| ACQUISITIONS: |
3.ACQUISITIONS:
Addressable Television Net Assets from Allant (“Allant”)
On December 1, 2015, the Company acquired certain addressable television net assets from The Allant Group, Inc. The acquisition provides the Company additional consumer insight capabilities that enable clients to more effectively reach their television channel customer base and audiences. The Company paid approximately $5.4 million in cash. The Company has omitted pro forma disclosures related to this acquisition as the pro forma effect of this acquisition is not material. The results of operation for the acquisition are included in the Company’s consolidated results beginning December 1, 2015.
The following table presents the purchase price allocation related to assets acquired and liabilities assumed (dollars in thousands):
|
|
|
December 1, 2015
|
|
|
Assets acquired:
|
|
|
|
|
Accounts receivable
|
|
$
|
499
|
|
|
Developed technology
|
|
2,700
|
|
|
Other intangible assets
|
|
1,400
|
|
|
Goodwill
|
|
1,377
|
|
|
|
|
|
|
|
|
|
5,976
|
|
|
Accounts payable
|
|
(590
|
)
|
|
|
|
|
|
|
Net cash paid
|
|
$
|
5,386
|
|
|
|
|
|
|
|
The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed were based on preliminary calculations and valuations using management’s estimates and assumptions and were based on the information that was available as of the date of acquisition. The Company expects to finalize the valuation as soon as practical.
LiveRamp
On July 1, 2014, the Company acquired all of the outstanding shares of LiveRamp, Inc. (“LiveRamp”), a leading service provider for onboarding customer data into digital marketing applications. The Company acquired LiveRamp to, among other things, provide clients with solutions for bringing offline customer data online with better matching, more connectivity, and faster onboarding. The Company has included the financial results of LiveRamp in the consolidated financial statements from the date of acquisition. LiveRamp is included in the Connectivity segment. The acquisition date fair value of the consideration transferred for LiveRamp was approximately $272.7 million which consisted of the following (dollars in thousands):
|
|
|
July 1, 2014
|
|
|
Cash, net of $12.0 million cash acquired
|
|
$
|
234,672
|
|
|
Restricted cash held in escrow
|
|
31,000
|
|
|
Fair value of stock options issued included in purchase price
|
|
6,978
|
|
|
|
|
|
|
|
Total fair value of consideration transferred
|
|
$
|
272,650
|
|
|
|
|
|
|
|
The fair value of the stock options issued by the Company was determined using a binomial lattice approach (see note 12). The total fair value of the stock options issued was $30.5 million of which $7.0 million was allocated to the purchase consideration and $23.5 million was allocated to future services and will be expensed over the remaining service periods on a straight-line basis, net of any forfeitures.
On the acquisition date, the Company delivered $31.0 million of cash to an escrow agent according to the terms of the purchase agreement. The cash was restricted as to withdrawal or use by the Company. The restricted cash was delivered to the LiveRamp sellers one year from the acquisition date, during fiscal 2016. The principal escrow amount was owned by the Company until funds were delivered to the LiveRamp sellers. All interest and earnings on the principal escrow amount remained property of the Company. At March 31, 2015, the restricted cash was reported as restricted cash held in escrow, with an offsetting liability reported as acquisition escrow payable, on the consolidated balance sheet.
The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the date of the acquisition (dollars in thousands):
|
|
|
July 1, 2014
|
|
|
Assets acquired:
|
|
|
|
|
Cash
|
|
$
|
12,016
|
|
|
Trade accounts receivable
|
|
5,206
|
|
|
Deferred income tax assets
|
|
10,444
|
|
|
Goodwill
|
|
213,093
|
|
|
Developed technology (Software)
|
|
40,000
|
|
|
Other intangible assets (Other assets, net)
|
|
26,500
|
|
|
Other current and noncurrent assets
|
|
1,306
|
|
|
|
|
|
|
|
|
|
308,565
|
|
|
Deferred income tax liabilities
|
|
(18,945
|
)
|
|
Accounts payable, accrued expenses and deferred revenue
|
|
(4,954
|
)
|
|
|
|
|
|
|
Net assets acquired
|
|
284,666
|
|
|
Less:
|
|
|
|
|
Cash acquired
|
|
12,016
|
|
|
|
|
|
|
|
Net purchase price allocated
|
|
$
|
272,650
|
|
|
Less:
|
|
|
|
|
Fair value of stock options issued included in purchase price
|
|
6,978
|
|
|
|
|
|
|
|
Net cash paid
|
|
$
|
265,672
|
|
|
|
|
|
|
|
The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill and is primarily attributed to development of future technology and products related to the onboarding of customer data into digital marketing applications, development of future customer relationships, and LiveRamp’s assembled workforce. The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed were based on preliminary calculations and valuations and on management’s estimates and assumptions and were based on the information that was available as of the date of the acquisition. Goodwill is not expected to be deductible for U.S. income tax purposes.
