Bcom Disclosure Summary Final

National Professional Services Group
Business Combinations and Noncontrolling Interests

Financial Statement Disclosure Summary 2010
Table of Contents
Overview Section I - Analysis of 2009 Filings Section II - Financial Statement Disclosures Index of Topics Examples Index of Companies PwC Contacts
3-5 6 - 18 19 20 - 98 99 101
Overview
Welcome to PricewaterhouseCoopers' Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary for 2010 (the "Summary"). The primary objective of this Summary is to provide data, analysis, and insights on how certain of the financial statement disclosure requirements under U.S. Generally Accepted Accounting Principles (U.S. GAAP) related to business combinations and noncontrolling interests have been applied in practice. The disclosure information in this Summary is provided solely to increase awareness and understanding of the types of disclosures that individual companies have made in particular situations. The disclosure examples illustrate how certain companies applied the current accounting standards in the first year in which the standards were effective. The examples come from companies of varying sizes in multiple industries. There is no suggestion implied in this information that all disclosures analyzed are consistent with PwC's views in all circumstances, or are intended to represent best practices. Whether any of the disclosures comply with U.S. GAAP depends on the judgment applied to the unique facts and circumstances of each case. We hope that you find this summary useful in understanding how companies have applied the standards.
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Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary
Disclosure principles
The U.S. GAAP disclosure requirements1 are intended to enable users of financial statements to evaluate the nature and financial effects of: Business combinations that occur either during the current reporting period or after the reporting period, but before the financial statements are issued; Adjustments recognized in the current reporting period that relate to business combinations that occurred in current and previous reporting periods; and Relationships between the parent and a subsidiary or investee when the parent does not have 100 percent ownership or control These disclosures should be made in the period in which the business combination occurs, and should be reported for each material business combination. Companies should also include the disclosures in subsequent financial statements if an acquisition occurred in a previous reporting period and that period is presented in the financial statements. Companies are also required to disclose information about acquisitions made after the balance sheet date, but before the financial statements are issued. If the initial accounting for the business combination is incomplete, the company should describe which disclosures could not be made and the reasons why they could not be made. Companies are also required to disclose gains or losses arising from the deconsolidation of a business when the company loses control of that business.
Contents
The Summary is divided into two primary sections as described below. Section I - Analysis of 2009 Filings The first section titled "Analysis of 2009 Filings" presents findings and PwC insights from an analysis of 185 transactions that were disclosed in 2009 quarterly and annual filings made by public companies. This section also presents the summary data from which the findings were derived. The summary data was accumulated based on our review of the filings and is included as a point of reference to support our analysis. The percentages presented in the findings were derived
1
The U.S. GAAP accounting standards applicable to business combinations are ASC 805, Business Combinations, and ASC 810, Consolidation (the "standards"). The disclosures that are required for all material business combinations that occur during the reporting period can be found in ASC 805-10-50-2. Additionally, ASC 805-10-50-2(e)-(h), ASC 805-2050-1(a)-(e), and ASC 805-30-50-1(a)-(f) provide disclosure requirements for individually immaterial acquisitions that are collectively material, in the period in which the business combinations occur. The disclosures that are required for noncontrolling interests can be found in ASC 810-10-50.
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from the underlying summarized data; however, there may be limitations in the use of percentages due to the small sample involved in our analysis. The companies and transactions were generally selected based on those with the largest purchase price. Not all of the transactions reviewed were material to a specific acquirer and, accordingly, some disclosures were omitted from the financial statements. The results of the analysis may not be indicative of longer-term trends. This may be due to several reasons, such as the relatively short length of time that the new standards have been in effect, the weaker macro-economic conditions in the U.S. compared to historical norms, and a decrease in acquisition activity in 2009 compared to recent years. Section II - Financial Statement Disclosures The second section titled "Financial Statement Disclosures" presents example disclosures for each of the topics that have been summarized in the "Analysis of 2009 Filings" section. Additionally, the "Financial Statement Disclosures" section presents example disclosures for other topics related to business combinations and noncontrolling interests (e.g., reverse acquisitions, deferred revenue, indemnification assets). The disclosure examples presented were taken from public filings and have not been modified.
PwC clients who have questions on this publication should contact their engagement partner. Prospective clients and other interested parties should contact the managing partner of the PwC office nearest you, which can be found at www.pwc.com.
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I. Analysis of 2009 Filings

Commentary and PwC insights on the more significant findings noted in the analysis are presented in this section. Certain comments provide possible explanations for the results that were noted; however, these explanations are not based on an in-depth analysis of the facts and circumstances affecting the companies involved or of the historical data.
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Form of consideration The new standard requires that the value of equity consideration be measured as of the date that control is obtained. Previously, the value of equity consideration was generally measured on the date the deal was announced. We noted that the form of the acquisition consideration was heavily weighted toward either cash or cash and shares. This finding may indicate that equity was a less attractive acquisition currency because of generally lower stock prices compared to prices in recent history or companies were seeking to avoid the inherent volatility in pricing that could occur when consideration includes shares. Form of consideration
7%
6%
Cash Cash and shares Shares
31%
56%
Did not disclose
Contingent consideration Under the standard, contingent consideration arrangements may increase post-acquisition earnings volatility compared to previous guidance. Despite this fact, the percentage of deals included in our analysis that disclosed contingent consideration arrangements was relatively consistent with prior years. For example, 15%, 16%, and 21% of the deals disclosed in 2006, 2007, and 2008, respectively, included contingent consideration arrangements. This may indicate that the accounting implications were not a determining factor in structuring deal consideration.
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Was contingent consideration disclosed?
19%
Yes No
81%
Classification of contingent consideration For the transactions that included contingent consideration, the majority of acquirers classified the contingent consideration arrangement as a liability. This classification requires a company to remeasure the liability at fair value each reporting period and record any adjustment in earnings. While many companies may desire to avoid the resulting income statement volatility, equity classification (which does not require subsequent remeasurement) is generally more difficult to achieve under the standard. However, we observed that 11% of companies disclosed equity-classified contingent consideration. Additionally, four of the companies that disclosed a contingent payment arrangement also disclosed that some portion of the arrangement would be accounted for as compensation expense in the postcombination earnings of the acquirer. Classification of contingent consideration
Liability 22% Equity Mix 11% 3% 11% 53% Compensation Did not disclose
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Bargain purchase The standard requires a company to record a "bargain purchase gain" in earnings at the time of acquisition if the fair value of the net assets acquired exceeds the acquisition consideration. The standard indicates that such instances are expected to be infrequent. Six percent of companies disclosed bargain purchase gains. It is likely that these bargain purchase gains were attributable to the economic downturn in the U.S. that continued throughout 2009 along with the consolidation of weaker competitors that was observed in certain industry sectors. These conditions may change as the economy strengthens. Thus, the results of this analysis may not be indicative of longer-term trends that may develop.
Was a bargain purchase gain disclosed?
No 6% 94% Yes
Acquisition costs We found that approximately half of the companies in the analysis disclosed acquisition costs. The standard requires companies to expense acquisition costs, such as legal, advisory, and consulting fees, as incurred. Previously, direct costs of acquisitions were capitalized. Companies must also disclose material acquisition costs recorded in earnings. This requirement may create some inherent sensitivity for companies incurring material due diligence costs for possible acquisitions.
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Were acquisition costs disclosed?
Yes 48% 52% No
Classification of acquisition costs The majority of companies (85%) classified acquisition costs as a component of income from operations in the income statement. The standard requires disclosure of the line item in the income statement where the costs are recorded. Classification of acquisition costs
3%
5% 7%
SG&A expense - Operating Other expenses -Operating Separate line - Operating 52%
25%
Other expenses - Non-Operating Separate line - Non-Operating
8%
Did not disclose
Disclosure of purchase price allocation One of the requirements of both the previous and current standards is the disclosure of the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed (commonly called the "purchase price allocation"). The overwhelming majority of the transactions included in our sample disclosed this allocation in a schedule, while the rest disclosed the allocation in a narrative.
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Was the purchase price allocation disclosed
8% 10%
Yes - schedule Yes - narrative No 82%
Status of purchase price allocation Historically, many companies disclosed that their initial purchase price allocation was preliminary and subject to adjustment. Any adjustments to the initial allocation were typically recorded prospectively. Under the new guidance, material adjustments to the initial allocation must be reflected retroactively in the comparative financial statements. Some believed that this change would cause companies to make greater efforts to finalize allocations in the acquisition period to reduce the possibility of a need to recast previous period results. However, the results of our analysis indicate that the majority of companies continue to describe allocations as preliminary. Further, our analysis indicated that many of these companies did not specify which particular asset or liability balances remain subject to possible future adjustment. Of the companies that did specify, the most common items noted were intangible assets, income tax liabilities, accrued liabilities, and pre-acquisition contingent liabilities. When companies disclosed the allocation as final, the deals had been closed in the first month of the quarter. Status of purchase price allocation
22% 4%
Preliminary Final Did not disclose 74%
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In-Process Research and Development (IPR&D) costs The standard requires that IPR&D be initially measured at fair value and classified as an indefinite-lived intangible asset on the date of acquisition. For those companies that disclosed IPR&D and also disclosed the methodology used to initially value the IPR&D, the method used in all cases was a discounted cash flow (DCF) income approach. IPR&D valuation method
DCF income approach 43% Method not disclosed 57%
Measurement of acquired contingencies Of the acquired contingencies that were disclosed, some were initially measured and recorded at fair value, while others were initially measured and recorded at management's best estimate if determined to be probable and reasonably estimable (the "legacy" approach). The standard allows for such a legacy approach only when fair value cannot be determined during the measurement period. For example, under the standard there is an expectation that most companies would use the legacy approach for measuring some of the more common types of contingent liabilities, such as litigation, given the many factors and inherent uncertainties in determining fair value for such an item. Another expectation is that the fair value of warranty liabilities generally would be determinable. Our analysis supports both of these notions. Litigation was measured using a legacy approach. Additionally, warranty liabilities and certain other contractual contingencies were measured at fair value.
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Approach to recording certain types of contingencies
6% 12% 12%
Legacy-Litigation 12% Legacy-Other non-litigation Legacy-Environmental 23% FV-Environmental FV-Warranty FV-Contractual
18%
17%
FV-Not disclosed
Noncontrolling interests We analyzed the measurement technique used to determine the fair value of the noncontrolling interest (NCI) in partial acquisitions (situations in which the buyer acquires a controlling interest of more than 50% but less than 100% of the equity interest in the acquiree). Of the transactions that resulted in recognition of an NCI, the most common valuation technique used to measure the fair value of the NCI was the closing market price of the acquired company's shares on the acquisition date. In addition, for those acquisitions with an NCI, the vast majority of acquirers began the consolidated statement of cash flows with the caption "net income." Caption beginning the statement of cash flows for companies with NCI
2% 10% Net Income (NI) NI of the company NI of common shareholders 88%
When NCI was disclosed, the classification of the NCI in the statement of financial position was predominantly in equity. In a limited number of instances, mezzanine classification was used because the NCI was redeemable outside of the control of the controlling interest.
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Classification of the NCI

3% 7% Equity Mezzanine Equity and mezzanine 90%
Public company disclosures Public companies are required to disclose the amount of revenue and earnings of the acquiree since the acquisition date included in the acquirer's consolidated income statement. There is also a requirement to disclose supplemental pro forma revenue and earnings of the combined entity for the current and prior reporting periods. If these disclosures are deemed impracticable, the acquirer must disclose that fact and explain why it is impracticable. Of the companies that disclosed pro forma information, the most common items affecting the pro forma results included: Additional depreciation expense for fixed assets Additional amortization expense for intangible assets Additional interest expense related to the financing of the acquisition Additional employee benefits expense Exclusion of acquisition costs Exclusion of integration costs Many companies specifically disclosed that the acquiree results since acquisition and the pro forma information were not disclosed because the acquisition was not considered material. No companies adjusted the pro forma results for expected post-acquisition synergies. Several companies specifically disclosed that no adjustments to the pro forma results had been made for the conforming of acquirer and acquiree accounting policies.
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Were acquiree results since acquisition disclosed?
Yes 40% No
60%
Was pro forma information disclosed?
Yes 44% 56% No
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Other findings In addition, we noted the following: Only one of the companies in the analysis specifically disclosed the presence of "defensive" assets, which are defined as assets that an acquirer does not intend to actively use but intends to hold (lock up) to prevent others from gaining access to them. These assets may present unique accounting and valuation challenges, such as determining an initial fair value from the perspective of a market participant and determining an appropriate amortization period. Other companies in the analysis may also have acquired defensive assets, but did not disclose them separately from other intangible assets. None of the companies in the analysis specifically disclosed the presence of a reacquired right, which is defined as a right that the acquirer had previously granted to the acquiree to use one or more of the acquirer's recognized or unrecognized assets. Similar to defensive assets, reacquired rights may present unique valuation challenges, such as determining their initial fair value. Companies in the analysis may have recorded reacquired rights, but did not disclose them separately from other intangible assets. Of the companies in the analysis, 39% closed their deals during the first month of the quarter. Of the companies in the analysis, 18% closed deals during the first 10 days of the quarter. These percentages are slightly greater than the percentages that would be expected under an assumption that deals have an equal probability of closing on each day in a quarter. This may indicate that companies are timing deals to allow for the most amount of time possible before having to report financial information that includes the initial acquisition accounting. Less than 2% of the companies in the analysis disclosed subsequent measurement period adjustments to the amounts originally recorded. This may be the result of the limited length of time that has passed since the acquisition dates in the analysis. This may also be indicative of companies performing more robust due diligence procedures in advance of closing deals and more timely valuations after closing deals. None of the companies in the analysis specifically disclosed adjustments to tax account balances that had been recorded in prior years related to old deals. The standard now requires any such adjustments to be recorded in earnings rather than as an adjustment to goodwill on the balance sheet.
Presented on the following pages is summarized data derived from the quarterly analyses that were performed.
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Summary data
Data Point Form of consideration Sample Size What was the form of the consideration the Cash acquirer transferred in exchange for control Cash and shares of the acquiree? Shares Did not disclose Contingent consideration Was any portion of the acquisition consideration contingent in nature? Classification of contingent consideration If present, how was the contingent consideration classified in the financial statements? Sample Size Yes No Sample Size Liability Equity Mix Compensation Did not disclose Sample Size No Yes Sample Size Yes No Sample Size SG&A expense - Ops Other expense - Ops Separate line - Ops Other expense - NonOps Separate line - NonOps Did not disclose Disclosure of purchase price allocation Did the acquirer disclose the allocation of consideration to the net assets acquired? Sample Size Yes - schedule form Yes - narrative form No Sample Size Preliminary Final Did not disclose Q1 20 14 3 3 0 20 5 15 5 1 1 0 1 2 20 15 5 20 9 11 9 4 0 5 0 0 0 20 14 3 3 17 10 4 3 Q2 55 30 14 5 6 55 12 43 12 8 3 0 1 0 55 53 2 55 25 30 25 13 0 5 3 4 0 55 40 6 9 46 35 0 11 Q3 Q4 55 55 33 29 21 20 0 6 1 0 55 9 46 9 5 0 1 0 3 55 52 3 55 30 25 30 15 6 3 0 1 5 55 48 6 1 54 45 1 8 55 10 45 10 5 0 0 2 3 55 53 2 55 32 23 32 18 1 11 0 0 2 55 50 4 1 54 37 1 16 Cumulative 185 106 58 14 7 185 36 149 36 19 4 1 4 8 185 173 12 185 96 89 96 50 7 24 3 5 7 185 152 19 14 171 127 6 38 Percentage 100% 56% 31% 7% 6% 100% 19% 81% 100% 53% 11% 3% 11% 22% 100% 94% 6% 100% 52% 48% 100% 52% 8% 25% 3% 5% 7% 100% 82% 10% 8% 100% 74% 4% 22%
Bargain purchase Was there a bargain purchase gain disclosed as a result of the acquisition? Acquisition costs Did the acquirer disclose the amount of acquisition costs incurred in the period? Classification of acquisition costs In which line item of the statement of operations were acquisition related costs reported?
Status of purchase price allocation If the purchase price allocation was disclosed, were the amounts presented as being final or preliminary?
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Data Point In-Process Research and Development (IPR&D) costs If the acquirer disclosed the presence of IPR&D, how was it valued?
Sample Size DCF income approach Method not disclosed
Q1 5
Q2 8
Q3 Q4 11 13
Cumulative 37
Percentage 100%
0 5 3 1 1 0 0 0 1 0 2 1 0 1
3 5 3 0 1 1 0 0 0 1 20 19 1 0
6 5 4 0 0 0 1 2 1 0 20 18 2 0
7 6 7 1 2 2 2 0 0 0 25 21 4 0
16 21 17 2 4 3 3 2 2 1 67 59 7 1
43% 57% 100% 12% 23% 17% 18% 12% 12% 6% 100% 88% 10% 2%
Measurement of acquired contingencies If disclosed, which basis was used to measure certain types of liabilities?
Sample Size Legacy - Litigation Legacy - Other nonlitigation Legacy Environmental FV - Environmental FV - Warranty FV - Contractual FV - Not disclosed
Noncontrolling interests
Sample Size
If the acquirer disclosed a noncontrolling Net income (NI) interest, what line item was the starting point NI of the company for the statement of cash flows? NI of common shareholders Noncontrolling interests Sample Size
2 2 0 0
20 18 0 2
20 18 2 0
25 22 3 0
67 60 5 2
100% 90% 7% 3%
If the acquirer disclosed a noncontrolling Equity interest, where in the statement of financial Mezzanine position was it classified? Equity and mezzanine
Public company disclosures Did the acquirer disclose the amount of acquire results included in the acquirer results since the acquisition date? Public company disclosures Did the acquirer disclose the required pro forma financial information?
Sample Size Yes No
20 9 11
55 27 28
55 17 38
55 21 34
185 74 111
100% 40% 60%
Sample Size Yes No
20 10 10
55 14 41
55 26 29
55 31 24
185 81 104
100% 44% 56%
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II. Financial statement presentation and disclosure examples

