8. Acquisition

On August 21, 2014, Cirrus Logic completed the acquisition of Wolfson Microelectronics plc (the “Acquisition”), a public limited company incorporated in Scotland (“Wolfson”). Upon completion of the acquisition, Wolfson was re-registered as a private limited company. Wolfson is a supplier of high performance, mixed-signal audio solutions for the consumer electronics market. The Acquisition accelerates Cirrus Logic’s strategic roadmap, further strengthens our technology portfolio with the addition of MEMS microphones and extensive software capabilities, while significantly expanding our development capacity.

The enterprise value for Wolfson in connection with the Acquisition was approximately £283 million (approximately $469 million based on a U.S. dollar to pound sterling exchange rate of 1.659), and was based on the agreed upon offer of £2.35 per share (the “Offer”) for the entire issued and to be issued share capital of Wolfson. Cirrus Logic financed the Acquisition through a combination of existing cash on Cirrus Logic’s balance sheet and $225 million in debt funding from Wells Fargo Bank, National Association, as discussed below in Note 9. Upon completion of the Acquisition, the Company recorded approximately $12.0 million, in the current fiscal quarter, of realized losses on foreign currency fluctuations in the initial valuation exchange rate of 1.682 (U.S. dollar to pound sterling) and the actual exchange rate at Acquisition date of 1.659. The loss is included in the consolidated condensed statements of income under the caption “Other income (expense)”.

The Acquisition was accounted for as a business purchase pursuant to ASC Topic 805, Business Combinations, and the operations of Wolfson have been included in the Company’s consolidated financial statements since August 21, 2014, the date of acquisition. The following table presents the initial allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition (in thousands):


		Amount
Cash and cash equivalents	$	25,342
Inventory		28,658
Other current assets		15,633
Property, plant and equipment		29,093
Intangible assets		175,987
Pension assets		1,625
Total identifiable assets acquired	$	276,338

Deferred tax liability - current		(11,483)
Deferred revenue		(551)
Other accrued liabilities		(41,417)
Other long-term liabilities		(2,449)
Total identifiable liabilities assumed	$	(55,900)
Net identifiable assets acquired	$	220,438
Goodwill		249,043
Net assets acquired	$	469,481

The goodwill of $249.0 million arising from the Acquisition is attributable primarily to expected synergies and the product and customer base of Wolfson. None of the goodwill is expected to be deductible for income tax purposes. As of September 27, 2014, there were no changes in the recognized amounts of goodwill resulting from the Acquisition.

The components of the acquired intangible assets and related weighted average amortization periods are detailed below (in thousands):



Intangible assets		Amount	Weighted-average Amortization Period (years)
Developed technology	$	74,247	6.2
Technology intellectual property		14,572	5.3
Trademark		1,437	1.3
In-process research & development		72,750	7.5
Customer relationships		12,981	10.0
Total	$	175,987

The initial allocation of the purchase price is preliminary and subject to completion, including the areas of taxation, inventory, real property, intangible assets, other assets, deferred revenue, and other liabilities, where valuation assessments are in progress. The adjustments arising from the completion of the outstanding matters may materially affect the preliminary purchase accounting and would be retroactively reflected in the financial statements as of September 27, 2014 and for the interim periods then ended.

The Company recognized $14.9 million of acquisition related costs that were expensed in the current period. These costs are included in the consolidated condensed statements of income in the line item entitled “Acquisition related costs.”

The Company’s consolidated condensed statements of income for the period ending September 27, 2014 included $13.0 million of revenue attributable to Wolfson, which reflects revenues from the acquisition date to the end of the period. The earnings related to Wolfson included in the Company’s consolidated condensed statements of income for the period ending September 27, 2014, are excluded as it would be impracticable to allocate costs and services shared across product lines for the Company as to not be misleading.

Giving pro forma effect to the Acquisition as if it had occurred as of March 30, 2014, the beginning of the Company’s fiscal year, and after applying the Company’s accounting policies and adjusting the results to reflect these changes since March 30, 2014, $57.2 million of pro forma revenue would have been attributable to Wolfson. Pro forma earnings attributable to Wolfson is excluded as it would be impracticable. Costs and services shared across product lines for the Company cannot appropriately be allocated as to not be misleading.