Acquisitions and Divestiture

12 Months Ended

Dec. 31, 2011

Business Combinations [Abstract]

Business Combinations Policy [Policy Text Block]

Acquisitions and Divestiture

2011 Acquisitions

IronKey Systems, Inc.

On October 4, 2011 we acquired the secure data storage hardware assets of IronKey Systems Inc. (IronKey). The purchase price consisted of a cash payment of $19.0 million. We also entered into a strategic partnership whereby we received a license from IronKey for its secure storage management software and service as well as an exclusive license to use the IronKey brand for secure storage products including online cloud-based security service.

The purchase price allocation resulted in goodwill of $9.4 million, consisting of expected strategic synergies and intangible assets that do not qualify for separate recognition. IronKey is included in our existing Americas operating segment and is included in the Mobile Security reporting unit for the purposes of goodwill impairment testing. This goodwill is deductible for tax purposes. See Note 6 here for more information regarding goodwill.

The following table illustrates our allocation of the purchase price to the assets acquired and liabilities assumed:

(In millions)	Amount
Accounts receivable and other assets	$	3.5
Inventories	2.1
Intangible assets	7.8
Goodwill	9.4
Accounts payable and other liabilities	(3.8		)
	$	19.0

Our allocation of the purchase price to the assets acquired and liabilities assumed resulted in the recognition of the following intangible assets:

			Weighted
(In millions)	Amount		Average Life
Trade name	$	0.8	2 years
License	1.9		7 years
Customer relationships	0.4		7 years
Distributor relationships	0.9		9 years
Proprietary technology	3.8		4 years
	$	7.8

ProStor Systems, Inc.

On August 29, 2011, we acquired certain assets of ProStor Systems, Inc. (ProStor), including the InfiniVaulttiered storage system and other related technologies. The purchase price consisted of a cash payment of $0.5 million and resulted in no goodwill.

Memory Experts International Inc. (MXI Security)

On June 4, 2011, we acquired the assets of MXI Security, a leader in high-security and privacy technologies, from Memory Experts International Inc. MXI Security sells encrypted and biometric USB drives (MXI Stealth Key), encrypted and biometric hard disk drives (MXI Stealth HD), secure portable desktop solutions (Stealth Zone), and software solutions. MXI Security products contain various security features such as password authentication, encryption and remote manageability. The purchase price consisted of a cash payment of $24.5 million and the estimated fair value of future contingent consideration of $9.2 million, totaling $33.7 million.

The purchase price allocation resulted in goodwill of $21.9 million, consisting of expected strategic synergies and intangible assets that do not qualify for separate recognition. MXI Security is included in our existing Americas operating segment and is included in the Mobile Security reporting unit for the purposes of goodwill impairment testing. This goodwill is deductible for tax purposes. See Note 6 here for more information regarding goodwill.

Future contingent consideration consists of an earn-out payments which may be paid based on incremental revenue of the acquired business and incremental gross margin of the acquired business. The earn-out payments will be between $0.0 and $45.0 million. We revalue this contingent consideration each reporting period. Based on our analysis of fair value as of December 31, 2011, the value at acquisition of such contingent consideration obligation equaled the estimated fair value as of December 31, 2011 and no adjustments were required.

The following table illustrates our allocation of the purchase price to the assets acquired and liabilities assumed:

(In millions)	Amount
Accounts receivable and other assets	$	0.8
Inventories	1.1
Intangible assets	10.6
Goodwill	21.9
Accounts payable and other liabilities	(0.7		)
	$	33.7

Our allocation of the purchase price to the assets acquired and liabilities assumed resulted in the recognition of the following intangible assets:

			Weighted
(In millions)	Amount		Average Life
Trademark	$	0.7	10 years
Supply agreement	1.4		3 years
Customer relationships	1.0		8 years
Proprietary technology	7.5		6 years
	$	10.6

BeCompliant Corporation (doing business as Encryptx)

On February 28, 2011, we acquired substantially all of the assets of BeCompliant Corporation, doing business as Encryptx (Encryptx), a technology leader in encryption and security solutions for removable storage devices and removable storage media. The purchase price was $2.3 million, consisting of a cash payment of $1.0 million and the estimated fair value of future contingent consideration of $1.3 million. The total amount of contingent consideration that could become payable under the terms of the agreement is $1.5 million. We revalue this contingent consideration each reporting period. Based on our analysis of fair value as of December 31, 2011, the value at acquisition of such contingent consideration obligation equaled the estimated fair value as of December 31, 2011 and no adjustments were required.

The purchase price allocation resulted in goodwill of $1.6 million, consisting of expected strategic synergies and intangible assets that do not qualify for separate recognition. This goodwill is deductible for tax purposes. The goodwill was allocated to our existing Americas-Commercial reporting unit. Goodwill is considered impaired when its carrying amount exceeds its implied fair value. As of March 31, 2011, the carrying amount of all of our reporting units significantly exceeded their fair value and we performed an impairment test. Based on the goodwill test performed as of March 31, 2011, we determined that the carrying amount of the goodwill in the Americas-Commercial reporting unit, including the assets of Encryptx, exceeded the implied fair value and, therefore, the goodwill was fully impaired. As a result, a $1.6 million goodwill impairment charge was recorded during 2011 in the Consolidated Statements of Operations.

The effects of these acquisitions individually and in total did not materially impact our 2011 results of operations. Therefore, pro forma disclosures are not presented.

Divestiture Presented as Discontinued Operations

Discontinued operations are related to the wind down of the GDM joint venture. GDM was a joint venture created to market optical media products with Moser Baer India Ltd. (MBI). Since the inception of the joint venture in 2003, we held a 51 percent ownership in the business. As the controlling shareholder, we have historically consolidated the results of the joint venture in our financial statements. GDM was previously included partially in the Americas and Europe segments. See Note 14 herein for additional detail regarding the impact of discontinued operations on the Americas and Europe segments.

The results of discontinued operations were as follows:

	Years Ended December 31,
	2011			2010			2009
	(In millions)
Net revenue	$	—		$	—		$	74.5
(Loss) income before income taxes	(0.1		)	(0.2		)	2.1
Income tax provision	—			—			0.3
Total discontinued operations	$	(0.1	)	$	(0.2	)	$	1.8

No acquisitions were completed during the years ended December 31, 2010 or 2009.