Contents Form of consideration Contingent consideration - Liability classification Contingent consideration - Equity classification Contingent consideration - Liability and equity classifications Contingent consideration - Subsequent period adjustments Contingent compensation payments Bargain purchase Acquisition and restructuring costs Disclosure of purchase price allocation - Preliminary Disclosure of purchase price allocation - Final In-Process and Development (IPR&D) costs Acquired contingencies - Fair value Acquired contingencies - Legacy approach Acquired contingencies - Fair value and legacy approach Noncontrolling interests Noncontrolling interests - Step acquisitions Noncontrolling interests - Mezzanine classification Public company disclosures - Actual results of the acquiree Public company disclosures - Pro forma results Other disclosures: Acquisition date Reverse acquisitions Preexisting relationships Acquired loans Inventories Defensive assets Intangible assets Indemnification assets Goodwill Deferred revenue Income taxes Measurement period adjustments 75 77 77 80 83 84 86 91 93 95 96 97 Page 20 24 30 32 33 34 35 40 44 49 51 55 56 58 59 62 67 70 72
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Form of consideration
Consideration transferred is generally measured at fair value. Consideration transferred is the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred by the acquirer to the former owners of the acquiree, and the equity interests issued by the acquirer to the former owners of the acquiree.
Gilead Sciences Inc Filing: 10-Q, 6/30/09
The aggregate consideration transferred to acquire CV Therapeutics was $1.39 billion, and consisted of cash paid for common stock and other equity instruments at or prior to closing of $1.38 billion and the fair value of vested stock options assumed of $15.7 million. In accordance with the merger agreement, the number of Gilead stock options and restricted stock units into which assumed CV Therapeutics stock options and restricted stock units were converted was determined based on the option conversion ratio, which is the per share acquisition price of $20.00 divided by the average closing price of our common stock for the five consecutive trading days immediately preceding (but not including) the closing date of April 17, 2009, which was $46.24 per share. The fair value of stock options assumed was calculated using a Black-Scholes valuation model with the following assumptions: market price of $44.54 per share, which was the closing price of our common stock on the acquisition date; expected term ranging from 0.1 to 5.2 years; risk-free interest rate ranging from 0.1% to 1.7%; expected volatility ranging from 37.4% to 43.2%; and no dividend yield. The fair value of restricted stock units assumed was calculated using the acquisition-date closing price of $44.54 per share for our common stock. We included the fair value of vested stock options assumed by us of $15.7 million in the consideration transferred for the acquisition. There were no vested restricted stock units assumed by us. The estimated fair value of unvested stock options and restricted stock units assumed by us of $11.2 million was not included in the consideration transferred and is being recognized as stock-based compensation expense over the remaining future vesting period of the awards.
Westway Group Filing: 10-Q, 6/30/09
On May 28, 2009, we completed the acquisition of the bulk liquid storage and feed supplements businesses by effecting mergers of two of our wholly-owned subsidiaries with Westway Terminal Company, Inc. and Westway Feed Products, Inc., which were two former domestic subsidiaries of ED&F Man, and by purchasing the equity interests of certain foreign subsidiaries of ED&F Man engaged in the bulk liquid storage and liquid feed supplements businesses. The consideration we paid in connection with the closing of the business
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combination consisted of approximately 12.6 million newly-issued shares of our Class B common stock (fair value of $63.1 million), approximately 30.9 million newly-issued shares of our Series A Preferred Stock (fair value of $177.3 million), including 12.2 million escrowed shares for contingent earn-out payments that are to be released from escrow only if the Company achieves certain earnings or share price targets, and $103.0 million in cash, plus certain post closing adjustments for working capital of $3.4 million. If the targets are achieved in the form of shares released from escrow, the Company estimates the aggregate value of the consideration to be $346.9 million. On May 28, 2009, the Company delivered to an escrow agent for deposit into an escrow account 12,181,818 of the 30,886,830 newly issued shares of Series A Preferred Stock issued to Westway Holdings Corporation as part of consideration for the business combination, pursuant to a stock escrow agreement. These shares will be released to ED&F Man only upon the achievement by the Company of certain earnings or share price targets as determined in the Stock Escrow Agreement.
Penseco Financial Services Corp Filing: 10-Q, 6/30/09
The following table summarizes the consideration paid for Old Forge Bank and the identifiable assets acquired and liabilities assumed at acquisition date
Cash Common Stock issued - 1,128,079 shares of the Company, net of issuance costs of $184 Fair value of consideration transferred $17,405 38,058 $55,463
The fair value of the 1,128,079 common shares of the Company issued as part of the consideration paid to former Old Forge Bank shareholders was $38,058, determined by use of the weighted average price of Company shares traded on March 31, 2009 ($33.90 per share). The Company believes that the weighted average price of the Company stock traded on March 31, 2009 is the best indication of value since the Company's common stock is not a heavily traded security.
SCM Microsystems, Inc Filing: 10-Q, 6/30/09
In exchange for all of the outstanding capital stock of Hirsch, SCM paid approximately $14.2 million in cash, issued approximately 9.4 million shares of SCM common stock at the closing and issued warrants to purchase approximately 4.7 million shares of SCM common stock at an exercise price of $3.00 with a five-year term, exercisable for two years following the third anniversary of the closing date. In addition, each warrant to purchase shares of Hirsch
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common stock outstanding immediately prior to the effective date of the acquisition was converted into a warrant to purchase the number of shares of SCM common stock equal to the number of shares of Hirsch common stock that could have been purchased upon the full exercise of such warrants, multiplied by the conversion ratio (as defined below), rounded down to the nearest whole share. The per share exercise price for each new warrant to purchase SCM common stock was determined by dividing the per share exercise price of the Hirsch common stock subject to each warrant as in effect immediately prior to the effective date of the acquisition by the conversion ratio, and rounding that result up to the nearest cent. As used in this Quarterly Report on Form 10-Q, conversion ratio means the quotient obtained by dividing the estimated aggregate value of the acquisition consideration per share of Hirsch common stock, by the 30-day volume weighted average price of SCMs common stock (as reported on the NASDAQ Stock Market during the 30 days preceding the day prior to the day of the effective date of the acquisition). The total purchase consideration was determined to be $38.0 million as of the acquisition date. The following table summarizes the consideration paid for Hirsch and the amounts of the assets acquired and liabilities assumed at the acquisition date. The fair value of the shares of SCM common stock issued in connection with the acquisition was determined using the closing price of SCMs common stock as of the acquisition date of $2.37 per share. Fair value of consideration transferred (in thousands):
Cash paid for Hirsch common Fair value of common stock Fair value of warrants issued Fair value of warrants converted Total purchase consideration $14,167 22,258 1,327 200 $37,952
Inverness Medical Innovation, Inc Filing: 10-Q, 6/30/09
The preliminary aggregate purchase price for the Second Territory Business was approximately $192.9 million ($190.9 million present value), which consisted of an initial cash payment totaling $105.0 million and deferred purchase price consideration payable in cash and common stock with an aggregate fair value of $87.9 million. Included in our consolidated statements of operations for the three and six months ended June 30, 2009 is revenue totaling approximately $8.7 million related to the Second Territory Business. The operating results of the Second Territory Business are included in our professional diagnostics reporting unit and business segment. During the remainder of 2009, we will pay $1.5 million in cash and an amount equal to $57.5 million in shares of our common stock as settlement of a portion of the deferred purchase
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price consideration. The deferred payments made in 2009 will bear interest at a rate of 4%. The remainder of the purchase price will be due in two installments, each comprising 7.5% of the total purchase price, or approximately $28.9 million, on the dates 15 and 30 months after the acquisition date. These amounts do not bear interest and may be paid in cash or a combination of cash and up to approximately 29% of each of these payments in shares of our common stock. For purposes of determining the preliminary aggregate purchase price of $190.9 million, we present valued the final two installment payments totaling $28.9 million using a discount rate of 4% resulting in a reduction in the deferred purchase price consideration of approximately $2.0 million.
Bottomline Technologies, Inc. Filing: 10-Q, 9/30/09 On September 14, 2009, the Company completed the purchase of substantially all of the assets and related operations of PayMode from Bank of America (the Bank). PayMode facilitates the electronic exchange of payments and invoices between organizations and their suppliers and is operated as a Software as a Service (SaaS) offering. There are currently in excess of 90,000 vendors participating in the PayMode network. As a result of the acquisition the Company acquired the PayMode operations including the vendor network, application software, intellectual property rights and other assets, properties and rights used exclusively or primarily in the PayMode business. As purchase consideration, the Company paid the Bank cash of $17.0 million and issued the Bank a warrant to purchase 1,000,000 shares of common stock of the Company at an exercise price of $8.50 per share. The warrants were exercisable upon issuance and were valued at $10.5 million using a Black Scholes valuation model that used the following inputs:
Dividend yield Expected term Risk free interest Volatility 0% 10 years 3.42% 78%
The expected term of ten years equates to the contractual life of the warrants. Volatility was based on the Companys actual stock price over a ten year historic period.
Atheros Communications, Inc. Filing: 10-K, 12/31/09 Under the terms of the merger agreement, the Company paid an aggregate of $113,627,000 in cash ($70,701,000 net of cash acquired) and exchanged 4,500,000 shares of the Companys common stock and equivalents for 32,503,000 of Intellons outstanding common stock and equivalents, valued at $140,348,000 to Intellon shareholders upon closing, resulting in total acquisition consideration of $253,975,000. The Company issued to Intellon
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employees on December 15, 2009, options to purchase 631,000 shares of the Companys common stock, 189,000 restricted stock units (RSUs) of the Companys common stock and 16,000 restricted stock awards with an aggregate value of approximately $18,183,000, in exchange for their options to purchase shares, restricted stock units, and restricted stock awards of Intellon. Of this amount, 272,000 stock options and 28,000 RSUs were earned prior to the acquisition date, and therefore, the Company recorded $5,189,000 as part of the acquisition consideration. The remaining 359,000 stock options, 161,000 RSUs and 16,000 restricted stock awards will result in compensation expense of $12,994,000, which will be recognized over the remaining vesting period of these equity awards, which ranges from one day to four years, subject to adjustment based on estimated forfeitures. Additionally, on December 15, 2009, the Company issued 356,000 restricted stock units of the Companys common stock to employees of Intellon valued at $11,456,000, subject to adjustment based on estimated forfeitures, and will recognize this amount as compensation expense over a period ranging from one to four years. The value of the Companys common stock and equivalents issued was determined based on the Companys closing share price on December 15, 2009 (the acquisition date), or $32.18 per share.
Contingent consideration - Liability classification

Contingent consideration is measured at its acquisition-date fair value. A contingent consideration arrangement that is required to be settled in cash or other assets should be classified as a liability. A contingent consideration arrangement that is required to be (or at the issuer's option can be) settled in shares may be classified as a liability or as equity depending on an analysis of the specific facts and circumstances of the arrangement and a consideration of all relevant U.S. GAAP.
Riverbed Technology, Inc Filing: 10-Q, 3/31/09 The total acquisition date fair value of the consideration transferred is estimated at $33.0 million, which includes the initial payments totaling $23.1 million in cash and the estimated fair value of acquisition-related contingent consideration to be paid to Mazu shareholders totaling $9.9 million. The total acquisition date fair value of consideration transferred is estimated as follows:
(in thousands) Payment to Mazu shareholders Acquisition related contingent consideration Total acquisition date fair value $23,051 9,909 $32,960
In accordance with SFAS No. 141(R), a liability was recognized for an estimate of the acquisition date fair value of the acquisition-related contingent consideration based on the
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probability of achievement of the bookings target. Any change in the fair value of the acquisition-related contingent consideration subsequent to the acquisition date, including changes from events after the acquisition date, such as changes in our estimate of the bookings targets, will be recognized in earnings in the period the estimated fair value change. The fair value estimate is based on the probability weighted bookings to be achieved over the earn-out period. Actual achievement of bookings below $16.0 million would reduce the liability to zero and achievement of bookings of $35.0 million or more would increase the liability to $16.6 million. A change in fair value of the acquisition-related contingent consideration could have a material affect on the statement of operations and financial position in the period of the change in estimate. We estimated the fair value of the acquisition-related contingent consideration using a probability-weighted discounted cash flow model. This fair value measurement is based on significant inputs not observed in the market and thus represents a Level 3 measurement as defined by SFAS No. 157. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect our own assumptions in measuring fair value. The estimated fair value of acquisition-related contingent consideration of $9.9 million includes amounts to be distributed directly to shareholders, discounted at 13%, but excludes a fair value estimate of $3.8 million to be paid to former employees of Mazu. As of March 31, 2009, there were no significant changes in the estimated fair value of the contingent consideration recognized as a result of the acquisition of Mazu. The estimated fair value of acquisition-related contingent consideration of $3.8 million to be paid to the former employees of Mazu is considered compensatory and will be recognized as compensation cost, recorded in operating expense, over the Earn-Out period provided generally that such former Mazu employees are employees of Riverbed at the time the acquisition-related contingent consideration is earned.
Exar Corporation Filing: 10-Q, 6/28/09
We expect to pay $4.95 million in cash for Galazar, representing the fair value of total consideration transferred. This amount includes $1.0 million contingent consideration, that for purposes of valuation was assigned a 95% probability or a fair value of $0.95 million. The contingent consideration is expected to be paid within the next six months and is included in the Other accrued expenses line item in our condensed consolidated balance sheets.
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ev3 Inc. Filing: 10-Q, 7/5/09
We issued 5,060,510 shares of our common stock, with an estimated fair value of $53.2 million. The estimated fair value per share of common stock of $10.51 was based on the closing price of our common stock on the date of the acquisition, June 23, 2009. The cash consideration, net of cash acquired, was approximately $24.7 million. We have also incurred approximately $1.0 million in direct acquisition costs, all of which were expensed as incurred. In addition, we have agreed to pay an additional milestone-based payment of cash and equity upon the FDA pre-market approval of the Pipeline device. This milestone-based contingent payment could range from: (1) $75 million upon FDA approval prior to October 1, 2011, (2) $75 million less $3.75 million per month upon FDA approval from October 1, 2011 through December 31, 2012 and (3) no payment required if FDA approval is not obtained by December 31, 2012. The milestone-based payment of up to $75.0 million will consist of cash and equity paid in the form of shares of our common stock ranging from 30% cash and 70% equity to 85% cash and 15% equity, of the total required payment. In accordance with SFAS 141(R), we have recorded the acquisition-date estimated fair value of the contingent milestone payment of $37.3 million as a component of the consideration transferred in exchange for the equity interests of Chestnut. The acquisition-date fair value was measured based on the probability adjusted present value of the consideration expected to be transferred. The fair value of the contingent milestone payment was remeasured as of July 5, 2009 at $37.5 million and is reflected in Other longterm liabilities in our consolidated balance sheets. The change in fair value of approximately $196,000 is reflected as Contingent consideration in our consolidated statements of operations for the three and six months ended July 5, 2009.
McAfee Filing: 10-Q, 9/30/09 On September 1, 2009, we acquired 100% of the outstanding shares of MX Logic, Inc. (MX Logic), a Software-as-a-Service provider of on-demand email, web security and archiving solutions for $138.5 million. The MX Logic purchase agreement provides for earn-out payments totaling up to $30.0 million contingent upon the achievement of certain MX Logic revenue targets. The $24.6 million fair value of the earn-out payments has been accrued for a total purchase price of $163.1 million. The MX Logic contingent consideration arrangement requires payments up to $30.0 million that will be due and payable if certain criteria in relation to revenue recognized on the sale of MX Logic products are met during the three-year period subsequent to the close of the acquisition. The fair value of the contingent consideration arrangement of $24.6 million was determined using the income approach with significant inputs that are not observable in the market. Key assumptions include discount rates consistent with the level of risk of achievement and probability adjusted revenue amounts. The expected outcomes were
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recorded at net present value. Subsequent changes in the fair value of the liability will be recorded in earnings. As of September 30, 2009, the range of outcomes and the assumptions used to develop the estimates had not changed significantly, and the amount accrued in the financial statements increased by $1.0 million. The increase in fair value was due to expected achievement of the earn-out payments at an earlier date than originally assumed and an increase in the net present value of the liability due to the passage of time.
DivX, Inc. Filing: 10-Q, 9/30/09 The total consideration for the net assets acquired is up to $15.0 million, consisting of an initial cash payment of $7.5 million, which the Company made in August 2009, and additional consideration of up to $7.5 million upon the achievement of certain technical product development milestones and certain revenue and distribution milestones. The total acquisition date fair value of the consideration was estimated at $12.5 million as follows (in thousands):
Initial cash payment to AnySource Estimated fair value of contingent milestone consideration Total consideration $7,500 4,974 $12,474
On the acquisition date, a liability was recognized for an estimate of the acquisition date fair value of the contingent milestone consideration based on the probability of achieving the milestones and the probability weighted discount on cash flows. Any change in the fair value of the contingent milestone consideration subsequent to the acquisition date will be recognized in the statements of income. This fair value measurement is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Companys own assumptions in measuring fair value. Discount rates considered in the assessment of the acquisition date fair value for the contingent milestones totaling $5.0 million range from approximately 6% to 23%. A change in fair value of the contingent milestone consideration, as a result of changes in significant inputs such as the discount rate and estimated probabilities of milestone achievements, could have a material effect on the statement of income and financial position in the period of the change.
Inverness Medical Innovations, Inc. Filing: 10-Q, 9/30/09 The preliminary aggregate purchase price was $127.4 million, which consisted of an initial cash payment totaling $105.3 million and a contingent consideration obligation with a fair
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value of $22.1 million. In addition, we assumed and immediately repaid debt totaling approximately $1.3 million. We determined the acquisition date fair value of the contingent consideration obligation based on a probability-weighted income approach derived from 2010 revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) estimates and a probability assessment with respect to the likelihood of achieving the various earn-out criteria. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in fair value measurement accounting. The resultant probability-weighted cash flows were then discounted using a discount rate of 13%. At each reporting date, we revalue the contingent consideration obligation to its fair value and record increases and decreases in the fair value as income or expense in our consolidated statements of operations. Increases or decreases in the fair value of the contingent consideration obligations may result from changes in discount periods and rates, changes in the timing and amount of revenue estimates and changes in probability assumptions with respect to the likelihood of achieving the various earn-out criteria. We recorded expense of approximately $15,000 in our consolidated statements of operations during the three and nine months ended September 30, 2009, as a result of a decrease in the discount period since the acquisition date. As of September 30, 2009, the fair value of the contingent consideration obligation was approximately $22.1 million. A summary of the preliminary aggregate purchase price allocation for this acquisition is as follows (in thousands):
Current assets Property, plant and equipment Goodwill Intangible assets Other non-current assets Total assets acquired Current liabilities Non-current liabilities Total liabilities assumed Net assets acquired Less: Fair value of contingent consideration obligation Cash consideration
$ 17,183 1,224 80,766 59,100 807 $159,080 8,042 23,640 $ 31,682 127,398 22,097 $105,301
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Netlogic Microsystems Inc. Filing: 10-K, 12/31/09 The Company may be required to issue up to an additional 1.6 million shares of common stock and pay up to an additional $15.9 million cash to the former holders of RMI capital stock as earn-out consideration based upon achieving specified percentages of revenue targets for either the 12-month period from October 1, 2009 through September 30, 2010, or the 12month period from November 1, 2009 through October 31, 2010, whichever period results in the higher percentage of the revenue target. The additional earn-out consideration, if any, net of applicable indemnity claims, will be paid on or before December 31, 2010.
Issuance of Netlogic common stock to RMI preferred shareholders Payments to RMI common shareholders in cash Acquisition-related contingent consideration Other adjustments Total
$188,527 12,582 9,679 (837) $209,951
In accordance with ASC 805 Business Combinations, a liability was recognized for the estimated merger date fair value of the acquisition-related contingent consideration based on the probability of the achievement of the revenue target. Any change in the fair value of the acquisition-related contingent consideration subsequent to the merger date, including changes from events after the acquisition date, such as changes in the Companys estimate of the revenue expected to be achieved and changes in its stock price, will be recognized in earnings in the period the estimated fair value changes. The fair value estimate assumes probability-weighted revenues are achieved over the earn-out period. Actual achievement of revenues at or below 75% of the revenue range for this assumed earn-out period would reduce the liability to zero. If actual achievement of revenues is at or above 100% of the revenue target, the RMI stockholders will receive the maximum consideration of 1.6 million shares and $15.9 million in cash. If the amount of revenue recognized is greater than 75% but less than 100% of the revenue target, the RMI stockholders will receive an earn-out consideration that increases as the percentage gets closer to 100%. A change in the fair value of the acquisition-related contingent consideration could have a material impact on the Companys statement of operations and financial position in the period of the change in estimate. The estimated initial earn-out liability was based on the Companys probability assessment of RMIs revenue achievements during the earn-out period. In developing these estimates, the Company considered the revenue projections of RMI management, RMIs historical results, and general macro-economic environment and industry trends. This fair value measurement is based on significant revenue inputs not observed in the market and thus represents a Level 3 measurement as defined by ASC 820 Fair Value Measurements and Disclosures. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Companys own assumptions in measuring fair value. The Company assumed a probability-weighted revenue achievement of approximately 80% of target. The Company determined that the resulting earn-out consideration would be 244,000 shares of its common stock and cash payment of approximately $0.4 million. The Company then applied its closing stock price of $38.01 as of October 30, 2009 to the 244,000 shares and added $0.4 million to arrive at an initial earn-out liability of $9.7 million.
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Contingent consideration - Equity classification

