Motorola 2007 Annual Report Download - page 126

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The Company is in the process of performing a review of its ability to utilize acquired tax carryovers. In
addition, the Company is in the process of finalizing valuations of acquired assets and liabilities. Accordingly, the
outcome of these processes may result in an adjustment to the preliminary purchase price allocation. Any necessary
adjustment will be recorded in the period finalized.
The results of operations of Netopia have been included in the Home and Networks Mobility segment in the
Company’s consolidated financial statements subsequent to the date of acquisition. The pro forma effects of this
acquisition on the Company’s consolidated financial statements were not significant.
Terayon Communication Systems, Inc.
In July 2007, the Company acquired Terayon Communication Systems, Inc. (“Terayon”), a provider of real-
time digital video networking applications to cable, satellite and telecommunication service providers worldwide,
for $137 million in net cash. The Company recorded $102 million in goodwill, none of which is expected to be
deductible for tax purposes and $52 million in identifiable intangible assets. Intangible assets are included in Other
assets in the Company’s consolidated balance sheets. The intangible assets are being amortized over periods
ranging from 4 to 6 years on a straight-line basis.
The Company is in the process of performing a review of its ability to utilize acquired tax carryovers. In
addition, the Company is in the process of finalizing valuations of acquired assets and liabilities. Accordingly, the
outcome of these processes may result in an adjustment to the preliminary purchase price allocation. Any necessary
adjustment will be recorded in the period finalized.
The results of operations of Terayon have been included in the Home and Networks Mobility segment in the
Company’s consolidated financial statements subsequent to the date of acquisition. The pro forma effects of this
acquisition on the Company’s consolidated financial statements were not significant.
Broadbus Technologies, Inc.
In September 2006, the Company acquired Broadbus Technologies, Inc. (“Broadbus”), a provider of
technology solutions for television on demand, for $181 million in cash. The Company recorded $131 million in
goodwill, none of which is expected to be deductible for tax purposes, a $12 million charge for acquired in-process
research and development costs, and $30 million in identifiable intangible assets. The acquired in-process research
and development will have no alternative future uses if the products are not feasible. At the date of the acquisition,
one project was in process. This project is expected to be completed in 2008. The average risk adjusted rate used
to value this project was 22%. The allocation of value to in-process research and development was determined
using expected future cash flows discounted at average risk adjusted rates reflecting both technological and market
risk as well as the time value of money. These research and development costs were expensed at the date of
acquisition. Intangible assets are included in Other assets in the Company’s consolidated balance sheets. The
intangible assets are being amortized over periods ranging from 3 to 5 years on a straight-line basis.
The results of operations of Broadbus have been included in the Home and Networks Mobility segment in the
Company’s consolidated financial statements subsequent to the date of acquisition. The pro forma effects of this
acquisition on the Company’s consolidated financial statements were not significant.
TTP Communications plc
In August 2006, the Company acquired TTP Communications plc (“TTPCom”), a provider of wireless
software platforms, protocol stacks and semiconductor solutions, for $193 million in cash. The Company recorded
$52 million in goodwill, a portion of which is expected to be deductible for tax purposes, a $17 million charge for
acquired in-process research and development costs, and $118 million in identifiable intangible assets. The
acquired in-process research and development will have no alternative future uses if the products are not feasible.
At the date of the acquisition, a total of four projects were in process. The average risk adjusted rate used to value
these projects was 18%. As of December 31, 2007, the work on one of these projects continues and is expected to
be completed in 2008. The allocation of value to in-process research and development was determined using
expected future cash flows discounted at average risk adjusted rates reflecting both technological and market risk
as well as the time value of money. These research and development costs were expensed at the date of acquisition.
However, due to recent changes in software platform strategy, impairment charges of $89 million were recorded
118