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Acquisitions
9 Months Ended
Sep. 30, 2011
Acquisitions 
Acquisitions

Note 3.         Acquisitions

 

MagnaLynx

 

In March 2010, the Company acquired all of the outstanding stock of MagnaLynx, Inc. (MagnaLynx), a provider of semiconductor interface technology. Under the terms of the merger agreement, the Company paid approximately $2.2 million to settle debt and certain other liabilities of MagnaLynx and approximately $1.2 million to MagnaLynx shareholders. An additional $0.5 million, referred to as the indemnification holdback, is payable 18 months after the closing, net of any costs related to indemnification claims that may arise during such 18 month period. The full amount of the indemnification holdback was paid in October 2011.  In addition, the Company paid an additional $1.0 million to the former shareholders of MagnaLynx in the second quarter of 2011, as earn-out consideration based on MagnaLynx meeting certain contractually agreed-upon development milestones. This earn-out consideration was included in the acquisition price because the Company expected that it was more likely than not that the objectives related to this earn-out would be met.

 

The Company recorded a total acquisition price as follows (in thousands):

 

Cash

 

$

3,355

Acquisition-related earn-out

 

1,000

Indemnification holdback

 

500

Liabilities assumed by MoSys

 

32

Total acquisition price

 

$

4,887

 

The allocation of the acquisition price for net tangible and intangible assets was as follows (in thousands):

 

Net tangible assets

 

$

100

Intangible asset - developed technology

 

4,440

Goodwill

 

347

Total acquisition price

 

$

4,887

 

Goodwill represents the excess of the acquisition price of an acquired business over the fair value of the underlying net tangible and intangible assets. Included in the goodwill amount is the value of the acquired workforce, which has significant expertise in low-power interface IP. The goodwill recognized is expected to be deductible for income tax purposes.

 

The value of the identifiable intangible asset was determined by using future cash flow assumptions. The intangible asset, which is considered developed technology, is being amortized on a straight-line basis over its estimated life of five years.