Contingent consideration is measured at its acquisition-date fair value. A contingent consideration arrangement that is required to be (or at the issuer's option can be) settled in shares may be classified as a liability or as equity depending on an analysis of the specific facts and circumstances of the arrangement and a consideration of all relevant U.S. GAAP.
Equity One, Inc Filing: 10-Q, 3/31/09 On January 14, 2009 (the Acquisition Date) in accordance with the Stock Exchange Agreement between us and Homburg Invest Inc. and Homburg (Neth) Beheer B.V. (collectively, Homburg), dated January 9, 2009 (the DIM Exchange Agreement), we acquired ownership of 15.1% of the outstanding DIM ordinary shares in exchange for 866,373 shares of our common stock. In addition, we obtained from Homburg voting rights with respect to an additional 9.4 % of the outstanding DIM ordinary shares over which Homburg has voting power but does not currently own (the Future Shares) resulting, together with the 65.2% of DIM ordinary shares owned by us, in voting control over 74.6% of the outstanding DIM ordinary shares. Prior to the Acquisition Date, we accounted for our 48% interest in DIM on December 31, 2008 as an available-for-sale security because of our inability to exert significant influence over DIMs operating or financial policies and, based on DIMs organizational and capital structure, we were unable to participate in the affairs of DIMs supervisory board. The DIM Exchange Agreement provides for us to acquire from Homburg the Future Shares, if and when Homburg has acquired ownership thereof, in consideration for 536,601 shares of our common stock or, at our option, $11.50 per share in cash adjusted for any dividends paid on our shares and the Future Shares. The fair value of the Future Shares transaction of $323,000 was determined using Monte-Carlo simulation methodology to estimate fair values of the securities involved. These valuations of the securities considers various assumptions, including time to maturity, applicable market volatility factors, and current market and selling prices for the underlying securities which are traded on the open market. The value of the DIM Exchange Agreement of approximately $323,000 will be classified as contingent consideration within stockholders equity until consummation of the Future Shares acquisition. This contingent stock exchange requires us to issue Homburg 536,601 shares of our common stock in exchange for 766,573 of DIM's ordinary shares if our common stock is trading below $20.00. Likewise, the contingent stock exchange requires Homburg to provide us with 766,573 DIM ordinary shares in exchange for 536,601 shares of our common stock if our stock is trading above $16.50. The Agreement provides for a time-sensitive cash settlement option, solely and absolutely at our discretion, that takes precedence over the aforementioned stock exchange. This cash settlement option provides us the ability to pay
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Homburg cash of $11.50 per DIM ordinary share, adjusted for a dividend formula that considers our dividend and DIM's dividend, if any. The following table summarizes the Acquisition Date fair value of the consideration paid for the controlling interest in DIM (in thousands):
Acquisition Date Fair Value (In Thousands) $36,945 12,234 323 $49,502
Previous equity interest Value of our common stock exchange Contingent consideration Total
EQUITY ONE, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets March 31, 2009 (Unaudited) and December 31, 2008 (In thousands)
March31, 2009
December 31, 2008
Equity: Stockholders equity of Equity One Preferred stock, $0.01 par value 10,000 shares authorized but unissued C Common stock, $0.01 par value,10,000 shares authorized but unissued Preferred stock, $0.01 par value , 100,000 shares authorized 76,655 and 76,198 shares issued and outstanding as o March 31, 2009 and December 31, 2008, respectively Additional paid in capital Distributions in excess of retained earnings Contingent consideration Accumulated other comprehensive income (loss
Total stockholders equity of Equity One)
769 977,515 (15,926) 323 404

963,085
762 967,514 (36,617) (22,161)

909,498
Noncontrolling interest Total stockholders' equity

Total Liabilities And Stockholders Equity
26,187 989,272
$2,370,069
989 910,487
$2,036,263
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First Solar, Inc. Filing: 10-Q, 7/31/09
Pursuant to the Merger Agreement, of the 2,972,420 Merger Shares, as of April 3, 2009, 355,096 shares were Holdback Shares that were issuable to OptiSolar Holdings upon satisfaction of conditions relating to certain then-existing liabilities of OptiSolar. The estimated fair value of this contingent consideration was $47.4 million and $47.7 million on June 27, 2009 and April 3, 2009, respectively, and has been classified separately within stockholders equity. As of June 27, 2009, 2,409 Holdback Shares had been issued to OptiSolar Holdings. Subsequent to June 27, 2009, an additional 331,523 Holdback Shares were issued to OptiSolar Holdings.
Contingent consideration - Liability and equity classifications

Contingent consideration is measured at its acquisition-date fair value. A contingent consideration arrangement that is required to be settled in cash or other assets should be classified as a liability. A contingent consideration arrangement that is required to be (or at the issuer's option can be) settled in shares may be classified as a liability or as equity depending on an analysis of the specific facts and circumstances of the arrangement and a consideration of all relevant U.S. GAAP.
BioClinica, Inc. Filing: 10-Q, 9/30/09
On September 15, 2009, BioClinica acquired substantially all of the assets of Tourtellotte Solutions, Inc. (Tourtellotte). Tourtellotte provides software applications and consulting services which support clinical trials in the pharmaceutical industry. The purchase price for Tourtellotte was $2.1 million in cash. Pursuant to the acquisition agreement, the Company agreed to pay up to an additional $3.2 million in cash and 350,000 shares of our common stock based upon achieving certain milestones, which include certain product development and revenue targets. (the earn-out). The fair value of the cash earn-out of $2.8 million has been accrued for and the fair value of the 350,000 shares of $1.3 million has been classified separately within stockholders equity as contingent consideration for a total purchase price of $6.2 million. The Company used cash from operations to fund the cash purchase price for Tourtellotte. The following table summarizes the consideration transferred to acquire CardioNow and Tourtolette at the respective acquisition dates:
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CardioNow Cash Estimated earnout payments: Contingent consideration to be settled in cash Contingent consideration to be settled in stock Working capital adjustment Total purchase price $1,000 $1,000
Tourtellotte $2,100 2,700 1,300 94 $6,194
The contingent consideration of 350,000 shares of our common stock for the earn-out as part of the Tourtellotte acquisition was excluded from the computation of basic and diluted earnings per share. Based on the authoritative literature for earnings per share, these shares are not considered contingently issued because all of the necessary conditions for the contingent criteria have not been satisfied as of the reporting date.
Contingent consideration - Subsequent period adjustments

Contingent consideration is measured at its acquisition-date fair value. The accounting for subsequent changes in the fair value of contingent consideration depends upon the classification of the contingent consideration. Changes in the fair value of contingent consideration not classified as equity generally impact earnings in the postcombination period.
Endo Pharmaceuticals Holdings, Inc. Filing: 10-Q, 9/30/09
During the three months ended September 30, 2009, the fair value of the acquisition-related contingent consideration, as determined in accordance with accounting principles generally accepted in the United States, decreased by approximately $23 million reflecting managements current assessment in light of the FDAs ongoing review of the application for AveedTM. The decrease in the liability was recorded as a gain and is included in the acquisition-related costs line item in the accompanying Condensed Consolidated Statements of Operations. During the nine months ended September 30, 2009, the fair value of the acquisition-related contingent consideration increased by $3.2 million and was recorded as a charge to earnings and is included in the acquisition-related costs line item in the accompanying Condensed Consolidated Statements of Operations.
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Riverbed Technology, Inc. Filing: 10-Q, 9/30/09
We estimated the fair value of the acquisition-related contingent consideration using a probability-weighted discounted cash flow model. This fair value measurement is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect our own assumptions in measuring fair value. The fair value of the acquisition-related contingent consideration to be distributed directly to the Mazu selling shareholders was originally estimated at the acquisition date to be $9.9 million. As of September 30, 2009, the estimated fair value of the acquisition-related contingent consideration liability was reduced to $4.1 million, primarily due to a reduction in the probability-weighted bookings estimate, discounted at 13%. The reduction in our fair value estimate resulted in a net gain of $3.0 million and $5.8 million for the three and nine months ended September 30, 2009, respectively, which was recorded in Acquisition-related costs in the Condensed Consolidated Statement of Operations.
Ev3, Inc. Filing: 10-Q, 10/04/09
In addition, we have agreed to pay an additional milestone-based payment of cash and equity upon the FDA pre-market approval of the Pipeline device. This milestone-based contingent payment could range from: (1) $75 million upon FDA approval prior to October 1, 2011, (2) $75 million less $3.75 million per month upon FDA approval from October 1, 2011 through December 31, 2012 and (3) no payment required if FDA approval is not obtained by December 31, 2012. The milestone-based payment of up to $75.0 million will consist of cash and equity paid in the form of shares of our common stock ranging from 30% cash and 70% equity to 85% cash and 15% equity, of the total required payment. We have recorded the acquisition-date estimated fair value of the contingent milestone payment of $37.3 million as a component of the consideration transferred in exchange for the equity interests of Chestnut. The acquisition-date fair value was measured based on the probability-adjusted present value of the consideration expected to be transferred. The fair value of the contingent milestone payment was remeasured as of October 4, 2009 at $39.7 million and is reflected in Other long-term liabilities in our consolidated balance sheets. The change in fair value for the three and nine months ended October 4, 2009 of $2.3 million and $2.5 million, respectively, is reflected as Contingent consideration in our consolidated statements of operations.
Contingent compensation payments

Arrangements that include contingent consideration need to be assessed to determine if the consideration is for postcombination services based on the nature of the arrangements. If the consideration is for postcombination services, it is recognized as compensation expense in the postcombination period.
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GSI Commerce Inc. Filing: 10-K, 1/2/10
As consideration for the acquisition of RCI, the Company paid cash of $92,133 and issued 4,572 shares of the Companys common stock valued at $93,945 based on the closing share price on the acquisition date. In addition, the Company is obligated to pay additional payments of up to $170,000 over a three year period beginning with RCI fiscal year 2010 contingent on RCIs achievement of certain financial performance targets, of which the Company has the ability to pay up to $44,100 with shares of the Companys common stock. To reach the maximum earnout, RCI will need to achieve earnings before interest, taxes, depreciation and amortization (EBITDA) of $51,900 in fiscal year 2012, excluding compensation expense on the earnout payment and certain other adjustments as defined in the RCI merger agreement. A maximum of $46,200 of the earnout will be paid to RCI employees based on performance conditions, which will be treated as compensation expense. The remaining $123,800 of the earnout will be accounted for as additional acquisition consideration. On the acquisition date, the Company recorded a liability of $60,012 which represents the fair value of the portion of the earnout that will be accounted for as additional acquisition consideration. Any adjustment to the fair value of the Companys estimate of the earnout payment will impact changes in fair value of deferred acquisition payments on the Companys Consolidated Statements of Operations and could have a material impact to its financial results.
Resources Connection Inc. Filing: 10-Q, 11/28/09
In addition, under the terms of the Membership Interest Purchase Agreement and Goodwill Purchase Agreement, up to 20% of the contingent consideration is payable to the employees of the acquired business at the end of the measurement period to the extent certain EBITDA growth targets are met. The Company will record the estimated fair value of the contractual obligation to pay the employee portion of contingent consideration as compensation expense over the service period as it is deemed probable that such amount is payable. The estimate of the fair value of the employee portion of contingent consideration payable requires very subjective assumptions to be made of future operating results, discount rates and probabilities assigned to various potential operating results scenarios. Future revisions to these assumptions could materially change the estimate of the fair value of the employee portion of contingent consideration and therefore materially affect the Companys future financial results.
Bargain purchase
Any excess of the value assigned to the net identifiable assets acquired over the fair value of the acquirers interest in the acquiree (i.e., consideration transferred and any previously held equity interest in the acquiree) and any noncontrolling interest is a bargain purchase gain and should be recognized in earnings.
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SonoSite Filing: 10-Q, 9/30/09 The following table summarizes the acquisition-date fair value of the assets acquired and the liabilities assumed in connection with the business combination (in thousands):
August 14, 2009 Assets Current assets: Cash and cash equivalents Accounts receivable Inventories Deferred income taxes Prepaid expenses and other current assets Total current assets Property and equipment, net Identifiable intangible assets Other assets Total assets Liabilities Current liabilities: Accounts payable Accrued expenses and other current liabilities Total current liabilities Long-term debt Deferred tax liability Other non-current liabilities Total liabilities Net assets acquired Acquisition consideration Gain on bargain purchase
$ 2,511 2,560 2,799 5,376 95 13,341 1,001 12,400 158 26,900
2,459 2,191 4,650 5,500 4,538 437 15,125 11,775 10,697 $ 1,078
When there is a gain on a bargain purchase, accounting standards require a reassessment to determine all assets acquired, liabilities assumed, and consideration transferred. We have performed a reassessment and have still concluded that we have a gain on a bargain purchase. Because the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the excess of the value of the net assets acquired over the purchase price has been recorded as a gain on bargain purchase.
SonoSite, Inc. Condensed Consolidated Statements of Income (unaudited) Three Months Ended September 30, (In thousands, except net (loss) income per share) Revenue Cost of revenue Gross margin Operating expenses: Research and development 2008 2009 as adjusted $53,571 16,021 37,550 6,497 $61,633 18,562 43,071 7,440 Nine Months Ended September 30, 2008 2009 as adjusted $157,661 48,033 109,628 21,569 $173,362 50,962 122,400 20,574
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Sales, general and administrative Licensing income and litigation settlement Acquisition costs, net of bargain purchase (gain) Total operating expenses
28,874 (110) $35,261
28,254 (2,643) $33,051
81,682 (924) 469 $102,796
86,712 (2,643) $104,643
SonoSite, Inc. Condensed Consolidated Statements of Cash Flows (unaudited) Nine Months Ended September 30, (In thousands) Operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Stock-based compensation Deferred income tax provision Amortization of net discounts on investment securities Amortization of debt discount and debt issuance costs Accretion of contingent purchase consideration Excess tax benefit from exercise of stock based awards Net loss on investments and derivatives Gain on convertible note repurchase Non-cash gain on litigation settlement Loss on disposal of property and equipment Gain on bargain purchase of CardioDynamics 2009 $1,048 3,647 5,201 1,216 (284) 3,792 720 123 (1,339) 31 (1,078) 2008 as adjusted $5,252 3,086 5,209 2,528 (443) 6,581 675 (961) 225 (643)
Assured Guaranty Ltd. Filing: 10-Q, 9/30/09 The following table represents the allocation of the purchase price to the net assets of the Acquired Companies. The bargain purchase gain results from the difference between the purchase price and the net assets fair value estimates.
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July 1, 2009 (in thousands) Purchase price: Cash Fair value of common stock issued (based upon June 30, 2009 closing price of AGO common stock) Total purchase price Identifiable assets acquired: Investments Cash Premiums receivable, net Ceded unearned premium reserve Deferred tax asset, net Financial guaranty variable interest entities assets Other assets Total assets Liabilities assumed: Unearned premium reserves Long-term debt Note payable to related party Credit derivative liabilities Financial guaranty variable interest entities liabilities Other liabilities Total liabilities Net assets resulting from acquisition Bargain purchase gain resulting from the FSAH Acquisition $ 545,997 275,875 821,872
5,950,061 86,999 854,140 1,727,673 888,117 1,879,446 662,496 12,048,932 7,286,393 396,160 164,443 920,018 1,878,586 348,906 10,994,506 1,054,426 $ 232,554
The bargain purchase gain was recorded within "Goodwill and settlement of pre-existing relationship" in the Company's consolidated statements of operations in the three-month period ended September 30, 2009 ("Third Quarter 2009"). The bargain purchase results from the unprecedented credit crisis, which resulted in a significant decline in FSAH's franchise value due to material insured losses, ratings downgrades and significant losses at FSAH's parent company, which resulted in government intervention in its affairs and resulting motivation to sell FSAH, and the absence of potential purchasers of FSAH due to the financial crisis. The initial difference between the purchase price of $822 million and FSAH's recorded net assets of $2.1 billion was reduced significantly by the recognition of additional liabilities related to FSAH's insured portfolio on a fair value basis as required by purchase accounting. The Company and FSAH had a pre-existing reinsurance relationship before the acquisition. Under GAAP, this pre-existing relationship must be effectively settled at fair value. The loss relating to this pre-existing relationship results from the effective settlement of reinsurance contracts at fair value and the write-off of previously recorded assets and liabilities relating to this relationship recorded in the Company's historical accounts. The loss related to the contract settlement results from contractual premiums that were less than the Company's estimate of what a market participant would demand currently, estimated in a manner similar to how the value of the Acquired Companies insurance policies were valued, as described above. A summary of goodwill and settlements of pre-existing relationship included in the consolidated statement of operations follows:
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Nine months ended September 30, 2009 (in thousands) Goodwill impairment associated with reinsurance assumed line of business Gain on bargain purchase of FSAH Settlement of pre-existing relationship in conjunction with the FSAH Acquisition Goodwill and settlement of pre-existing relationship $ 85,417 (232,554) 170,478 $ 23,341
Westamerica Bancorporation Filing: 10-Q, 3/31/09
On February 6, 2009, Westamerica Bank purchased substantially all the assets and assumed substantially all the liabilities of County Bank from the Federal Deposit Insurance Corporation (FDIC), as Receiver of County Bank. County Bank operated 39 commercial banking branches primarily within Californias central valley region between Sacramento and Fresno. The FDIC took County Bank under receivership upon County Banks closure by the California Department of Financial Institutions at the close of business February 6, 2009. Westamerica Bank submitted a bid for the acquisition of County Bank with the FDIC on February 3, 2009. The FDIC approved Westamerica Banks bid upon reviewing three competing bids and determining Westamerica Banks bid would be the least costly to the Deposit Insurance Fund. Westamerica Banks bid included the purchase of substantially all County Bank assets at a cost of assuming all County Bank deposits and certain other liabilities. No cash or other consideration was paid by Westamerica Bank. The County Bank acquisition was accounted for under the purchase method of accounting in accordance with FAS 141R. The statement of net assets acquired as of February 6, 2009 and the resulting bargain purchase gain are presented in the following table. The purchased assets and assumed liabilities were recorded at their respective acquisition date fair values, and identifiable intangible assets were recorded at fair value. Fair values are preliminary and subject to refinement for up to one year after the closing date of a merger as information relative to closing date fair values becomes available. A bargain purchase gain totaling $48.8 million resulted from the acquisition and is included as a component of noninterest income on the statement of income. The amount of the gain is equal to the amount by which the fair value of assets purchased exceeded the fair value of liabilities assumed. The acquisition resulted in a gain due to County Banks impaired capital condition at the time of the acquisition. The operations of County Bank provided revenue of $11.5 million and net income of $1.2 million for the period of February 6, 2009 to March 31, 2009, and is included in the consolidated financial statements. County Banks results of operations prior to the acquisition are not included in Westamericas statement of income.
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Westamerica Bancorporation Consolidated Statements of Income (Unaudited) Three months ended March 31, 2009 Net Interest Income After Provision For Loan Losses Noninterest Income: Service charges on deposit accounts Merchant credit card Debit card Trust fees Financial services commissions Other FAS 141R gain Gain on sale of Visa common stock Total Noninterest Income $52,552 $8,422 2,432 856 364 154 2,896 48,844 $63,968 2008 41,966 7,296 2,580 904 303 230 2,367 5,698 19,378 (In thousands, except per share data)
Acquisition and restructuring costs

