Dell 2007 Annual Report Download - page 83

Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 7 — ACQUISITIONS
Dell has recorded all of its acquisitions using the purchase method of accounting in accordance with SFAS No. 141, Business
Combinations ("SFAS 141"). Accordingly, the results of operations of the acquired companies have been included in Dell's consolidated
results since the date of each acquisition. Dell allocates the purchase price of its acquisitions to the tangible assets, liabilities, and
intangible assets acquired, which include in-process research & development ("IPR&D") charges, based on their estimated fair values.
The excess of the purchase price over the fair value of the identified assets and liabilities has been recorded as goodwill. The fair value
assigned to the assets acquired is based on valuations using management's estimates and assumptions. Dell does not expect the majority
of goodwill related to these acquisitions to be deductible for tax purposes. Dell has not presented pro forma results of operations because
these acquisitions are not material to Dell's consolidated results of operations, financial position or cash flows on either an individual or
an aggregate basis.
The purchase price allocations for these acquisitions are preliminary and subject to revision as more detailed analyses are completed and
additional information about the fair value of assets and liabilities becomes available. Any change in the estimated fair value of the net
assets of the acquired companies will change the amount of the purchase price allocable to goodwill.
EqualLogic Acquisition
On January 25, 2008, Dell completed its acquisition of EqualLogic Inc. ("EqualLogic"), a provider of high performance Internet Protocol
(IP) iSCSI storage area network (SAN) solutions uniquely designed for virtualization and ease-of-use. Dell acquired 100% of the
common shares of EqualLogic for approximately $1.4 billion in cash. Dell recorded approximately $969 million of goodwill and
$486 million of amortizable intangible assets. This acquisition will strengthen Dell's product and channel position and assist Dell in its
strategic efforts to simplify and virtualize IT for its customers globally. Dell also expensed IPR&D of $75 million resulting from the
EqualLogic acquisition.
Based on valuations prepared using estimates and assumptions developed by management, the preliminary purchase price allocation as of
the date of acquisition are as follows:
(in millions)
Cash, cash equivalents and short-term investments $ 21
Other tangible assets 57
Liabilities (243)
Total net liabilities assumed (165)
Amortizable intangible assets 486
Goodwill 969
IPR&D 75
Total purchase price $ 1,365
Dell has included EqualLogic in its storage line of business for product revenue reporting purposes. Goodwill, which represents the
excess of the purchase price over the net tangible and intangible assets acquired, is not
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