The amounts allocated to other intangible assets in the table above included customer relationships and a trade name. Intangible assets will be amortized on a straight-line basis over the estimated useful lives of 2 to 6 years. The following table presents the components of intangible assets acquired and their estimated useful lives as of the acquisition date (dollars in thousands):
|
|
|
Fair value
|
|
Useful life
(in years)
|
|
|
Developed technology
|
|
$
|
40,000
|
|
4
|
|
|
Customer relationships
|
|
25,000
|
|
6
|
|
|
Trade name
|
|
1,500
|
|
2
|
|
|
|
|
|
|
|
|
|
Total intangible assets subject to amortization
|
|
$
|
66,500
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s consolidated statements of operations for fiscal 2015 included revenue and net loss of $27.0 million and $16.5 million, respectively, attributable to LiveRamp since the acquisition.
Following are the Company’s supplemental consolidated results on an unaudited pro forma basis, as if the LiveRamp acquisition had taken place at the beginning of each of the fiscal years presented (dollars in thousands, except per-share amounts):
|
|
|
2015
|
|
2014
|
|
|
Revenues
|
|
$
|
811,619
|
|
$
|
824,393
|
|
|
Net loss attributable to Acxiom
|
|
$
|
(33,797
|
)
|
$
|
(40,268
|
)
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per share
|
|
$
|
(0.44
|
)
|
$
|
(0.54
|
)
|
|
|
|
|
|
|
|
|
|
These pro forma results were based on estimates and assumptions, which we believe are reasonable. They were not the results that would have been realized had we been a combined company during the periods presented and are not necessarily indicative of our consolidated results of operations in future periods. The pro forma results include adjustments primarily related to purchase accounting adjustments, including amortization expense of $3.7 million and $14.9 million for fiscal years 2015 and 2014, respectively, related to acquired intangible assets, stock-based compensation expense of approximately $5.0 million and $21.3 million for fiscal years 2015 and 2014, respectively, related to unvested stock options and restricted stock units issued to former LiveRamp employees, and the related income tax effects as though the acquisition occurred as of the beginning of the Company’s fiscal years 2015 and 2014.
Other Intangible Assets
The amounts allocated to other intangible assets from acquisitions include software, customer relationship intangibles and trademarks. Amortization lives for those intangibles range from two years to ten years. The following table shows the amortization activity of purchased intangible assets (dollars in thousands):
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
Developed technology assets, gross (Software)
|
|
$
|
42,850
|
|
$
|
42,524
|
|
$
|
2,537
|
|
|
Accumulated amortization
|
|
(17,950
|
)
|
(9,924
|
)
|
(2,349
|
)
|
|
|
|
|
|
|
|
|
|
|
Net developed technology assets
|
|
$
|
24,900
|
|
$
|
32,600
|
|
$
|
188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer/trademark assets, gross (Other assets)
|
|
$
|
35,466
|
|
$
|
34,166
|
|
$
|
7,674
|
|
|
Accumulated amortization
|
|
(16,263
|
)
|
(11,265
|
)
|
(7,393
|
)
|
|
|
|
|
|
|
|
|
|
|
Net customer/trademark assets
|
|
$
|
19,203
|
|
$
|
22,901
|
|
$
|
281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets, gross
|
|
$
|
78,316
|
|
$
|
76,690
|
|
$
|
10,211
|
|
|
Total accumulated amortization
|
|
(34,213
|
)
|
(21,189
|
)
|
(9,742
|
)
|
|
|
|
|
|
|
|
|
|
|
Net intangible assets
|
|
$
|
44,103
|
|
$
|
55,501
|
|
$
|
469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense
|
|
$
|
15,467
|
|
$
|
11,447
|
|
$
|
340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The intangible assets in the table above have remaining amortizable periods over the next five years.
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