An acquirer in a business combination typically incurs acquisition-related costs, such as advisory, legal, or valuation fees. Acquisition-related costs are considered separate transactions and should not be included as part of the consideration transferred, but rather expensed as incurred or when the service is received. Restructuring costs are recognized separately from a business combination and generally expensed as incurred. Liabilities related to restructurings or exit activities of the acquiree should only be recognized at the acquisition date if, from the acquirer's perspective, an obligation to incur the costs associated with these activities existed as of the acquisition date in accordance with U.S. GAAP.
Riverbed Technology, Inc. Filing: 10-Q, 3/31/09
Acquisition-related costs recognized in the three months ended March 31, 2009 include transaction costs, integration-related costs and changes in the fair value of the acquisitionrelated contingent consideration. During the three months ended March 31, 2009, transaction costs such as legal, accounting, valuation and other professional services were $0.6 million and integration-related costs were $0.8 million.
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The following table summarizes the acquisition-related costs, including the acquisition-related contingent consideration to be paid to the former employees of Mazu, recognized in the three months ended March 31, 2009 and 2008.
(in thousands) Sales and marketing Research and development General and administrative Acquisition-related costs Total other acquisition-related costs
Three months ended March 31, 2009 2008 $ 151 $ 133 83 1,520 $1,887 $
Bank of America Filing: 10-Q, 3/31/09
Merger and restructuring charges are recorded in the Consolidated Statement of Income and include incremental costs to integrate the operations of the Corporation, Merrill Lynch, Countrywide, LaSalle and U.S. Trust Corporation. These charges represent costs associated with these one-time activities and do not represent ongoing costs of the fully integrated combined organization. The following table presents severance and employee-related charges, systems integrations and related charges, and other merger-related charges.
(Dollars in millions) Severance and employee-related charges Systems integrations and related charges Other Total merger and restructuring charges Three months ended March 31, 2009(1) 2008(2) $491 $45 192 90 82 35 $765 $170
1. Included for the three months ended March 31, 2009 are merger-related charges of $513 million, $193 million and $59 million related to the Merrill Lynch, Countrywide and LaSalle mergers, respectively. 2. Included for the three months ended March 31, 2008 are merger-related charges of $129 million and $41 million related to the LaSalle and U.S Trust Corporation mergers.
During the three months ended March 31, 2009, the $513 million merger-related charges for the Merrill Lynch acquisition included $432 million for severance and other employee-related costs, $38 million of system integration costs and $43 million in other merger-related costs.
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Dow Chemical Company Filing: 10-Q, 6/30/09
During the second quarter of 2009, pretax charges totaling $52 million ($100 million during the first six months of 2009) were recorded for legal expenses and other transaction costs related to the April 1, 2009 acquisition of Rohm and Haas. These charges were expensed in accordance with SFAS 141R, recorded in Acquisition-related expenses and reflected in Corporate. An additional $34 million of acquisition-related retention expenses were incurred during the second quarter of 2009 and recorded in Cost of sales, Research and development expenses, and Selling, general and administrative expenses and reflected in Corporate.
M&T Bank Corporation Filing: 10-Q, 6/30/09
Merger-related expenses associated with the acquisition of Provident were $66 million and $69 million during the three- and six-month periods ended June 30, 2009, respectively. Such expenses were for professional services and other temporary help fees associated with the conversion of systems and/or integration of operations; costs related to branch and office consolidations; costs related to termination of existing Provident contractual arrangements for various services; initial marketing and promotion expenses designed to introduce M&T Bank to Providents customers; severance and incentive compensation costs; travel costs; and printing, supplies and other costs of commencing operations in new markets and offices. The Company expects to incur additional merger-related expenses, although such costs are expected to be substantially less than the amount incurred in the first six months of 2009. As of June 30, 2009, the remaining unpaid portion of merger-related expenses was $33 million. A summary of merger-related expenses included in the consolidated statement of income follows:
Three months ended June 30, 2009 (in thousands) Salaries and employee benefits Equipment and net occupancy Printing, postage and supplies Other costs of operations $ 8,768 581 2,514 54,594 $66,457 $ 8,779 585 2,815 56,704 $68,883 Six months ended June 30, 2009
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Scripps Networks Interactive Inc. Filing: 10-K, 12/31/09 On December 15, 2009 we acquired a 65 percent controlling interest in the Travel Channel. The transaction was structured as a leveraged joint venture between SNI and Cox TMI, Inc., a wholly owned subsidiary of Cox Communications, Inc. (Cox). Pursuant to the terms of the transaction, Cox contributed the Travel Channel, valued at $975 million, and SNI contributed $181 million in cash to a newly created partnership. The partnership also completed a private placement of $885 million aggregate principal amount of notes (Senior Notes) that were guaranteed by SNI. Cox has agreed to indemnify SNI for payments made in respect of SNIs guarantee (see Note 15Long-Term Debt for additional details). Proceeds from the issuance of the Senior Notes totaling $877.5 million were distributed to Cox. In connection with the transaction, SNI received a 65% controlling interest in Travel Channel and Cox retained a 35% non-controlling interest in the business. This transaction provides a unique opportunity to meaningfully expand SNIs portfolio into a lifestyle category thats highly desirable to media consumers, advertisers and programming distributors. As part of the transaction, the partnership incurred financing and transaction related costs of approximately $22.3 million. Approximately $10.2 million of these costs is included in the caption other costs and expenses and $12.1 million are included in the caption Travel Channel financing costs in our consolidated and combined statement of operations for the year ended December 31, 2009. Debt issuance costs of $6.1 million were incurred in connection with the issuance of the Senior Notes and were capitalized in the caption other assets in our consolidated balance sheet.
Pfizer Inc. Filing: 10-K, 12/31/09 We incurred the following costs in connection with our cost-reduction initiatives and the Wyeth acquisition:
Year Ended December 31, (Millions of dollars) Transaction costs(a) Integration costs and other(b) Restructuring charges Restructuring charges and certain acquisition-related costs Additional depreciationasset restructuring Implementation costs Total
(a)
2009 $768 569 3,000 4,337 241 250 $4,828 $
2008 49 2,626 2,675 786 819 $4,280 $
2007 11 2,523 2,534 788 601 $3,923
Transaction costs represent external costs directly related to effecting the acquisition of Wyeth and primarily include expenditures for banking, legal, accounting and other similar services. Substantially all of the costs incurred are fees related to a $22.5 billion bridge term
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loan credit agreement entered into with certain financial institutions on March 12, 2009 to partially fund our acquisition of Wyeth. The bridge term loan credit agreement was terminated in June 2009 as a result of our issuance of approximately $24.0 billion of senior unsecured notes in the first half of 2009. All bridge term loan commitment fees have been expensed, and we no longer are subject to the covenants under that agreement (see Note 9D: Financial Instruments: Long-Term Debt).
(b)
Integration costs represent external, incremental costs directly related to integrating acquired businesses and primarily include expenditures for consulting and systems integration.
Netlogic Microsystems Inc Filing: 10-K, 12/31/09 Prior to the close of the acquisition, RMI initiated a restructuring plan where the employment of some RMI employees were terminated upon the close of the merger. The Company has determined that the restructuring plan was a separate plan from the business combination because the plan to terminate the employment of certain employees was in contemplation of the merger. Therefore, the full severance cost of $0.9 million was recognized by the Company as an expense on the acquisition date. The severance costs were comprised of $0.4 million, which was paid by RMI to the terminated employees prior to the close, and $0.5 million which was paid after the merger by the Company.
Disclosure of purchase price allocation Preliminary

If the initial accounting for a business combination is incomplete for particular assets, liabilities, or equity interests, and the amounts recognized in the financial statements for the business combination are provisional amounts, the company should disclose (1) the reasons why the initial accounting is incomplete, (2) the assets, liabilities, or equity interests for which the initial accounting is incomplete, and (3) the nature and amount of any measurement period adjustments recognized during the reporting period.
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NRG Energy, Inc. Filing: 10-Q, 6/30/2009
The following table summarizes the provisional values assigned to the net assets acquired, including cash acquired of $6 million, as of the acquisition date:
(in millions) Assets Current and non-current assets Property, plant and equipment Intangible assets subject to amortization: In-market customer contracts Customer relationships Trade names In-market energy supply contracts Other Derivative assets Deferred tax asset, net Goodwill Total assets acquired Liabilities Current and non-current liabilities Derivative liabilities Out-of-market energy supply and customer Total liabilities assumed Net assets acquired
$ 635 72 733 481 178 37 6 1,942 11 4,095 550 2,996 148 3,694 $ 401
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Pulte Homes Inc Filing: 10-Q, 9/30/09 The following table summarizes the calculation of the fair value of the total consideration transferred and the provisional amounts recognized as of the acquisition date (000s omitted, except per share data):
Calculation of consideration transferred Centex common shares exchanged (including restricted stock) Centex restricted stock unit exchanged Exchange ratio Pulte common shares and restricted stock units issued Closing price per share of Pulte common stock, as of August 18, 2009 Consideration attributable to common stock Consideration attributable to Pulte equity awards exchanged for Centex equity awards (a) Cash paid for fractional shares Total consideration transferred Assets acquired and liabilities assumed Cash and equivalents Restricted cash Inventory Residential mortgage loans available for sale Intangible assets Goodwill (b) Other assets Total assets acquired Accounts payable Accrued and other liabilities Income tax liabilities Senior notes Total liabilities assumed Total net assets acquired
124,484 373 124,857 0.975 121,736 $12.33 $1,501,005 4,036 50 $1,505,091 $1,748,792 24,037 2,088,094 129,955 100,000 1,394,965 459,772 5,945,615 (113,070) (1,094,466) (147,672) (3,085,316) (4,440,524) $1,505,091
a) Reflects the portion of the fair value of the awards attributable to pre-merger employee service. The remaining fair value of the awards will be recognized in Pultes operating results over the applicable periods. b) Goodwill resulting from the Centex merger is not deductible for federal income tax purposes, though Centex has approximately $40 million of goodwill deductible for tax purposes related to prior acquisitions. The assignment of goodwill to reporting units has not yet been completed. The Company has completed the majority of its business combination accounting as of September 30, 2009 and expects to substantially complete the remainder in the fourth quarter
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of 2009. As of September 30, 2009, the Company had not received final valuations from certain independent valuation specialists, including the valuation of acquired property and equipment and assumed casualty insurance liabilities. Additionally, the Company had not completed its final review of the valuation of acquired inventory, investments in unconsolidated entities, income taxes and deferred income tax assets and liabilities, and certain other assets and liabilities. Final determinations of the values of assets acquired and liabilities assumed may result in adjustments to the values presented above and a corresponding adjustment to goodwill.
Walt Disney Co. Filing: 10-Q, 1/2/10 The Company is required to allocate the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values. The excess of the purchase price over those fair values is recorded as goodwill. The Company is in the process of finalizing the valuation of the assets acquired and liabilities assumed and therefore, the fair values set forth below are subject to adjustment once the valuations are completed. The following table summarizes our initial allocation of the purchase price:
Estimated Fair Value Cash and cash equivalents Accounts receivable and other assets Film costs Intangible assets Goodwill Total assets acquired Accounts payable and other liabilities Deferred income taxes Total liabilities assumed Non controlling interests $105 141 269 3,410 2,115 5,770 (325) (1,121) (1,466) (83) $4,241
Endo Pharmaceuticals Holdings Filing: 10-Q, 3/31/09
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the Acquisition Date (in thousands):
February 23, 2009 Cash and cash equivalents Accounts receivable $117,675 13,725
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Inventories Prepaid and other current assets Property, plant and Other intangible assets Deferred tax assets Other non-current assets Total identifiable Accounts payable Accrued expenses Convertible notes Non-recourse notes Deferred tax liabilities Other non-current liabilities Total liabilities Net identifiable assets Goodwill Net assets acquired
15,808 8,327 8,266 586,900 159,769 764 $911,234 $(5,081) (27,357) (71,682) (115,235) (234,599) (18,199) (472,153) $439,081 $102,490 $541,571
The above estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed. The Company believes that information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the Company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value reflected are subject to change. Such changes could be significant. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable but no later than one-year from the acquisition date.
Pfizer Inc. Filing: 10-K, 12/31/09
The recorded amounts are provisional and subject to change. The following items still are subject to change: Amounts for intangibles, inventory and PP&E, pending finalization of valuation efforts for acquired intangible assets as well as the completion of certain physical inventory counts and the confirmation of the physical existence and condition of certain property, plant and equipment assets. Amounts for legal contingencies, pending the finalization of our examination and valuation of the portfolio of filed cases. Amounts for income tax assets, receivables and liabilities pending the filing of Wyeth preacquisition tax returns and the receipt of information from taxing authorities which may change certain estimates and assumptions used. The allocation of goodwill among reporting units.
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A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. Our judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact our results of operations.
Ceradyne, Inc. Filing: 10-Q, 6/30/09 The purchase price has been allocated as follows (in thousands):
Accounts receivable, net Inventories Other current assets Property, plant and equipment Intangible assets Goodwill Accounts payable and other Net assets acquired $ 466 1,602 221 1,360 9,314 2,065 (274)
$14,754
The purchase price allocation is preliminary, pending completion of the valuation of acquired intangible assets, inventory and property, plant and equipment. The final valuation may change the allocation of the purchase price, which could affect the fair value assigned to the assets. Of the $9.3 million of acquired intangible assets, $8.3 million was assigned to developed technology rights that have a useful life of approximately 10 years and $1.0 million was assigned to customer relationships with a useful life of approximately 10 years. The amounts assigned to intangible assets were based on managements preliminary estimate of the fair value. Developed technology rights recorded in connection with the acquisition of Diaphorms assets were established as intangible assets under SFAS 141R as the underlying technologies are legally protected by patents covering its proprietary ballistic helmets. The developed technology rights are both transferable and separable from the acquired assets.
Disclosure of purchase price allocation - Final

Acquirers should disclose the amounts recognized at the acquisition-date for each major class of assets acquired and liabilities assumed.
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Ball Corporation Filing: 10-K, 12/31/09 Acquisitions Anheuser-Busch InBev n.a./s.a. On October 1, 2009, the company acquired three of Anheuser-Busch InBev n.v./s.a.s (AB InBev) beverage can manufacturing plants and one of its beverage can end manufacturing plants, all of which are located in the U.S., for $574.7 million in cash. The additional plants will enhance Balls ability to better serve its customers. The facilities acquired employ approximately 635 people. The plants operations were included in Balls results beginning October 1, 2009, which amounted to approximately $160 million of net sales and $12 million of operating earnings from that date through December 31, 2009. In addition, a pretax charge of $11.1 million ($6.8 million after tax) was recorded during the year for transaction costs associated with the acquisition, which, in accordance with recent changes to the guidance related to accounting for business combinations, are required to be expensed as incurred. The transaction costs are included in the business consolidation and other activities line of the consolidated statement of earnings. Managements fair market valuation of acquired assets and liabilities has been completed and is summarized in the table below:
Inventories Property, plant and equipment Goodwill Other intangible assets Current liabilities Net assets acquired $ 63.3 191.5 279.3 42.5 (1.9) $574.7
Hickory Tech Corp. Filing: 10-Q, 9/30/09 On August 1, 2009, we purchased all of the capital stock of CP Telecom for an adjusted purchase price of $6,625,000 to grow our small to medium sized business customer base. This acquisition was funded with cash on hand. CP Telecom was formerly a privately held facilities-based telecom provider serving Minneapolis, St. Paul and northern Minnesota. The table below sets forth the final CP Telecom purchase price allocation. The fair value of the property and equipment were determined based on Level 1 inputs. The valuation of intangible assets was evaluated using Level 2 inputs. The valuation of net working capital and other assets and liabilities were evaluated using Level 3 inputs.
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(Dollars in thousands) Property and Equipment Identifiable intangible assets: Customer relationships and contracts Supplier relationship Goodwill Net working capital Other assets and liabilities Allocation of purchase consideration
$3,998 1,070 2,100 2,069 (549) (2,063) $6,625
In-Process Research and Development (IPR&D) costs

In-process research and development acquired in a business combination is measured at fair value using market participant assumptions and capitalized as an indefinite-lived intangible asset. In subsequent periods, the IPR&D is subject to periodic impairment testing.
ev3 Inc. Filing: 10-Q, 7/5/09
The acquired in-process research and development asset relates to the Pipeline Embolization Device, which is a new class of embolization device that is designed to divert blood flow away from an aneurysm in order to provide a complete and durable aneurysm embolization while maintaining patency of the parent vessel. This asset is recognized and measured at the estimated fair value at the date of acquisition using an appraisal. As of the date of the acquisition, the in-process project had not yet reached technological feasibility in the United States and had no alternative use. The primary basis for determining technological feasibility of the project in the United States is obtaining FDA regulatory approval to market the device. The income approach was used to determine the fair value of the acquired in-process research and development asset. This approach establishes fair value by estimating the after-tax cash flows attributable to the in-process project over its useful life and then discounting these after-tax cash flows back to the present value. The costs to complete each project were based on estimated direct project expenses as well as the remaining labor hours and related overhead costs. In arriving at the value of the acquired in-process research and development project, we considered the projects stage of completion, the complexity of the work to be completed, the costs already incurred, and the remaining costs to complete the project, the contribution of core technologies, the expected
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introduction date and the estimated useful life of the technology. We expect to incur approximately $8.0 million to obtain the regulatory approval required to commercialize the Pipeline device in the United States. The discount rate used to arrive at the present value of acquired in-process research and development as of the date of the acquisition was approximately 27% and was based on the time value of money and medical technology investment risk factors.
Integrated Device Technology, Inc. Filing: 10-Q, 6/28/09 A summary of the allocation of amortizable intangible assets is as follows:
Fair Value (in millions) Amortizable intangible assets: Existing Technologies Customer Relationships In-process research and development Total $4.6 1.1 0.3 $6.0
Useful lives are primarily based on the underlying assumptions used in the discounted cash flow (DCF) models. Projects that qualify as IPR&D represent those at the development stage and require further research and development to determine technical feasibility and commercial viability. Technological feasibility is established when an enterprise has completed all planning, designing, coding, and testing activities that are necessary to establish that a product can be produced to meet its design specifications, including functions, features, and technical performance requirements. The value of IPR&D was determined by considering the importance of each project to the Companys overall development plan, estimating costs to develop the purchased IPR&D into commercially viable products, estimating the resulting net cash flows from the projects when completed and discounting the net cash flows to their present value based on the percentage of completion of the IPR&D projects. The Company utilized the DCF method to value the IPR&D, using a discount factor of 45% and 46% and will amortize this intangible asset once the projects are complete. Currently, the Company expects to complete these projects within the next twelve months.
Bristol Myers Squibb Co. Filing: 10-Q, 9/30/09
A project is considered to be IPRD when the underlying project has not received regulatory approval and it has no alternative future use. IPRD projects are initially considered indefinite
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lived assets subject to annual impairment reviews or more often upon the occurrence of certain events. Upon commercialization, the assets are amortized over the expected useful lives. The fair value of the IPRD acquired in the business combination was determined based on the present value of each research projects projected cash flows utilizing an income approach. Future cash flows are predominately based on the net income forecast of each project, consistent with historical pricing, margins and expense levels of similar products. Revenues are estimated based on relevant market size and growth factors, expected industry trends, individual project life cycles and the life of each research projects underlying patent. In determining the fair value of each research project, expected revenues are first adjusted for technical risk of completion. The resulting cash flows are then discounted at a rate approximating the Companys weighted-average cost of capital.
Ikanos Communications, Inc. Filing: 10-Q, 9/27/09
As discussed further below, the identified intangible assets acquired were assigned fair values in accordance with the FASBs authoritative guidance. The Company believes that these identified intangible assets have no residual value. The identifiable intangible assets acquired are as follows (in thousands):
Acquired Intangible Assets: Existing technologies In-process research and development Customer relationships Order backlog
Estimated Fair Expected Useful Value Life $13,390 4,935 8,216 1,761 $28,302 3 years * 4 years 0.5 year
* Technical feasibility of the IPR&D has not been reached and, therefore, a useful life has not been determined
Acquired IPR&D: Acquired IPR&D relates to projects that as of the acquisition date have not been completed. IPR&D assets are initially recognized at fair value and have indefinite useful lives until the successful completion or abandonment of the associated research and development efforts. Accordingly, during the development period after the acquisition date, these assets will not be amortized into results of operations; instead these assets will be subject to periodic impairment testing. Upon successful completion of the development process for an IPR&D project, determination as to the useful life of the asset will be made; at that point in time, the asset would then be considered as having a finite-life and Ikanos would
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begin to amortize the asset into earnings. The Company valued the IPR&D using the income approach and a DCF model with a discount rate of 22%. IPR&D comprised mainly of two projects in process as of the acquisition date. The two projects were next generation VDSL solutions, one for the access line of business and the other for the gateway line.
Warner Chilcott Plc Filing: 10-K, 12/31/09
Intangible Assets A substantial portion of the assets acquired consisted of intangible assets related to PGPs marketed products and PGPs IPR&D projects. Management determined that the estimated acquisition-date fair values of the intangible assets related to the marketed products and IPR&D projects were $2,587,208 and $247,588, respectively. The two most significant intangible assets related to the PGPs marketed products was $530,351 related to ACTONEL and $1,859,257 related to ASACOL. In accordance with ASC 350 the Company has determined that these intangible assets have finite useful lives and will be amortized over their respective useful lives. The most significant intangible asset related to the IPR&D projects was $241,447 for the follow-on drug candidate to an existing product in post-menopausal osteoporosis. In accordance with the guidance in ASC 350, intangible assets related to IPR&D projects are considered to be indefinite-lived until the completion or abandonment of the associated R&D efforts. During the period the assets are considered indefinite-lived they will not be amortized but will be tested for impairment on an annual basis and between annual tests if the Company becomes aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts. If and when development is complete, which generally occurs if and when regulatory approval to market a product is obtained, the associated assets would be deemed finite-lived and would then be amortized based on their respective estimated useful lives at that point in time. The estimated fair value of the intangible assets related to the marketed products and IPR&D projects was determined using the income approach, which discounts expected future cash flows to present value. The Company estimated the fair value of these intangible assets using a present value discount rate ranging from 12.0% to 13.5%, and ranging from 16.5% to 19.0%, for the marketed products and IPR&D, respectively, which is based on the estimated weighted-average cost of capital for companies with profiles substantially similar to that of PGP. This is comparable to the estimated internal rate of return for PGPs operations and represents the rate that market participants would use to value the intangible assets. Some of the other significant assumptions inherent in the development of the identifiable intangible asset valuations, from the perspective of a market participant, include the estimated net cash flows for each year for each project or product (including net revenues, cost of sales, research and development costs, selling and marketing costs and contributory asset
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charges), the assessment of each assets life cycle, competitive trends impacting the asset and each cash flow stream and other factors. For the intangible assets related to the IPR&D projects, the Company compensated for the differing phases of development of each project by probability-adjusting its estimation of the expected future cash flows associated with each project. The Company then determined the present value of the expected future cash flows using the discount rate ranging from 16.5 % to 19.0%. The projected cash flows from the IPR&D projects were based on key assumptions such as estimates of revenues and operating profits related to the projects considering their stages of development; the time and resources needed to complete the development and approval of the related product candidates; the life of the potential commercialized products and associated risks, including the inherent difficulties and uncertainties in developing a drug compound such as obtaining marketing approval from the FDA and other regulatory agencies; and risks related to the viability of and potential alternative treatments in any future target markets. The intangible asset related to PGPs marketed products are amortized over their estimated useful life using an amortization rate derived from the forecasted future product sales for these products. The weighted-average amortization period for these intangible assets is approximately 4 years.
Acquired contingencies - Fair value

