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60
NOTE 9 — BUSINESS COMBINATIONS
Nokia’s Devices and Services Business
On April 25, 2014, we completed the transaction to acquire substantially all of NDS for a total purchase price of $9.5
billion, including cash acquired of $1.5 billion (“the Acquisition”). The purchase price consisted primarily of cash of $7.1
billion and Nokia’s repurchase of convertible notes of $2.1 billion which was a non-cash transaction. The Acquisition is
expected to accelerate the growth of our Devices and Consumer (“D&C”) business through faster innovation, synergies,
and unified branding and marketing.
The purchase price allocation as of the date of the Acquisition was based on a preliminary valuation and is subject to
revision as more detailed analyses are completed and additional information about the fair value of assets acquired and
liabilities assumed become available.
The major classes of assets and liabilities to which we have preliminarily allocated the purchase price were as follows:
(In millions)
Cash $ 1,503
Accounts receivable (a) 754
Inventories 544
Other current assets 960
Property and equipment 981
Intangible assets 4,509
Goodwill (b) 5,458
Other 249
Current liabilities (4,576)
Long-term liabilities (917)
Total purchase price $ 9,465
(a) Gross accounts receivable is $901 million, of which $147 million is expected to be uncollectible.
(b) Goodwill was assigned to our new Phone Hardware segment. The goodwill was primarily attributed to increased
synergies that are expected to be achieved from the integration of NDS. Goodwill of $4.5 billion is expected to be
deductible in Finland for tax purposes.
Following are the details of the purchase price allocated to the intangible assets acquired:
(In millions) Amount
Weighted
Average Life
Technology-based $ 2,493 9 years
Contract-based 1,500 9 years
Customer-related 359 3 years
Marketing-related (trade names) 157 2 years
Fair value of intangible assets acquired $ 4,509 8 years
Our consolidated income statement for fiscal year 2014 includes revenue and operating loss of $2.0 billion and $692
million, respectively, attributable to NDS since the Acquisition.
Following are the supplemental consolidated results of Microsoft Corporation on an unaudited pro forma basis, as if the
Acquisition had been consummated on July 1, 2012:
(In millions, except per share amounts)
Y
ear Ended June 30, 2014 2013
Revenue $ 96,248 $ 93,243
Net income $ 20,234 $ 20,153
Diluted earnings per share $ 2.41 $ 2.38