Preliminary Purchase Price Allocation. The total consideration for the transaction is $8,500 in a debt-free cash-free transaction. The combined company will allocate the purchase price paid by ORBCOMM to the fair value of the WAM assets acquired and liabilities assumed. The pro forma purchase price allocation below has been developed based on preliminary estimates of fair value using the historical financial statements of WAM as of September 30, 2015. In addition, the allocation of the purchase price to acquired intangible assets is based on preliminary fair value estimates and is subject to final management analysis. Once ORBCOMM completes this analysis, additional insight may be gained that could impact: (i) the estimated total value assigned to intangible assets, (ii) the estimated allocation of value between finite-lived and indefinite-lived intangible assets and/or (iii) the estimated weighted- average useful life of each category of intangible assets. The estimated intangible asset values and their useful lives could be impacted by a variety of factors. The estimated intangible assets are comprised of customer contracts with an estimated useful life of 11 years, technology with an estimated useful life of 10 years, and trade names with an estimated useful life of 7 years, which is consistent with the estimated benefit period. Since ORBCOMM has limited information at this time to value all of the intangible assets, the estimated fair values were based primarily on current estimates of WAM’s expected future cash flows for all customer contracts and projected revenue for all trade names and technology. ORBCOMM expects that the estimated value assigned to WAM’s customer contracts is likely to change as ORBCOMM analyzes the specifics of WAM’s customer contracts and as life and renewal assumptions are refined. Additional intangible asset classes may be identified as the valuation process continues, however such items are currently not expected to be material to the overall purchase price allocation. A 10% change in the amount allocated to identifiable intangible assets would increase or decrease annual amortization expense by approximately $38. The residual amount of the purchase price after preliminary allocation to identifiable intangibles has been allocated to goodwill. The actual amounts recorded when the final valuation is complete may differ materially from the pro forma amounts presented below: Assets acquired: Current assets $ 574 Satellite network and other equipment, net 122 Total tangible assets acquired 696 Intangible assets acquired 7,699 Liabilities assumed (7,594 ) Total assets acquired in excess of liabilities assumed 801 Goodwill 7,699 Total purchase price $ 8,500
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Preliminary Purchase Price Allocation. The total consideration for the transaction is $8,500 in a debt-free cash-free transaction. The combined company will allocate the purchase price paid by ORBCOMM Express Scripts to the fair value of the WAM Medco assets acquired and liabilities assumed. The pro forma purchase price allocation below has been developed based on preliminary estimates of fair value using the historical financial statements of WAM Medco as of September 30December 31, 20152011. In addition, the allocation of the purchase price to acquired intangible assets is based on preliminary fair value estimates and is subject to final management analysis, with the assistance of third party valuation advisors. Once ORBCOMM completes New Express Scripts and its third party valuation advisors complete this analysis, additional insight may will be gained that could impact: (i) the estimated total value assigned to intangible assets, (ii) the estimated allocation of value between finite-lived and indefinite-lived intangible assets and/or (iii) the estimated weighted- weighted-average useful life of each category of intangible assets. The estimated intangible asset values and their useful lives could be impacted by a variety of factors. The estimated intangible assets are comprised of customer contracts with an estimated useful life of 11 years, technology with an estimated useful life of 10 years, years and trade names with an estimated useful life of 7 5 years, which is consistent with the estimated benefit period. Since ORBCOMM New Express Scripts has limited information at this time to value all of the intangible assets, the estimated fair values were based primarily on current estimates of WAMMedco’s expected future cash flows for all customer contracts and projected revenue for all trade names and technologynames. ORBCOMM New Express Scripts expects that the estimated value assigned to WAMMedco’s customer contracts is likely to change as ORBCOMM New Express Scripts analyzes the specifics of WAMMedco’s customer contracts and as life and renewal assumptions are refined. Additional intangible asset classes may be identified as the valuation process continues, however such items are currently not expected to be material to the overall purchase price allocation. A 10% change in the amount allocated to identifiable intangible assets would increase or decrease annual amortization expense by approximately $38140.0 million. The residual amount of the purchase price after preliminary allocation to identifiable intangibles has been allocated to goodwill. The actual amounts recorded when the final valuation is complete may differ materially from the pro forma amounts presented below: Assets below (in millions): Tangible assets acquired: Current assets $ 574 Satellite network 6,676.9 Property and other equipment, net 122 1,108.4 Other non-current assets 61.6 Total tangible assets acquired 696 Intangible 7,846.9 Value assigned to intangible assets acquired 7,699 11,700.0 Liabilities assumed assumed, excluding debt (7,594 7,909.1 ) Deferred tax liability related to acquired intangible assets and replacement stock awards included in the purchase price (3,324.3 ) Total assets acquired in excess of liabilities assumed 801 8,313.5 Goodwill 7,699 27,077.6 Total purchase price 35,391.1 Less debt assumed (5,331.4 ) Total payments to Medco stockholders $ 8,50030,059.7
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