Contingencies are recognized at fair value if fair value can be determined during the measurement period.
Nash Finch Co. Filing: 10-Q, 3/28/09 A contingency of $0.3 million is included in the other long-term liabilities account in the table above related to a payment the Company would be required to make in the event a purchase option is not exercised associated with the sublease of the Pensacola, FL facility prior to October 10, 2010. The Company has determined the range of the potential loss on the contingency is zero to $1.0 million and the acquisition date fair value of the contingency is $0.3 million based upon a probability-weighted discounted cash flow valuation technique. As of March 28, 2009, there were no changes in the recognized amounts or range of outcomes associated with this contingency.
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Iridium Communications Inc. Filing: 10-Q, 9/30/09 Pre-Acquisition Contingency Iridium Holdings LLC had certain contingencies under agreements in effect as of the date of the Acquisition that the Company believes are required to be recorded at their fair value at the time of the Acquisition. Some of the contingencies relate to potential payments relating to the occurrence of a distribution event, change of control or other specified transactions, and other matters. The Company believes that it is unclear whether the foregoing provisions were intended to apply to a transaction such as the Acquisition. Although the outcome of such payments is uncertain, management currently believes that payment on certain of these provisions is not probable. The estimated fair value of the pre-Acquisition contractual contingencies at the date of the Acquisition was $11.7 million, which have been reflected as a liability in the unaudited Condensed Consolidated Balance Sheet as of September 30, 2009.
Acquired contingencies - Legacy approach

If the fair value of acquired contingencies cannot be determined, companies should account for the acquired contingencies when the contingencies are determined to be probable and reasonably estimable (the "legacy" approach).
Dow Chemical Company Filing: 10-Q, 6/30/09 Liabilities assumed from Rohm and Haas on April 1, 2009 included certain contingent environmental liabilities valued at $159 million and a liability of $185 million related to Rohm and Haas Pension Plan matters (see Note J), which were valued in accordance with SFAS No. 5, Accounting for Contingencies.
NOTE J COMMITMENTS AND CONTINGENT LIABILITIES Rohm and Haas Pension Plan Matters At June 30, 2009, the Company had a pension liability associated with this matter of $185 million, which was recognized as part of the acquisition of Rohm and Haas on April 1, 2009. The liability, which was determined in accordance with SFAS No. 5, Accounting for Contingencies, recognized the estimated impact of the above described judicial decisions on the long-term Rohm and Haas Plan obligations owed to the applicable Rohm and Haas retirees and active employees.
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Environmental Matters Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on current law and existing technologies. At June 30, 2009, the Company had accrued obligations of $537 million for environmental remediation and restoration costs, including $88 million for the remediation of Superfund sites. The $537 million balance includes $159 million of environmental liabilities assumed from Rohm and Haas on April 1, 2009 (see Note D). This is managements best estimate of the costs for remediation and restoration with respect to environmental matters for which the Company has accrued liabilities, although the ultimate cost with respect to these particular matters could range up to approximately twice that amount. Inherent uncertainties exist in these estimates primarily due to unknown conditions, changing governmental regulations and legal standards regarding liability, and emerging remediation technologies for handling site remediation and restoration. At December 31, 2008, the Company had accrued obligations of $312 million for environmental remediation and restoration costs, including $22 million for the remediation of Superfund sites
NRG Energy, Inc. Filing: 10-Q, 6/30/09 The Company, through its acquisition of Reliant Energy, is subject to material contingencies relating to Excess Mitigation Credits (see Note 14, Commitments and Contingencies ) and Retail Replacement Reserve (see Note 15, Regulatory Matters ). Due to the number of variables and assumptions involved in assessing the possible outcome of these matters, sufficient information does not exist to reasonably estimate the fair value of these contingent liabilities. These material contingencies have been evaluated in accordance with SFAS No. 5, Accounting for Contingencies , or SFAS 5, and related guidance, and no provisional amounts for these matters have been recorded at the acquisition date.
Bank of America Filing: 10-Q, 3/31/09 The fair value of net assets acquired includes certain contingent liabilities that were recorded as of the acquisition date. Merrill Lynch has been named as a defendant in various pending legal actions and proceedings arising in connection with its activities as a global diversified financial services institution. Some of these legal actions and proceedings include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. Merrill Lynch is also involved in investigations and/or proceedings by governmental and self-regulatory agencies. Due to the number of variables and assumptions involved in assessing the possible outcome of these legal actions, sufficient information does not exist to reasonably estimate the fair value of these contingent liabilities. As such, these contingences have been measured in accordance with SFAS No. 5, Accounting for Contingencies.
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Chesapeake Utilities Corp. Filing: 10-K, 12/31/09 The assets acquired and liabilities assumed in the merger were recorded at their respective fair values at the completion of the merger. For certain assets acquired and liabilities assumed, such as pension and post-retirement benefit obligations, income taxes and contingencies without readily determinable fair value, for which GAAP provides specific exception to the fair value recognition and measurement, we applied other specified GAAP or accounting treatment as appropriate. Contingencies Note As of December 31, 2009, we had recorded approximately $12.3 million in environmental liabilities related to FPUs MGP sites in Florida, primarily from the West Palm Beach site, which represents our estimate of the future costs associated with those sites. FPU is approved to recover its environmental costs up to $14.0 million from insurance and customers through rates. Approximately $5.7 million of FPUs expected environmental costs has been recovered from insurance and customers through rates as of December 31, 2009. We also had recorded approximately $6.6 million in regulatory assets for future recovery of environmental costs from FPUs customers.
Acquired contingencies - Fair value and legacy approach

Contingencies are recognized at fair value if fair value can be determined during the measurement period. If fair value cannot be determined, companies should account for the acquired contingencies when the contingencies are determined to be probable and reasonably estimable (the "legacy" approach).
Pfizer Inc Filing: 10-K, 12/31/09 In the ordinary course of business, Wyeth incurs liabilities for environmental, legal and tax matters, as well as guarantees and indemnifications. These matters can include contingencies. Except as specifically excluded by the relevant accounting standard, contingencies are required to be measured at fair value as of the acquisition date, if the acquisition-date fair value of the asset or liability arising from a contingency can be determined. If the acquisition-date fair value of the asset or liability cannot be determined, the asset or liability would be recognized at the acquisition date if both of the following criteria were met: (i) it is probable that an asset existed or that a liability had been incurred at the acquisition date, and (ii) the amount of the asset or liability can be reasonably estimated.
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Legal MattersWyeth is involved in various legal proceedings, including product liability, patent, commercial, environmental, antitrust matters and government investigations, of a nature considered normal to its business (see Note 19. Legal Proceedings and Contingencies ). Due to the uncertainty of the variables and assumptions involved in assessing the possible outcomes of events related to these items, an estimate of fair value is not determinable. As such, these contingencies have been measured under the same probable and estimable standard previously used by Wyeth. Liabilities for legal contingencies approximate $650 million as of the acquisition date, which includes the recording of additional adjustments of approximately $150 million for legal matters that we intend to resolve in a manner different from what Wyeth had planned or intended. See below for items pending finalization. Environmental MattersIn the ordinary course of business, Wyeth incurs liabilities for environmental matters such as remediation work, asset retirement obligations and environmental guarantees and indemnifications. Virtually all liabilities for environmental matters, including contingencies, have been measured at fair value and approximate $550 million as of the acquisition date.
Hubbell Inc. Filing: 10-K, 12/31/09 The Company assumed Burndys pre-exisiting contingent liabilities as part of the acquisition. These contingent liabilities consisted of contingent consideration related to an acquisition Burndy completed in 2008 as well as environmental liabilities. The undiscounted fair value related to the contingent consideration liability was $5.6 million since it is highly probable that the required earning targets will be achieved. Additionally, the Burndy opening balance sheet includes a $6.2 million contingent liability related to environmental matters. The estimated fair value portion of this liability is $1.6 million, while the remaining $4.6 million liability was determined using the guidance prescribed under ASC 450, which requires the loss contingency to be probable and reasonably estimable.
Noncontrolling interests
A noncontrolling interest is the portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. In a business combination, the noncontrolling interest is recognized at fair value. The noncontrolling interest is generally presented in the equity section of the statement of financial position, separate from the controlling interest's equity.
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Brinks Company Filing: 10-Q, 3/31/09 We adopted SFAS 160, Noncontrolling Interests in Consolidated Financial Statements an Amendment of ARB No. 51, effective January 1, 2009. SFAS 160 establishes new accounting and reporting standards for the noncontrolling interest, previously known as minority interest, in a subsidiary and for the deconsolidation of a subsidiary. This statement clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as a separate component within equity in the consolidated financial statements. Additionally, consolidated net income is to be reported with separate disclosure of the amounts attributable to the parent and to the noncontrolling interests. We retroactively restated our consolidated balance sheets, consolidated statements of income, consolidated statement of shareholders equity, consolidated statements of cash flows and consolidated statements of comprehensive income as required by SFAS 160. The adoption of SFAS 160 resulted in a $91.3 million reclassification of noncontrolling interests from other long-term liabilities to shareholders equity on the December 31, 2008, consolidated balance sheet. Net income for the quarter ended March 31, 2008, was increased by $14.9 million as a result of the adoption. Prior to the adoption of SFAS 160 noncontrolling interests were a deduction to income in arriving at net income. Under SFAS 160 noncontrolling interests are a deduction from net income used to arrive at net income attributable to Brinks.
The Brinks Company and subsidiaries Consolidated Balance Sheets (in millions) Equity The Brinks company (Brinks) shareholder equity: Common stock Capital excess of par value Retained earnings Accumulated other comprehensive loss Total Brinks shareholders equity Non controlling interests Total equity Total liabilities and shareholders equity
March 31, 2009
December 31, 2008
45.5 486.5 324.9 (641.4) 215.5 100.0 315.5
45.7 486.3 310.0 (628.0) 214.0 91.3 305.3
$1,827.0
$1,815.8
The Brinks Company and subsidiaries Consolidated Statements of Income (Unaudited) (in millions, except per share amounts) Net income Less net income attributable to non controlling interests Net income attributable to Brinks Amounts attributable to Brinks Income from continuing operations
Three Months Ended March 31 2009 $33.3 (10.3) 23.0 22.2 2008 $65.0 (14.9) 50.1 32.9
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Income from discontinued operations Net income attributable to Brinks
0.8 $23.0
17.2 $50.1
United Technologies Corporation Filing: 10-Q, 3/31/09 Equity Footnote Effective January 1, 2009, we adopted the provisions of SFAS 160. Certain provisions of this statement are required to be adopted retrospectively for all periods presented. Such provisions include a requirement that the carrying value of noncontrolling interests (previously referred to as minority interests) be removed from the mezzanine section of the balance sheet and reclassified as equity; and consolidated net income to be recast to include net income attributable to the noncontrolling interest. As a result of this adoption, we reclassified noncontrolling interests in the amounts of $1,009 million and $984 million from the mezzanine section to equity in the December 31, 2008 and March 31, 2008 balance sheets, respectively. Supplemental Schedule: Consistent with the adoption of SFAS 141(R) and SFAS 160, changes in noncontrolling interests that do not result in a change of control and where there is a difference between fair value and carrying value are accounted for as equity transactions. A summary of these changes in ownership interest in subsidiaries and the effect on shareowners equity for the quarter ended March 31, 2009 is provided below:
(in millions of dollars) Net income attributable to common share owners Transfers to noncontrolling interests: Decrease in common stock for purchase of subsidiary shares Changes from net income attributable to common share owners and transfers to noncontrolling interests
$722
(27)
$695
United Technologies Corporation and Subsidiaries Condensed Consolidated Statement of Operations (Unaudited) (in millions of dollars, except per share amounts) Net income Less: Noncontrolling interest in subsidiaries earnings Net income attributable to common shareowners
Quarter Ended March 31 2009 $799 77 $722 2008 $1,079 79 $1,000
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United Technologies Corporation and Subsidiaries Condensed Consolidated Balance Sheet (Unaudited) (in millions of dollars) Shareowners Equity: Common Stock Treasury Stock Retained earnings Unearned ESOP shares Accumulated other non-shareowners changes in equity Total Shareowners Equity Noncontrolling interest Total Equity
March 31, 2009
December 31, 2008
$11,222 (14,514) 25,519 (193) (6,221) 15,813 973 $16,786
$11,179 (14,316) 25,159 (200) (5,905) 15,917 1,009 $16,926
Noncontrolling interests - Step acquisitions

In a partial or step acquisition in which control is obtained, 100 percent of the goodwill and identifiable net assets are recognised at fair value. The noncontrolling interest is recognized at fair value. In a step acquisition in which control is obtained, any gain or loss on the previously held equity interest is recognized in the income statement.
Alcoa Inc Filing: 10-Q, 3/31/09 On March 31, 2009, Alcoa completed the non-cash exchange of its 45.45% stake in the Sapa AB joint venture for Orkla ASAs (Orkla) 50% stake in the Elkem Aluminium ANS joint venture (Elkem). Alcoa now owns 100% of Elkem and Orkla now owns 100% of Sapa AB. Prior to the completion of the exchange transaction, Alcoa accounted for its investments in Sapa AB and Elkem on the equity method and the carrying values were $475 and $435, respectively, at December 31, 2008. Elkem includes aluminum smelters in Lista and Mosjen, Norway with a combined output of 282 kmt (thousand metric tons) and the anode plant in Mosjen in which Alcoa already holds an 82% stake. These three facilities employ approximately 700 workers combined. The individual assets and liabilities of Elkem were included in the Primary Metals segment at March 31, 2009 (the final amounts to be recorded will be based on valuation and other studies that have not yet been completed) and Elkems results of operations will be reflected in this segment starting on April 1, 2009. The exchange transaction resulted in the recognition of a $188 gain ($133 after-tax), comprised of a $156 adjustment to the carrying value of Alcoas existing 50% interest in
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Elkem in accordance with the fair value measurement provisions of SFAS 141(R) and a $32 adjustment for the finalization of the estimated fair value of the Sapa AB joint venture. The $188 gain was reflected in Other expenses, net on the accompanying Consolidated Statement of Operations, of which $156 ($112 after-tax) was reflected in the Primary Metals segment and $32 ($21 after-tax) was reflected in Corporate. The portion of the gain reflected in Corporate was because the original write-down of the 45.45% Sapa AB investment to its estimated fair value in December 2008 was reflected in Corporate. At the time the exchange transaction was completed, Elkem had $18 in cash, which was reflected in the accompanying Consolidated Statement of Cash Flows on the acquisitions line.
Cephalon, Inc. Filing: 10-Q, 6/30/09 Our initial investment in Arana was recorded as an available for sale investment in accordance with FAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, (FAS 115). On May 27, 2009, we acquired additional shares for $89.8 million which increased our Arana holdings to 50.4% of the outstanding shares. As a result, effective on that date we have consolidated Arana in accordance with FAS No. 141(R), Business Combinations (FAS 141(R)). The 90% premium payment is considered contingent consideration and was initially recognized at its estimated fair value of $1.0 million for the shares purchased on May 27, 2009. Upon satisfying the 90% criteria on June 12, 2009, the excess of the actual payments over the recorded liability for the 90% premium of $2.8 million was recorded as a charge to other income (expense), net. The fair value of the noncontrolling interest in Arana as of May 27, 2009 was $104.7 million based on the closing stock price for Aranas shares on that date. The fair value of our Arana holdings of approximately 19.8% immediately prior to the acquisition on May 27, 2009 was $48.0 million. This investment was remeasured to fair value on the acquisition date with the increase of $6.6 million over the original cost recognized in other income (expense), net. This gain is the result of an increase in the value of the Australian dollar relative to the U.S. dollar, net of changes in the Arana share price. For the quarter ended June 30, 2009, we have included $2.0 million of revenues and $4.4 million of net losses for Arana in our consolidated results.
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Yum! Brands, Inc. Filing: 10-Q, 6/13/09 Items Affecting Comparability of Net Income and Cash Flows Footnote Consolidation of a Former Unconsolidated Affiliate in China On May 4, 2009 we acquired an additional 7% ownership in the entity that operates more than 200 KFCs in Shanghai, China for $12 million, increasing our ownership to 58%. The acquisition was driven by our desire to increase our management control over the entity and further integrate the business with the remainder of our KFC operations in China. This entity has historically been accounted for as an unconsolidated affiliate under the equity method of accounting, due to the effective participation of our partners in the significant decisions of the entity that were made in the ordinary course of business as addressed in EITF Issue No. 9616, "Investor's Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights". Concurrent with the acquisition we received additional rights in the governance of the entity, and thus we began consolidating the entity upon acquisition. As required by Statement of Financial Accounting Standards (SFAS) No. 141(R), Business Combinations (SFAS 141R), we remeasured our previously held 51% ownership in the entity, which had a recorded value of $17 million at the date of acquisition, at fair value and recognized a gain of $68 million accordingly. This gain, which resulted in no related income tax expense, was recorded in Other (income) expense on our Condensed Consolidated Statements of Income during the quarter ended June 13, 2009 and was not allocated to any segment for performance reporting purposes.
Bristol-Myers Squibb Co. Filing: 10-Q, 9/30/09

Dollars in Million Purchase price: Cash Fair value of the Companys equity in Medarex held prior to acquisition(1) Total purchase price Identifiable net assets: Cash Marketable Securities Other current and long-term assets(2) In-process research and development(3) Intangible assets - Technology(4) Intangible assets - Licenses(5) Short-term borrowings (Note 21) Other current and long-term liabilities Deferred income taxes, net Total identifiable net assets Goodwill $ 2,285 46 2,331 53 269 133 1,252 120 320 (91) (92) (281) 1,683 $ 648
(1) Income of approximately $21 million was recognized from the re-measurement to fair value of our previous equity interest in Medarex of approximately 2.0% held before the acquisition and is included in other income for the three and nine months ended September 30, 2009. (2) Includes a 5.1% ownership interest in Genmab ($64 million) and an 18.7% ownership in Celldex Therapeutics, Inc. ($17 million), both of which are publicly traded securities and are accounted for by the Company as available for sale investments. (3) Includes approximately $1.0 billion related to ipilimumab. (4) Amortized over 10 years. (5) Amortized over 13 years.
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Open Text Corporation Filing: 10-Q, 9/30/09 Total consideration for this acquisition was comprised of:
Equity consideration paid Cash consideration paid Fair value of total consideration transferred Vignette shares already owned by Open Text through open market purchases (at fair value) Acquisition related costs (included in Special charges in the Condensed Consolidated Statements of Income) for the three months ended September 30, 2009 $ 125,233 182,909 308,132 13,283 $ 321,415
$1,392
We recognized a gain of $4.4 million as a result of re-measuring to fair value our investment in Vignette held before the date of acquisition. The gain is included in Other income in our consolidated financial statements.
Merck & Co Inc. Filing: 10-K, 12/31/09 Merck/Schering-Plough Partnership Upon consummation of the Merger, the Company obtained a controlling interest in the Merck/Schering-Plough partnership (the MSP Partnership) and it is now owned 100% by the Company. Previously the Company had a noncontrolling interest. As a result of obtaining a controlling interest, the Company was required to remeasure Mercks previously held equity interest in the MSP Partnership at its Merger-date fair value and recognized the resulting gain of $7.5 billion in earnings in Other (income) expense, net. In conjunction with this remeasurement, the Company recorded intangible assets of approximately $7.3 billion, which included IPR&D and approximately $0.3 billion of step-up in inventories.
Sprint Nextel Corp. Filing: 10-K, 12/31/09 During the fourth quarter 2009, we completed the acquisitions of Virgin Mobile USA, Inc. and iPCS, Inc. (together, Acquisitions) within our Wireless segment. The estimated fair values of the assets acquired and liabilities assumed were preliminarily determined using the income, cost or market approaches. The fair value measurements were primarily based on significant inputs that are not observable in the market, other than long-term debt assumed in the
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acquisition of iPCS. Discounted cash flows, an income approach, were primarily used to value the identifiable intangible assets, consisting primarily of customer relationships, reacquired rights and the Virgin Mobile trademark, as well as the effective settlement of litigation. Depreciated replacement cost, a cost approach, was used to estimate the fair value of property, plant and equipment. In accordance with the recently adopted guidance on accounting for business combinations, Sprint measured 100% of the acquirees assets and liabilities at fair value, including the non-controlling interest in VMU held by Sprint prior to the acquisition. Sprints previously held non-controlling interest in VMU was valued based on a market approach considering the amounts paid to acquire the remaining 85.9% ownership in VMU.
VMU and iPCS Acquisitions On November 24, 2009 we completed the acquisition of the remaining 85.9% of VMU, a national provider of predominantly prepaid wireless communications services, in a cash and stock business combination, to, among other things, broaden the Companys position in the prepaid wireless market. The aggregate consideration, including the fair value of Sprints non-controlling interest in VMU, was $701 million consisting of 96.2 million shares of Sprint common stock valued at $361 million, share-based consideration of $18 million and $265 million in net cash. The value of the 96.2 million shares of Sprint common stock issued was determined based on Sprints common stock share price of $3.75, the closing price on the date of acquisition. As a result of the acquisition, we recognized a gain of $151 million resulting from the excess of the estimated fair value of $57 million for our previously held 14.1% interest over our carrying value. Sprints historical carrying value of its previously held interest in VMU was reflected as a $94 million liability resulting from a return of capital in excess of our investment in VMU.
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Noncontrolling interests - Mezzanine classification

Public companies with redeemable securities outside of the issuer's control are required to classify those securities outside of permanent equity in the mezzanine section of the statement of financial position.
DIRECTV Filing: 10-K, 12/31/2009

Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities Unearned subscriber revenues and deferred credits Current portion of long-term debt Total current liabilities Long-term debt Deferred income taxes Other liabilities and deferred credits Commitments and contingencies Redeemable noncontrolling interest Stockholders' equity Common stock and additional paid-in capital$0.01 par value, 3,500,000,000 shares authorized, 911,377,919 shares issued and outstanding of DIRECTV Class A common stock at December 31, 2009, $0.01 par value, 30,000,000 shares authorized, 21,809,863 shares issued and outstanding of DIRECTV Class B common stock at December 31, 2009 and $0.01 par value, 3,000,000,000 shares authorized, 1,024,182,043 shares issued and outstanding of The DIRECTV Group, Inc. common stock at December 31, 2008 Accumulated deficit Accumulated other comprehensive loss Total stockholders' equity Total liabilities and stockholders' equity
$3,757 434 1,510 5,701 6,500 1,070 1,678 400 6,689
$3,115 362 108 3,585 5,725 524 1,749 325 8,318
(3,722) (56) 2,911 $18,260
(3,559) (128) 4,631 $16,539
Accounting Changes Noncontrolling interests. On January 1, 2009 we adopted new accounting standards for the accounting and reporting of noncontrolling interests in subsidiaries, also known as minority
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interests, in consolidated financial statements. The new standards also provide guidance on accounting for changes in the parent's ownership interest in a subsidiary and establishes standards of accounting for the deconsolidation of a subsidiary due to the loss of control. Reporting entities must now present certain noncontrolling interests as a component of equity and present net income and consolidated comprehensive income attributable to the parent and the noncontrolling interest separately in the consolidated financial statements. These new standards are required to be applied prospectively, except for the presentation and disclosure requirements, which must be applied retrospectively for all periods presented. As a result of our adoption of these standards, "Net income" in the Consolidated Statements of Operations now includes net income attributable to noncontrolling interest as compared to the previous presentation, where net income attributable to the noncontrolling interest was deducted in the determination of net income. Additionally, the Consolidated Statements of Cash Flows are now presented using net income as calculated pursuant to the new accounting requirements. On January 1, 2009 we adopted the revisions made by the SEC to accounting standards regarding the financial statement classification and measurement of equity securities that are subject to mandatory redemption requirements or whose redemption is outside the control of the issuer. The revisions to the accounting guidance require that redeemable noncontrolling interests, such as Globo Comunicacoes e Participacoes S.A.'s, or Globo's, redeemable noncontrolling interest in Sky Brazil that are redeemable at the option of the holder be recorded outside of permanent equity at fair value, and the redeemable noncontrolling interests be adjusted to their fair value at each balance sheet date. Adjustments to the carrying amount of a redeemable noncontrolling interest are recorded to retained earnings (or additional paid-in-capital in the absence of retained earnings). As a result of the adoption of this accounting requirement, we have reported Globo's redeemable noncontrolling interest in Sky Brazil in "Redeemable noncontrolling interest" at fair value in the Consolidated Balance for each period presented.
Note 19 In connection with our acquisition of Sky Brazil in 2006, our partner who holds the remaining 25.9% interest, Globo was granted the right, until January 2014, to require us to purchase all or a portion (but not less than half) of its shares in Sky Brazil. Upon exercising this right, the fair value of Sky Brazil shares will be determined by mutual agreement or by an outside valuation expert, and we have the option to elect to pay for the Sky Brazil shares in cash, shares of our common stock or a combination of both. As of December 31, 2009, we estimate that Globo's 25.9% equity interest in Sky Brazil has a fair value of approximately $400 million to $550 million. As of December 31, 2008, we estimate that Globo's 25.9% equity interest in Sky Brazil had a fair value of approximately $325 million to $450 million. Adjustments to the carrying amount of the redeemable noncontrolling interest were recorded to additional paidin-capital. We determined the range of fair values using significant unobservable inputs including forecasted operating results, which are Level 3 inputs pursuant to fair value accounting standards.
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Scripps Networks Interactive, Inc. Filing: 10-K, 12/31/09

Liabilities and Equity Current liabilities: Accounts payable Program rights payable Customer deposits and unearned revenue Accrued liabilities: Employee compensation and benefits Accrued marketing and advertising costs Liabilities of discontinued operations Other accrued liabilities Total current liabilities Deferred income taxes Long-term debt Other liabilities (less current portion) Total liabilities Commitments and contingencies (Note 22) Redeemable noncontrolling interests (Note 17) Equity: SNI shareholders equity: Preferred stock, $.01 par - authorized: 25,000,000 shares; none outstanding Common stock, $.01 par: Class A - authorized: 240,000,000 shares; issued and outstanding: 2009 - 129,443,195 shares; 2008 - 127,184,107 shares Voting - authorized: 60,000,000 shares; issued and outstanding: 2009 - 36,338,226 shares; 2008 - 36,568,226 shares Total Additional paid-in capital Retained earnings (deficit) Accumulated other comprehensive income (loss) Total SNI shareholders equity Noncontrolling interest Total equity Total Liabilities and Equity
27,538 20,350 16,865 43,377 13,477 89,101 210,708 119,515 884,239 99,662 1,314,124 113,886
13,231 15,240 11,045 35,259 16,695 10,905 66,277 168,652 131,903 80,000 104,239 484,794 9,400
1,295 363 1,658 1,271,209 113,853 (3,004) 1,383,716 151,336 1,535,052 $2,963,062
1,272 366 1,638 1,219,930 (120,774) 31,487 1,132,281 146,733 1,279,014 $1,773,208
17. Redeemable Noncontrolling Interests and Noncontrolling Interests As of December 31, 2009, noncontrolling interests held an approximate 6% residual interest in FLN. The noncontrolling interests of FLN had the right to require us to repurchase their interests. In January 2010, we reached agreement with the noncontrolling interest owner to acquire their 6% residual interest in FLN for cash consideration of $14.4 million. In 2008, we had previously acquired the 3.75% interest in FLN from a noncontrolling owner of FLN for cash consideration of $9.0 million. A noncontrolling interest holds a 35% residual interest in the Travel Channel. The noncontrolling interest has the right to require us to repurchase their interest and we have an option to acquire their interest. The noncontrolling interest will receive the fair value for their
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interest at the time their option is exercised. The put options on the noncontrolling interest in the Travel Channel become exercisable in 2014. The call options become exercisable in 2015. A noncontrolling interest holds a 20% residual interest in the food international venture. The noncontrolling interest has the right to require us to repurchase their interest and we have an option to acquire their interest. The noncontrolling interest will receive the fair value for their interest at the time their option is exercised. The put and call options on the noncontrolling interest in the food international venture become exercisable in 2012. Our consolidated balance sheets include a redeemable noncontrolling interest balance of $113.9 million at December 31, 2009 and $9.4 million at December 31, 2008. Noncontrolling interests hold an approximate 31% residual interest in Food Network. The Food Network general partnership agreement is due to expire on December 31, 2012, unless amended or extended prior to that date. In the event of such termination, the assets of the partnership are to be liquidated and distributed to the partners in proportion to their partnership interests.
Public company disclosures - Actual results of the acquiree

If an acquirer is a public company, it should disclose the amount of revenue and earnings of the acquiree since the acquisition date included in its consolidated income statement.
Endo Pharmaceuticals Holdings Filing: 10-Q, 3/31/09 The amounts of revenue and net loss of Indevus included in the Companys Condensed Consolidated Statements of Operations from the Acquisition date to the period ending March 31, 2009 are as follows (in thousands, except per share data):
Revenue and Losses included in the Condensed Consolidated Statements of Operations from February 23, 2009 to March 31, 2009 Revenue Net loss Basic and diluted loss $7,916 $(11,252) $(0.10)
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Dow Chemical Company Filing: 10-Q, 6/30/09
Following is the amount of net sales and earnings from the Rohm and Haas acquired businesses included in the Companys results since the April 1, 2009 acquisition. Included in the results from Rohm and Haas was $257 million of restructuring charges (see Note C for information regarding the Companys 2009 restructuring activities) and a one-time increase in cost of sales of $209 million related to the fair value step-up of inventories acquired from Rohm and Haas and sold in the second quarter of 2009.
Rohm and Haas Results of Operations In millions Net sales Loss from Continuing Operations Before Income Taxes April 1 - June 30, 2009 $1,849 $ (339)
Bank of America Filing: 10-Q, 3/31/09 For the three months ended March 31, 2009, Merrill Lynch contributed $10.0 billion in revenue, net of interest expense, and $3.7 billion in net income before certain merger-related costs and revenue opportunities which were realized in legacy Bank of America legal entities.
Nuance Communications Filing: 10-Q, 12/31/09 On December 30, 2009 we acquired all of the outstanding capital stock of SpinVox Limited (SpinVox), a UK-based privately-held company engaged in the business of providing voice to text services. The acquisition was a non-taxable event and the goodwill resulting from this acquisition is not expected to be deductible for tax purposes. The revenues and expenses of SpinVox for the one day, December 31, 2009, of the reporting period during which SpinVox was a part of Nuance were excluded from our consolidated results for the three months ended December 31, 2009 as such amounts for that one day were immaterial.
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Clean Harbors, Inc. Filing: 10-Q, 9/30/09 The Company has determined that the presentation of Eveready net income is impracticable for the three and nine months ended September 30, 2009 due to the integration of Eveready operations into the Company upon acquisition. Revenues attributable to Eveready for the three and nine months ended September 30, 2009 were $71.2 million.
Public company disclosures - Pro forma results

If an acquirer is a public company, it should present pro forma information for the current reporting period as though the acquisition had occurred as of the beginning of the annual reporting period. If comparative financial statements are prepared, the pro forma information for the comparable prior period should be prepared assuming that the acquisition occurred at the beginning of the comparable prior annual reporting period.
Endo Pharmaceuticals Holdings Filing: 10-Q, 3/31/09
The following supplemental pro forma information presents the financial results as if the acquisition of Indevus had occurred January 1, 2009 for the three months ended March 31, 2009 and on January 1, 2008 for the three months ended March 31, 2008. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been made on January 1, 2008 or January 1, 2009, nor are they indicative of any future results.
Quarter ended Pro forma consolidated results (in thousands, except per share data): Revenue Net income Basic earnings per share Diluted earnings per share March 31, 2009 March 31, 2008 $345,599 $21,913 $0.16 $0.16 $305,211 $20,914 $0.16 $0.16
These amounts have been calculated after applying the Companys accounting policies and adjusting the results of Indevus to reflect a different revenue recognition model, the additional
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depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment, intangible assets, unfavorable leases and current and long-term debt, had been applied on January 1, 2009 or 2008, as applicable, together with the consequential tax effects.
Dow Chemical Company Filing: 10-Q, 6/30/09 The following table provides actual results of operations for the three-month period ended June 30, 2009, pro forma results of operations for the three-month period ended June 30, 2008 and pro forma results of operations for the six-month periods ended June 30, 2009 and June 30, 2008, as if Rohm and Haas had been acquired on January 1 of each year. The unaudited pro forma results reflect certain adjustments related to the acquisition, such as increased depreciation and amortization expense on assets acquired from Rohm and Haas resulting from the fair valuation of assets acquired and the impact of acquisition financing in place at June 30, 2009. The pro forma results do not include any anticipated cost synergies or other effects of the planned integration of Rohm and Haas. Accordingly, such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisition been completed on the dates indicated, nor are they indicative of the future operating results of the combined company.
Pro Forma Results of Operations In millions, except per share amounts Net sales Net income (loss) available for The Dow Chemical Company common stockholders Earnings (Loss) per common share - diluted Three Months Ended Six Months Ended Actual June Pro Forma Pro Forma Pro Forma 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008 $11,322 $18,913 $22,132 $36,208 $(486) $(0.47) $589 $0.53 $(887) $(0.79) $1,283 $1.15
Gilead Sciences Inc Filing: 10-Q, 6/30/09 The following unaudited pro forma information presents the combined results of operations of Gilead and CV Therapeutics for the six months ended June 30, 2009 and 2008 as if the acquisition of CV Therapeutics had been completed on January 1, 2009 and 2008, respectively, with adjustments to give effect to pro forma events that are directly attributable to the acquisition. The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings which may result from the consolidation of the operations of Gilead and CV Therapeutics. Accordingly, these unaudited pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the combined company that would have been achieved had the acquisition occurred at the beginning of each period presented, nor are they intended to represent or be indicative of future results of operations. The unaudited pro forma results of operations are as follows (in thousands):
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Three Months Ended June 30, 2009 Total revenues Net income attributable to Gilead $1,653,951 $555,307 2008 $1,327,125 $415,554
Six Months Ended June 30, 2009 $3,221,331 $1,061,827 2008 $2,608,088 $830,687
Magellan Midstream Partners LP Filing: 10-Q, 9/30/09
Pro Forma Information (unaudited) The following summarized pro forma consolidated income statement information assumes that the Longhorn acquisition and the Wynnewood terminal acquisition discussed above occurred as of January 1, 2008. These pro forma results are for comparative purposes only and may not be indicative of the results that would have occurred if MMP had completed these acquisitions as of the periods shown below or the results that will be attained in the future. The amounts presented below are in thousands:
Three Months Ended September 30, 2008 As Reported Revenues Net income $292,193 $69,354 Pro Forma Adjustments $26,029 $3,961 Pro Forma $318,222 $73,315 Nine Months Ended September 30, 2008 As Reported $912,026 $249,038 Pro Forma Adjustments $86,625 $20,227 Pro Forma $998,651 $269,265
Three Months Ended September 30, 2009 As Reported Revenues Net income $239,770 $54,215 Pro Forma Adjustments $(83) $(12,043) Pro Forma $239,687 $42,172
Nine Months Ended September 30, 2009 As Reported $660,916 $144,523 Pro Forma Adjustments $8,502 $(35,632) Pro Forma $669,418 $108,891
Significant pro forma adjustments for the Longhorn acquisition include its revenues and net income for the period prior to MMPs acquisition. Because the assets included in the Longhorn acquisition had minimal commercial activity following the former owners bankruptcy filing in July 2008, revenues and net income generated by the assets were substantially lower in 2009. Pro forma adjustments for the Wynnewood terminal include lease revenue based on a $2.0 million annual lease payment amount and depreciation expense based on $0.5 million annually. Pro forma adjustments for both acquisitions include interest expense on borrowings necessary to complete the acquisitions.
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Warner Chilcott PLC Filing: 10-K, 12/31/09
Pro Forma Information (unaudited) The following summarized pro forma consolidated income statement information assumes that the PGP Acquisition occurred as of January 1, 2008. The unaudited pro forma results reflect certain adjustments related to the acquisition, such as increased depreciation and amortization expense on assets acquired from PGP resulting from the fair valuation of assets acquired and the impact of acquisition financing in place at October 30, 2009. The pro forma results do not include any anticipated cost synergies or other effects of the planned integration of PGP. These pro forma results are for comparative purposes only and may not be indicative of the results that would have occurred if the Company had completed these acquisitions as of the periods shown below or the results that will be attained in the future:
Three months ended September 30, 2009 2008 Total revenues(1) Net income / (loss)(1) $3,258,019 $3,353,019 $ 692,102 $ (176,229)
(1) The pro forma amounts have not been adjusted to remove the impacts of the LEO Transaction (discussed in Note 5) for the periods presented.
Acquisition date
The acquisition date is the date on which the acquirer obtains control of the acquiree, which is generally the closing date. However, if control of the acquiree transfers to the acquirer through a written agreement, the acquisition date can be before or after the closing date.
Cephalon, Inc. Filing: 10-Q, 6/30/09
On February 27, 2009, we announced that we acquired (through our wholly owned subsidiary Cephalon International Holdings, Inc. (Cephalon International)), approximately 19.8% of the total issued share capital (the Equity Stake) of Arana Therapeutics Limited, an Australian
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company listed on the Australian Securities Exchange (Arana), for $41.4 million and that we intended to initiate a takeover offer for Arana (through Cephalon International). On March 9, 2009, through Cephalon International, we filed a Bidders Statement with the Australian Securities and Investments Commission in connection with our takeover offer for Arana. Our initial investment in Arana was recorded as an available for sale investment in accordance with FAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, (FAS 115). On May 27, 2009, we acquired additional shares for $89.8 million which increased our Arana holdings to 50.4% of the outstanding shares. As a result, effective on that date we have consolidated Arana in accordance with FAS No. 141(R), Business Combinations (FAS 141(R)). The fair value of the noncontrolling interest in Arana as of May 27, 2009 was $104.7 million based on the closing stock price for Aranas shares on that date.
Abbott Laboratories Filing: 10-K, 12/31/09
In February 2009, Abbott acquired the outstanding shares of Advanced Medical Optics, Inc. (AMO) for approximately $1.4 billion in cash, net of cash held by AMO. Prior to the acquisition, Abbott held a small investment in AMO. Abbott acquired AMO to take advantage of increasing demand for vision care technologies due to population growth and demographic shifts and AMO's premier position in its field. Abbott acquired control of this business on February 25, 2009 and the financial results of the acquired operations are included in these financial statements beginning on that date.
ONYX Pharmaceuticals Inc Filing: 10-K, 12/31/09
In accordance with the Merger Agreement, each issued and outstanding share of Proteolix capital stock was cancelled and converted into the right to receive the merger consideration described in the Merger Agreement. In addition, all outstanding stock options and warrants to purchase Proteolix shares vested in full were cancelled and converted into the right to receive the merger consideration for each Proteolix share subject to the option or warrant. Subject to the terms and conditions set forth in the Merger Agreement, the Company may, in its sole discretion, make any of the required earnout payments (with the exception of the first earnout payment) that become payable to former holders of Proteolix preferred stock in the form of cash, shares of Onyx common stock or a combination thereof. The Proteolix acquisition was accounted for as a business combination in accordance with the guidance in ASC Topic 805. The operating results of Proteolix from November 16, 2009 to December 31, 2009 have been included in the Companys Consolidated Statements of
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Operations. The Companys Consolidated Balance Sheets as of December 31, 2009 reflects the acquisition of Proteolix, effective November 16, 2009, the date the Company obtained control of Proteolix.
Reverse acquisitions
A reverse acquisition occurs if the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes, and the entity whose equity interests are acquired (legal acquiree) is the acquirer for accounting purposes.
Merck & Co, Inc Filing: 10-K, 12/31/09
On November 3, 2009, Old Merck and Schering-Plough completed the Merger. In the Merger, Schering-Plough acquired all of the shares of Old Merck, which became a wholly-owned subsidiary of Schering-Plough and was renamed Merck Sharp & Dohme Corp. ScheringPlough continued as the surviving public company and was renamed Merck & Co., Inc. However, for accounting purposes only, the Merger was treated as an acquisition with Old Merck considered the accounting acquirer. Under the terms of the Merger agreement, each issued and outstanding share of Schering-Plough common stock was converted into the right to receive a combination of $10.50 in cash and 0.5767 of a share of the common stock of New Merck. Each issued and outstanding share of Old Merck common stock was automatically converted into a share of the common stock of New Merck. Based on the closing price of Old Merck stock on November 3, 2009, the consideration received by Schering-Plough shareholders was valued at $28.19 per share, or $49.6 billion in the aggregate.
Preexisting relationships
Preexisting relationships between the acquirer and acquiree can be contractual (e.g., vendor and customer) or noncontractual (e.g., plaintiff and defendant). The acquirer should recognize a gain or loss for the effective settlement of a preexisting relationship with the acquiree.
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NRG Energy, Inc. Filing: 10-Q, 6/30/09 NRG paid RRI $287.5 million in cash at closing, funded from NRGs cash on hand, and will remit approximately $82 million of acquired net working capital to RRI over the eight months following the closing, bringing cash consideration to approximately $370 million. On June 15, 2009, NRG paid $63 million to RRI as an initial remittance of acquired net working capital. NRG also recognized a $31 million non-cash gain on the settlement of a pre-existing relationship, representing the in-the-money value to NRG of an agreement that permits Reliant Energy to call on certain NRG gas plants when necessary for Reliant Energy to meet its load obligations. NRG has recorded this gain within Operating Revenues in its condensed consolidated statement of operations. This non-cash gain is considered a component of consideration in accordance with SFAS 141R, and together with cash consideration, brings total consideration to approximately $401 million.
Energy Conversion Devices, Inc. Filing: 10-Q, 9/30/09
The Company recognized a gain of $0.4 million due to the effective settlement of the Companys and SITs preexisting contractual supply relationship. The gain was determined using a discounted cash flow analysis and was recorded in Selling, general and administrative expenses in the Companys Condensed Consolidated Statement of Operations.
Assured Guaranty Ltd. Filing: 10-Q, 9/30/09
The Company and FSAH had a pre-existing reinsurance relationship before the acquisition. Under GAAP, this pre-existing relationship must be effectively settled at fair value. The loss relating to this pre-existing relationship results from the effective settlement of reinsurance contracts at fair value and the write-off of previously recorded assets and liabilities relating to this relationship recorded in the Company's historical accounts. The loss related to the contract settlement results from contractual premiums that were less than the Company's estimate of what a market participant would demand currently, estimated in a manner similar to how the value of the Acquired Companies insurance policies were valued, as described above.
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A summary of goodwill and settlements of pre-existing relationship included in the consolidated statement of operations follows:
Nine months ended September 30, 2009 (in thousands) Goodwill impairment associated with reinsurance assumed line of business Gain on bargain purchase of FSAH Settlement of pre-existing relationship in conjunction with the FSAH Acquisition Goodwill and settlement of pre-existing relationship $ 85,417 (232,554) 170,478 $ 23,341
Sprint Nextel Corp Filing: 10-K, 12/31/09
The acquisition of iPCS resulted in the effective settlement of pre-existing litigation. On September 24, 2008 the Illinois Supreme Court denied the Companys petition for appeal in a contract dispute with iPCS. The decision resulted in a previous ruling being upheld that required Sprint to cease owning, operating or managing the iDEN network in parts of certain Midwestern states including Illinois, Iowa, Michigan, Missouri, Nebraska, Wisconsin and a small portion of Indiana. As a result of the acquisition, all disputes have been resolved and the Company recorded a $23 million charge as an increase to operating expenses, representing the estimated fair value of the settled litigation. Discounted cash flows, an income approach, were primarily used to value the effective settlement of litigation.
VMU Acquisition (in millions) Consideration Cash, net of cash acquired Equity instruments Settlement of pre-existing litigation Fair value of consideration transferred Fair value of Sprint's equity interest in VMU before the acquisition Total
iPCS Affiliate Acquisition
$265 379 644 57 $701
$318 (23) 295 $295
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Acquired loans
In the reporting period during which the business combination occurs, the acquirer should disclose the fair value of the acquired receivables, their gross contractual amounts, and an estimate of cash flows not expected to be collected.
Yadkin Valley Financial Corporation Filing: 10-Q, 6/30/09
Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date and prohibit the carryover of the related allowance for loan losses, which include loans purchased in the American Community acquisition. Purchased impaired loans are accounted for under American Institute of Certified Public Accountants (AICPA) Statement of Position 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer (SOP 03-3), when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition that the Company will not collect all contractually required principal and interest payments. Evidence of credit quality deterioration as of the purchase date may include statistics such as past due and nonaccrual status. Generally, acquired loans that meet the Companys definition for nonaccrual status fall within the scope of SOP 03-3. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference which is included in the carrying amount of the loans. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows result in a reversal of the provision for loan losses to the extent of prior charges, or a reversal of the nonaccretable difference with a positive impact on interest income. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of such cash flows. Purchased performing loans are recorded at fair value, including a credit discount. The fair value discount is accreted as an adjustment to yield over the estimated lives of the loans. There is no allowance for loan losses established at the acquisition date for purchased performing loans. A provision for loan losses is recorded for any deterioration in these loans subsequent to the merger. The carrying amount of acquired loans at April 17, 2009 consisted of loans accounted for in accordance with SOP 03-3 and loans not subject to SOP 03-3 as detailed in the following table:
SOP 03-3 Loans (in thousands) Commercial, financial, and agricultural Construction, land development & other land Real estate- 1-4 Family mortgage loans Real estate- Commercial and other $ 265 8,362 795 837 Non SOP 03-3 Loans $ 58,033 123,496 41,530 98,549 Total Loans $ 58,298 131,858 42,325 99,386
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Home equity lines of credit Installment loans to individuals Other loans Total
58 63 308 $10,688
47,760 12,878 23,405 $405,651
47,818 12,941 23,713 $416,339
The following table presents the Non SOP 03-3 loans receivable at the acquisition date of April 17, 2009. The amounts include principal only and do not reflect accrued interest as of the date of the acquisition or beyond:
(in thousands) Contractually required principal payments receivable Fair value of adjustment for credit, interest rate, and liquidity Fair value of Non SOP 03-03 loans receivable $416,833 (11,182) $405,651
The following table presents the SOP 03-3 loans receivable at the acquisition date of April 17, 2009. The Company has initially applied the cost recovery method to all loans subject to SOP 03-3 at the acquisition date due to uncertainty as to the timing of expected cash flows as reflected in the following table:
(in thousands) Contractually required principal payments receivables Nonaccretable difference Present value of cash flows expected to be collected Accretable difference Fair value of SOP 03-3 loans acquired $14,513 (3,825) 10,688 $10,688
Independent Bank Corp. Filing: 10-Q, 6/30/09
The Company acquired loans at fair value of $687.4 million. Included in this amount was $3.9 million of loans with evidence of deterioration of credit quality since origination for which it was probable, at the time of the acquisition, that the Company would be unable to collect all contractually required payments receivable. In accordance with Statement of Opinion 03-3 Accounting for Certain Loans or Debt Securities Acquired in a Transfer (SOP 03-3), this resulted in a non accretable difference of $806,000, which is defined as the loans contractually required payments receivable in excess of the amount of its cash flows expected to be collected. The Company considered factors such as payment history, collateral values, and accrual status when determining whether there was evidence of deterioration of loans credit quality at the acquisition date.
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M&T Bank Corporation Filing: 10-Q, 6/30/09
In many cases, determining the fair value of the acquired assets and assumed liabilities required the Company to estimate cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of these determinations related to the fair valuation of acquired loans. For such loans, the excess of cash flows expected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and other factors, such as prepayments. In accordance with GAAP, there was no carry over of Providents previously established allowance for credit losses. Subsequent decreases in the expected cash flows will require the Company to evaluate the need for additions to the Companys allowance for credit losses. Subsequent improvements in expected cash flows will result in the recognition of additional interest income over the then remaining lives of the loans. In conjunction with the Provident acquisition, the acquired loan portfolio was accounted for at fair value as follows:
May 23, 2009 (in thousands) Contractually required principal and interest at Contractual cash flows not expected to be collected Expected cash flows at acquisition Interest component of expected cash flows Basic in acquired loans at acquisitionestimated fair value $5,465,167 (832,115) 4,633,052 (595,685) $4,037,367
Interest income on acquired loans for the period from date of acquisition to June 30, 2009 was approximately $19 million. The outstanding principal balance and the carrying amount of these loans that is included in the consolidated balance sheet at June 30, 2009 is as follows:
(in thousands) Outstanding principal Carrying amount
$4,269,847 $3,996,718
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Inventories
Inventories should be measured at fair value on the acquisition date. Ordinarily, the amounts recognized for inventories at fair value by the acquirer will be higher than the amount recognized by the acquiree before the business combination.
Netlogic Microsystems Inc. Filing: 10-K, 12/31/09
As of the effective date of the merger, inventories are required to be measured at fair value. The preliminary fair value of inventory of $37.7 million was based on assumptions applied to the RMI acquired inventory balance. In estimating the fair value of finished goods and workin-progress inventory, the Company made assumptions about the selling prices and selling costs associated with the inventory. The Company assumed that estimated selling prices would yield gross margins consistent with actual margins earned by RMI during the first half of 2009. The Company assumed that selling cost as a percentage of revenue would be consistent with actual rates experienced by RMI during the first half of 2009.
Pulte Homes Inc. Filing: 10-Q, 9/30/09
The Company determined the fair value of inventory on a community-by-community basis primarily using a combination of market comparable land transactions, where available, and discounted cash flow models, though independent appraisals were also utilized in certain instances. These estimated cash flows are significantly impacted by estimates related to expected average selling prices and sales incentives, expected sales paces and cancellation rates, expected land development and construction timelines, and anticipated land development, construction, and overhead costs. Such estimates must be made for each individual community and may vary significantly between communities.
Watson Pharmaceuticals Inc. Filing: 10-K, 12/31/09
Inventories The fair value of inventories acquired included a step-up in the value of inventories of approximately $26.0 million. Approximately $14.2 million was amortized to cost of sales during 2009 and the remaining $11.8 million will be amortized to cost of sales in the first quarter of 2010.
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Pfizer, Inc. Filing: 10-K,12/31/09
Inventories -The fair value of acquired inventory was determined as follows: Finished goods - Estimated selling price, less an estimate of costs to be incurred to sell the inventory, and an estimate of a reasonable profit allowance for that selling effort. Work in process - Estimated selling price of an equivalent finished good, less an estimate of costs to be incurred to complete the work-in-process inventory, an estimate of costs to be incurred to sell the inventory and an estimate of a reasonable profit allowance for those manufacturing and selling efforts. Raw materials and supplies - Estimated cost to replace the raw materials and supplies. The amounts recorded for the major components of acquired inventory are as follows:
(Millions of dollars) Finished goods Work in process Raw materials Total Inventory
Amounts recognized as of acquisition date $2,692 5,286 410 $8,388
Defensive assets
A company may acquire intangible assets in a business combination that it has no intention to actively use but intends to hold (lock up) to prevent others from obtaining access to them. Such assets are referred to as defensive assets.
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Dress Barn, Inc. Filing: 10-Q, 1/23/10
On November 25, 2009, we completed the merger with Tween Brands, Inc., a Delaware corporation (Tween Brands), pursuant to the Agreement and Plan of Merger, dated June 24, 2009 (the Merger Agreement). Tween Brands operates Justice, apparel specialty stores targeting girls who are ages 7 to 14. We will refer to the post-Merger operations of Tween Brands as Justice. Other intangible assets were comprised of the following as of January 23, 2010: (Amounts in thousands)
Average Remaining Life Expected Life Indefinite Indefinite Indefinite Gross Net Intangible Accumulated Intangible Assets Amortization Assets $102,000 66,600 10,900 $102,000 66,600 10,900
Description Indefinite lived intangible assets: Maurices Trade Names Justice Trade Name (a) Justice Franchise Rights (b) Finite lived intangible assets: Maurices Customer Relationship Maurices Proprietary Technology Justice Limited Too Trade Name (c) Justice Proprietary Technology (d) Total
7 years 5 years 7 years 5 years
2 years 7 years 5 years
2,200 3,298 1,600 4,800 $191,398
(1,598) (3,298) (43) (141) $(5,080)
602 1,557 4,659 $186,318
a) Fair value was determined using a discounted cash flow model that incorporates the relief from royalty (RFR) method. Significant assumptions included, among other things, estimates of future cash flows, royalty rates and discount rates. This asset was assigned an indefinite useful life because it is expected to contribute to cash flows indefinitely. b) Fair value of these international franchise rights was determined using a discounted cash flow model that incorporates the relief from royalty (RFR) method. This asset was assigned an indefinite useful life because it is expected to contribute to cash flows indefinitely. c) Fair value was determined using the RFR method and assigned an indefinite life. This meets the definition of a defensive asset under ASC 350-30-25-5, and was assigned a remaining life of seven years which represents the lifecycle of the average Justice customer. d) Fair value was determined using the cost approach, as it consists of internally developed software that does not have an identifiable revenue stream. The remaining life is the estimated obsolescence rate determined for each identified asset.
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Intangible assets
All identifiable intangible assets that are acquired in a business combination should be recognized at fair value on the acquisition date. Identifiable intangible assets are recognized separately if they arise from contractual or other legal rights or if they are separable.
eBay, Inc. Filing: 10-Q, 6/30/09
The purchase price was allocated to the tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated purchase price recorded as goodwill. The fair value assigned to identifiable intangible assets acquired has been determined primarily by using the income approach and variation of the income approach known as the profit allocation method, which discounts expected future cash flows to present value using estimates and assumptions determined by management. Purchased identifiable intangible assets are amortized on a straight-line basis over their respective useful lives. Our preliminary allocation of the purchase price is summarized in the table below (in thousands):
Net assets acquired Goodwill Trade name User base Developed technology Other intangible assets Total $ 50,526 797,946 264,604 76,512 33,076 4.304
$1,226,968
Our estimated useful life of the identifiable intangible assets acquired is three years for developed technology, five years for the trade name and user base and one year for other intangibles. The allocation of the purchase price for the acquisition has been prepared on a preliminary basis and changes to that allocation may occur as additional information becomes available.
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NRG Energy, Inc. Filing: 10-Q, 6/30/09
Fair value measurements Customer relationships The customer relationships, reflective of Reliant Energys residential and small business customer base, or Mass, were valued using a variation of the income approach. Under this approach, the Company estimated the present value of expected future cash flows resulting from the existing customer relationships, considering attrition and charges for contributory assets (such as net working capital, fixed assets, software, workforce and trade names) utilized in the business, discounted at an independent power producer peer groups weighted average cost of capital. The customer relationships are amortized to depreciation and amortization, over a weighted average amortization period of eight years, based on the expected discounted future net cash flows by year. Trade names The trade names were valued using a relief from royalty method, an approach under which fair value is estimated to be the present value of royalties saved because NRG owns the intangible asset and therefore does not have to pay a royalty for its use. The trade names were valued in two parts based on Reliant Energys two primary customer segments Mass customers and C&I customers. The avoided royalty revenues were discounted at an independent power producer peer groups weighted average cost of capital. The trade names are amortized to depreciation and amortization, on a straight-line basis, over 15 years. Amortization of acquired intangible assets and out-of-market contracts The following table presents the estimated amortization related to the acquired intangible assets for 2009 2014:
Year Ended December 31, (in millions) 2009 (six months) 2010 2011 2012 2013 2014 Customer Contracts $178 208 134 93 45 Customer Relations $118 106 63 47 33 26 Trade Names $6 12 12 12 12 12 Energy Contracts $12 2 3 4 4
Gilead Sciences Inc Filing: 10-Q, 6/30/09 A substantial portion of the assets acquired consisted of intangible assets related to CV Therapeutics two marketed products, Ranexa and Lexiscan, and CV Therapeutics IPR&D projects. Management determined that the estimated acquisition-date fair values of the
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intangible assets related to the marketed products and IPR&D projects were $951.2 million and $180.1 million, respectively. Of the $951.2 million of intangible assets related to the marketed products, $688.4 million related to Ranexa and $262.8 million related to Lexiscan. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142), we have determined that these intangible assets have finite useful lives and will be amortized over their respective useful lives, which we estimated to be the periods over which the associated product patents will expire as those are the periods over which the intangible assets are expected to contribute to the future cash flows of the related products. Of the $180.1 million of intangible assets related to the IPR&D projects, $93.4 million related to CVT-3619, a product candidate in Phase 1 clinical studies for the treatment of hypertriglyceridemia. The remaining balance of the intangible assets related to IPR&D projects represented various other in-process projects with no single project comprising a significant portion of the total value. In accordance with SFAS 141R and SFAS 142, intangible assets related to IPR&D projects are considered to be indefinite-lived until the completion or abandonment of the associated research and development (R&D) efforts. During the period the assets are considered indefinite-lived, they will not be amortized but will be tested for impairment on an annual basis and between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts. If and when development is complete, which generally occurs if and when regulatory approval to market a product is obtained, the associated assets would be deemed finite-lived and would then be amortized based on their respective estimated useful lives at that point in time. The estimated fair value of the intangible assets related to the marketed products and IPR&D projects was determined using the income approach, which discounts expected future cash flows to present value. We estimated the fair value of these intangible assets using a present value discount rate of 9%, which is based on the estimated weighted-average cost of capital for companies with profiles substantially similar to that of CV Therapeutics. This is comparable to the estimated internal rate of return for CV Therapeutics operations and represents the rate that market participants would use to value the intangible assets. For the intangible assets related to the IPR&D projects, we compensated for the differing phases of development of each project by probability-adjusting our estimation of the expected future cash flows associated with each project. We then determined the present value of the expected future cash flows using the discount rate of 9%. The projected cash flows from the IPR&D projects were based on key assumptions such as estimates of revenues and operating profits related to the projects considering their stages of development; the time and resources needed to complete the development and approval of the related product candidates; the life of the potential commercialized products and associated risks, including the inherent difficulties and uncertainties in developing a drug compound such as obtaining marketing approval from the U.S. Food and Drug Administration and other regulatory agencies; and risks related to the viability of and potential alternative treatments in any future target markets. The following table summarizes the gross carrying amounts and accumulated amortization of the intangible assets related to the marketed products as of June 30, 2009 (in thousands):
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Gross Carrying Amount Intangible assetRanexa Intangible assetLexiscan Total $688,400 262,800 $951,200
Accumulated Amortization $(6,439) (5,363) $(11,802)
Amortization expense for the intangible assets related to the marketed products was $11.8 million for the three and six months ended June 30, 2009 and was recorded in cost of goods sold in our Condensed Consolidated Statement of Income. The weighted-average amortization period for these intangible assets is approximately 10 years. We are amortizing the intangible asset related to Ranexa over its estimated useful life using an amortization rate derived from our forecasted future product sales for Ranexa. We are amortizing the intangible asset related to Lexiscan over its estimated useful life on a straight-line basis. Given that current Lexiscan revenues consist of royalties received from a collaboration partner and we will have limited ongoing access and visibility into that partners future sales forecasts, we cannot make a reasonable estimate of the amortization rate utilizing a forecasted product sales approach. As of June 30, 2009, we estimated future amortization expense associated with the intangible assets related to the marketed products for each of the five succeeding fiscal years as follows (in thousands):
Fiscal Year 2009 (remaining six months) 2010 2011 2012 2013 2014 Total Amount $ 28,325 67,269 76,350 85,098 91,607 96,075 $444,724
Bottomline Technologies, Inc. Filing: 10-Q, 11/9/09 The valuation of the acquired intangible assets was estimated by performing projections of discounted cash flow, whereby revenues and costs associated with each intangible asset are forecast to derive expected cash flow which is discounted to present value at discount rates commensurate with perceived risk. The valuation and projection process is inherently subjective and relies on significant unobservable inputs (Level 3 inputs). The valuation assumptions also take into consideration the Companys estimates of contract renewal, technology attrition and revenue projections. The preliminary values for specifically identifiable intangible assets, by major asset class, are as set forth below. Other intangible assets consist of a tradename and below market lease arrangement.
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(in thousands) Customer related intangible assets Core technology Other tangible assets $ 9,349 7,648 1,662 $18,659
The customer related intangible assets, core technology and other intangible assets acquired are being amortized over weighted average lives of seventeen years, seven years and fourteen years, respectively
Netlogic Microsystems Inc. Filing: 10-K, 12/31/09
The acquisition was accounted for as a business combination under ASC 805 Business Combinations. The estimated total preliminary purchase price of $210.0 million was allocated to the net tangible and intangible assets acquired and liabilities assumed based on their fair values as of the date of the completion of the acquisition as follows (in thousands):
Net tangible assets Amortizable intangible assets: Existing and core technology Customer contracts and related relationships Composite intangible assets Tradenames and trademarks Backlog Indefinite-lived intangible asset: In-process research and development Goodwill Total 46,500 22,922 $209,951 71,800 13,800 2,700 2,200 200 $ 49,829
Existing and core technology consisted of products which have reached technological feasibility and relate to the multi-core, multi-threaded processing products and the ultra lowpower processing products. The value of the developed technology was determined by discounting estimated net future cash flows of these products. The Company is amortizing the existing and core technology on a straight-line basis over estimated lives of 4 to 7 years. Customer relationships relate to the Companys ability to sell existing and future versions of products to existing RMI customers. The fair value of the customer relationships was determined by discounting estimated net future cash flows from the customer contracts. The Company is amortizing customer relationships on a straight-line basis over an estimated life of 10 years.
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Composite intangible assets relate to matured legacy products. The fair value of the developed technology was determined by discounting estimated net future cash flows of these products. The Company is amortizing the composite intangible assets on a straight-line basis over an estimated life of 2 years. Tradename and trademarks represents various RMI brands, registered product names and marks. The fair value of tradename and trademarks was determined by estimating a benefit from owning the asset rather than paying a royalty to a third party for the use of the asset. The Company is amortizing the asset on a straight-line basis over an estimated life of 3 years. The backlog fair value relates to the estimated selling cost to generate backlog at October 30, 2009. The fair value of backlog at closing is being amortized over an estimated life of 6 months.
Indemnification assets
Indemnification assets may be recognized if the seller contractually indemnifies, in whole or in part, the buyer for a particular uncertainty, such as a contingent liability or uncertain tax position. The recognition and measurement of an indemnification asset is based on the related indemnified item. That is, the acquirer should recognize an indemnification asset at the same time that it recognizes the indemnified item, measured on the same basis as the indemnified item, subject to collectibility or contractual limitations on the indemnified amount.
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Sapient Corp Filing: 10-Q, 9/30/09 The acquisition of Nitro has been accounted for as a business combination using the acquisition method. Assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The fair values of identifiable intangible assets were based on valuations using the income approach based on estimates provided by management. The excess of purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The allocation of the purchase price is based upon a valuation of certain assets and liabilities acquired. The purchase price allocation was as follows (in thousands):
Amount Cash Accounts receivable Other current assets Property and equipment Identifiable intangible assets Goodwill Total assets acquired Accounts payable, accrued expenses and other current liabilities Deferred revenues Deferred tax liability Other long term liabilities Total liabilities assumed Total allocation of purchase price consideration Less: cash acquired Total purchase price, net of cash acquired $ 3,290 10,956 2,790 2,281 18,000 16,943 54,260 (16,912) (416) (1,379) (1,312) (20,019) 34,241 (3,290) $30,951
Included in other current assets is the estimated fair value of indemnification assets totaling $1.3 million. These assets reflect amounts due from the seller of Nitro as a result of representations and warranties made in the stock purchase agreement. Deferred consideration reflects $8.3 million of cash consideration, $4.9 million of which was paid in October of 2009, and $3.4 million is due in the first half of 2010. Other long-term liabilities reflect an acquired obligation to pay $1.6 million in equal installments over the next four years. Using a discounted cash flow model, these liabilities estimated fair values as of the acquisition date were $8.1 million and $1.3 million, respectively. Total net tangible assets consist of the fair value of tangible assets acquired less the fair value of assumed liabilities. Except for accounts receivable, leases, other long term liabilities and deferred taxes, net tangible assets were valued at the respective carrying amounts recorded by Nitro as the Company believes that their carrying value amounts approximate their fair value at the acquisition date. The purchase price allocation resulted in $16.9 million that exceeded the estimated fair value of tangible and intangible assets and liabilities, which was allocated to goodwill. The Company believes the resulting amount of goodwill reflects its expectations of the synergistic benefits of being able to leverage Nitros traditional advertising expertise with the Companys own digital commerce and marketing technology services to provide an integrated advertising service to both the Companys existing customer base and Nitros customer base.
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Microtune, Inc. Filing: 10-Q, 9/30/09 The purchase price allocated to current assets based on our preliminary estimates included an indemnification asset of $0.7 million representing the selling shareholders obligation to indemnify Microtune for the outcome of potential contingent liabilities relating to uncertain tax positions. The indemnification asset was measured on the same basis as the liability for uncertain tax positions. Uncertain tax positions of $0.8 million were included in the purchase price allocated to current liabilities based on our preliminary estimates and was measured in accordance with ASC Topic 740 (prior authoritative literature: FASB Interpretation No. 48, Accounting for Uncertainty in Income TaxesAn Interpretation of FASB Statement No. 109 (FIN 48)). An escrow fund of $1,000,000 was established for indemnification obligations, subject to a minimum threshold of $100,000 and a deductible of $100,000 on tax matters, as defined, with unreleased funds to be distributed 24 months after the acquisition date of July 31, 2009. An additional escrow fund of $100,000 was established for working capital adjustments, excluding contingent tax liabilities, as defined, with unreleased funds to be distributed 95 days after the acquisition date of July 31, 2009.
Goodwill
Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The goodwill associated with both the acquirers interest and the noncontrolling interest (i.e., 100 percent of the goodwill of the acquiree) is recognized in a business combination.
Stryker Corporation Filing: 10-K, 12/31/09 Goodwill associated with the acquisition of Ascent was $329.1 million and was $58.4 million for all other acquisitions. The factors that contributed to the recognition of goodwill included securing synergies that are specific to the Companys business and not available to other market participants, which are expected to increase revenues and profits; acquisition of a talented workforce; and cost savings opportunities.
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Netlogic Microsystems, Inc. Filing: 10-K, 12/31/09 Of the total estimated purchase price paid at the time of acquisition, approximately $22.9 million has been allocated to goodwill. Goodwill represents the excess of the purchase price of an acquired business over the fair value of the underlying net tangible and intangible assets and is not deductible for tax purposes. Among the factors that contributed to a purchase price in excess of the fair value of the net tangible and intangible assets was the acquisition of an assembled workforce of experienced semiconductor engineers, synergies in products, technologies, skillsets, operations, customer base and organizational cultures that can be leveraged to enable the Company to build an enterprise greater than the sum of its parts. In accordance with ASC 350 Intangibles Goodwill and Other, goodwill will not be amortized but instead will be tested for impairment at least annually and more frequently if certain indicators of impairment are present. In the event that management determines that the value of goodwill has become impaired, the Company will record an expense for the amount impaired during the fiscal quarter in which the determination is made.
Dean Foods Company Filing: 10-K, 12/31/09 Alpro On July 2, 2009, we completed the acquisition of Alpro, a privately held food company based in Belgium, for an aggregate purchase price of 314.6 million ($440.3 million), after working capital adjustments, excluding transaction costs which were expensed as incurred. Alpro manufactures and sells branded soy-based beverages and food products in Europe. The acquisition of Alpro will provide opportunities to leverage the collective strengths of our combined businesses across a global soy beverages and related products category. Assets acquired and liabilities assumed in connection with the acquisition have been recorded at their fair values. The fair values were determined by management based in part on an independent valuation of the net assets acquired, which includes intangible assets of $117.6 million. Intangible assets subject to amortization of $21.0 million are being amortized over a weighted-average period of 15 years and relate primarily to customer relationships. The excess of the net purchase price over the fair value of the net assets acquired of $175.1 million was recorded as goodwill and represents a value attributable to an increased competitive position in the soy-based beverages and foods in Europe. The goodwill is not deductible for tax purposes.
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Pfizer Inc Filing: 10-K, 12/31/09 Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill recorded as part of the acquisition of Wyeth includes the following: the expected synergies and other benefits that we believe will result from combining the operations of Wyeth with the operations of Pfizer, any intangible assets that do not qualify for separate recognition, as well as future, as yet unidentified projects and products, and the value of the going-concern element of Wyeths existing businesses (the higher rate of return on the assembled collection of net assets versus if Pfizer had acquired all of the net assets separately). Goodwill is not amortized and is not deductible for tax purposes. While the allocation of goodwill among reporting units is not complete, we expect the majority of the goodwill will be related to our Biopharmaceutical segment (see Note 12. Goodwill and Other Intangible Assets for additional information).
Deferred revenue
The fair value of a deferred revenue liability typically reflects how much an acquirer has to pay a third party to assume the liability. Thus, the acquiree's recognized deferred revenue liability at the acquisition date is generally not the fair value amount necessary to transfer the underlying contractual obligation.
Blackboard, Inc. Filing: 10-Q, 6/30/09 Deferred Revenue In connection with the preliminary purchase price allocation, the estimated fair value of the support obligation assumed from ANGEL in connection with the merger was determined utilizing a cost build-up approach. The cost build-up approach determines fair value by estimating the costs relating to fulfilling the obligation plus a normal profit margin. The sum of the costs and operating profit approximates the amount that the Company would be required to pay a third party to assume the support obligation. The estimated costs to fulfill the support obligation were based on the historical direct costs related to providing the support services and correcting any errors in ANGELs software products. These estimated costs did not include any costs associated with selling efforts or research and development or the related
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fulfillment margins on these costs. Profit associated with selling efforts is excluded because ANGEL had concluded the selling effort on the support contracts prior to May 8, 2009. The estimated profit margin was determined to be approximately 22% which approximates the Companys operating profit margin to fulfill the obligations. In allocating the purchase price, the Company recorded an adjustment to reduce the carrying value of ANGELs May 8, 2009 deferred support revenue by approximately $6.3 million to $3.2 million which represents the Companys estimate of the fair value of the support obligation assumed. As former ANGEL customers renew these support contracts, the Company will recognize revenue for the full value of the support contracts over the remaining term of the contracts, the majority of which are one year.
Income taxes
In a business combination, the acquirer should record all deferred tax assets, liabilities, and valuation allowances of the acquiree that are related to any temporary differences, tax carryforwards, and uncertain tax positions in accordance with ASC 740, Income Taxes.
SonoSite, Inc. Filing: 10-Q, 9/30/09 We recognized a deferred tax asset of $5.4 million, which includes $3.9 million related to CDICs federal net operating loss (NOL) carryforward. CDIC had federal NOL carryforwards of $52.6 million based on tax returns filed through November 30, 2008 which will be available to offset our future taxable income until they expire between 2010 and 2028. The NOL carryforward that will be available for utilization during this period is limited to $11.1 million, resulting from change in ownership limitations under Section 382 of the Internal Revenue Code. CDIC had state NOL carryforwards of $1.1 million against which we have recorded a full valuation allowance given the uncertainty as to whether we will have sufficient income in these states in the future to utilize these NOLs. We recognized an additional $1.5 million deferred tax asset and a $4.5 million deferred tax liability related to the difference in the book and tax bases of acquired assets and liabilities.
Open Text Corporation Filing: 10-Q, 9/30/09 As of acquisition date, Vignette had significant deferred tax assets that were subject to valuation allowances including deferred tax assets relating to the domestic federal net operating loss (NOL) carryforwards. Internal Revenue Code Section 382 imposes substantial
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restrictions on the utilization of these NOLs in the event of an ownership change of the corporation. We are currently assessing our ability to utilize these tax attributes prior to their expiration. The final valuation of the deferred tax assets could result in a material change in the above indicated amount of goodwill and intangible assets.
Pfizer Inc Filing: 10-K, 12/31/09 Tax MattersIn the ordinary course of business, Wyeth incurs liabilities for income taxes. Income taxes are exceptions to both the recognition and fair value measurement principles associated with the accounting for business combinations. Reserves for income tax contingencies continue to be measured under the benefit recognition model as previously used by Wyeth (see Note 1P. Significant Accounting Policies: Income Tax Contingencies). Net liabilities for income taxes approximate $24.8 billion as of the acquisition date, which includes $1.8 billion for uncertain tax positions. The net tax liability includes the recording of additional adjustments of approximately $15.0 billion for the tax impact of fair value adjustments and $10.6 billion for income tax matters that we intend to resolve in a manner different from what Wyeth had planned or intended. For example, because we plan to repatriate certain overseas funds, we provided deferred taxes on Wyeths unremitted earnings, as well as on certain book/tax basis differentials related to investments in certain foreign subsidiaries for which no taxes have been previously provided by Wyeth as it was Wyeths intention to permanently reinvest those earnings and investments. See below for items pending finalization.
Measurement period adjustments

Adjustments to the acquisition accounting within the measurement period (not to exceed one year from the acquisition date) result in the acquirer revising prior period financial information when reissued to reflect the adjustments as part of the acquisition accounting.
General Dynamics Corp Filing: 10-Q, 10/4/09 The changes in the carrying amount of goodwill by business group for the nine months ended October 4, 2009, were as follows:
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Aerospace December 31, 2008 Acquisitions(a) Other(b) October 4, 2009 $2,316 257 79 $2,652
Combat Systems Marine Systems $2,638 (80) 131 $2,689 $192 1 5 $198
Information Systems and Technology $6,267 575 29 $6,871
Total Goodwill $11,413 753 244 $12,410
a) Includes adjustments to preliminary assignment of fair value to net assets acquired b) Consists primarily of adjustments for foreign currency translation
Dean Foods Company Filing: 10-Q, 9/30/09 Intangible Assets Footnote Changes in the carrying amount of goodwill for the nine months ended September 30, 2009 are as follows:
(In thousands) Balance at December 31, 2008 Acquisitions Purchase accounting adjustments Foreign currency translation Balance at September 30, 2009
Fresh Dairy Direct $2,186,506 13,890 2,636 $2,203,032
WhiteWaveMorningstar $886,996 176,270 -59 -924 $1,062,283
Total $3,073,502 190,160 2,577 -924 $3,265,315
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Index of Companies included in the Summary
Companies Abbott Laboratories, Inc. Alcoa Inc. Assured Guaranty Ltd. Atheros Communications Inc. Ball Corporation Bank of America BioClinica, Inc. Blackboard, Inc. Bottomline Technologies, Inc. Brink's Company Bristol-Myers Squibb Co. Cephalon, Inc. Ceradyne, Inc. Chesapeake Utilities Corp. Clean Harbors Inc. Dean Foods Company DirecTV DivX, Inc. Dow Chemical Co. Dress Barn, Inc. eBay Inc. Endo Pharmaceuticals Holdings, Inc. Energy Conversion Devices, Inc. EquityOne, Inc. ev3 Inc. Exar Corporation First Solar, Inc. General Dynamics Corp Gilead Sciences Inc. GSI Commerce Inc. Hickory Tech Corporation Hubbell Inc. Ikanos Communications, Inc. Independent Bank Corp. Integrated Device Technology, Inc. Inverness Medical Innovations, Inc. Iridium Communications Inc. M&T Bank Corporation Magellan Midstream Partners LP McAfee, Inc. Merck & Co, Inc. Microtune, Inc. Nash Finch Co. Netlogic Microsystems Inc. NRG Energy, Inc. Nuance Communications, Inc. Onyx Pharmaceuticals Inc. Open Text Corporation
Page 76 62 37, 78 23 50 41, 57, 71 32 95 23, 89 60 52, 64 63, 75 49 58 72 94, 98 67 27 42, 56, 71, 73 85 86 33, 47, 70, 72 78 30 26, 34, 51 25 32 97 20, 73, 87 35 50 59 53 81 52 22, 27 56 42, 82 74 26 65, 77 93 55 29, 44, 83, 90, 94 45, 57, 78, 87 71 75 65, 96
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Companies Penseco Financial Services Corp Pfizer Inc. Pulte Homes, Inc. Resources Connection Inc. Riverbed Technology, Inc. Sapient Corp SCM Microsystems, Inc. Scripps Networks Interactive Inc. SonoSite, Inc. Sprint Nextel Corp Stryker Corp United Technologies Corporation Walt Disney Co. Warner Chilcott PLC Watson Pharmaceuticals Inc. Westamerica Bancorporation Westway Group, Inc. Yadkin Valley Financial Corporation Yum! Brands, Inc.
Page 21 43, 48, 58, 84, 95, 97 46, 83 35 24, 34, 40 92 21 43, 69 36, 96 65, 79 93 61 47 54, 75 83 39 20 80 64
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PwC Contacts John R. Formica, Jr. Partner Phone: 973-236-4152 Email: john.r.formica@us.pwc.com Lawrence N. Dodyk Partner Phone: 973-236-7213 Email: lawrence.dodyk@us.pwc.com Kevin McManus Senior Manager Phone: 973-236-5573 Email: kevin.m.mcmanus@us.pwc.com Hadir El Fardy Senior Manager Phone: 973-236-5562 Email: hadir.el.fardy@us.pwc.com
This publication has been prepared for general information on matters of interest only, and does not constitute professional advice on facts and circumstances specific to any person or entity. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication. The information contained in this material was not intended or written to be used, and cannot be used, for purposes of avoiding penalties or sanctions imposed by any government or other regulatory body. PricewaterhouseCoopers LLP, its members, employees and agents shall not be responsible for any loss sustained by any person or entity who relies on this publication. 2010 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, or as the context requires, the PricewaterhouseCoopers global network or other member firms of the network each of which is a separate and independent legal entity. To access additional content on accounting and reporting issues, register for CFOdirect Network (http://www.cfodirect.pwc.com), PricewaterhouseCoopers' online resource for senior financial executives.
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Business Combinations and Noncontrolling Interests

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

I. Analysis of 2009 Filings

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Cash Cash and shares Shares

Did not disclose

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Was contingent consideration disclosed?

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Was a bargain purchase gain disclosed?

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Were acquisition costs disclosed?

Yes 48% 52% No

Other expenses - Non-Operating Separate line - Non-Operating

Did not disclose

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Was the purchase price allocation disclosed

Yes - schedule Yes - narrative No 82%

Preliminary Final Did not disclose 74%

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

DCF income approach 43% Method not disclosed 57%

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Approach to recording certain types of contingencies

Legacy-Litigation 12% Legacy-Other non-litigation Legacy-Environmental 23% FV-Environmental FV-Warranty FV-Contractual

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Classification of the NCI

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Were acquiree results since acquisition disclosed?

Was pro forma information disclosed?

Yes 44% 56% No

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Sample Size DCF income approach Method not disclosed

Sample Size Yes No

100% 40% 60%

Sample Size Yes No

100% 44% 56%

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

II. Financial statement presentation and disclosure examples

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Gilead Sciences Inc Filing: 10-Q, 6/30/09

Westway Group Filing: 10-Q, 6/30/09

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Penseco Financial Services Corp Filing: 10-Q, 6/30/09

SCM Microsystems, Inc Filing: 10-Q, 6/30/09

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Inverness Medical Innovation, Inc Filing: 10-Q, 6/30/09

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Contingent consideration - Liability classification

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Exar Corporation Filing: 10-Q, 6/28/09

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

ev3 Inc. Filing: 10-Q, 7/5/09

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

$188,527 12,582 9,679 (837) $209,951

Business Combinations and Noncontrolling Interests Financial Statement Disclosure Summary

Contingent consideration - Equity classification