VMware 2015 Annual Report Download - page 68

TableofContents
VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Other2014BusinessCombinations
DuringtheyearendedDecember31,2014,VMwarecompletedthreebusinesscombinationsinadditiontoAirWatch,whichwerenotmaterialtoVMware’s
consolidatedfinancialstatements,eitherindividuallyorintheaggregate.OnAugust20,2014,VMwareacquiredCloudVolumes,Inc.(“CloudVolumes”),a
providerofreal-timeapplicationdeliverytechnologythatenablesenterprisestodelivernativeapplicationstovirtualizedenvironmentson-demand.Additionally,in
thefourthquarterof2014,VMwarecompletedtwootherimmaterialbusinesscombinations.Theaggregatepurchasepriceforthesethreeacquisitionswas$91
million,netofcashacquired.Thepurchasepriceprimarilyincluded$19millionofidentifiableintangibleassetsandapproximately$73millionofgoodwill.Of
thegoodwillacquired,$23millionisdeductibleforincometaxpurposes.
FiscalYear2013
DuringtheyearendedDecember31,2013,VMwarecompletedtwobusinesscombinations.OnOctober10,2013,VMwareacquiredDesktone,Inc.
(“Desktone”),aproviderofdesktop-as-a-servicefordeliveringWindowsdesktopsandapplicationsasacloudservice.OnFebruary15,2013,VMwareacquired
VirstoSoftware(“Virsto”),aproviderofsoftwarethatoptimizesstorageperformanceandutilizationinvirtualenvironments.
Theaggregateconsiderationforthesetwoacquisitionswas$289million,netofcashacquired.Thefollowingtablesummarizestheallocationofthe
considerationtothefairvalueoftheassetsacquiredandnetliabilitiesassumed(tableinmillions):
Intangibleassets $ 62
Goodwill 233
Deferredtaxassets,net 4
Totalassetsacquired 299
Otherassumedliabilities,netofotheracquiredassets (10)
Totalnetliabilitiesassumed (10)
Fairvalueofassetsacquiredandnetliabilitiesassumed $ 289
TheexcessoftheconsiderationforDesktoneandVirstooverthefairvaluesassignedtotheassetsacquiredandliabilitiesassumedrepresentsthegoodwill
resultingfromtheacquisitions.ManagementbelievesthatthegoodwillrepresentsthesynergiesexpectedfromcombiningthetechnologiesofVMwarewiththose
ofDesktoneandVirsto,includingcomplementaryproductsthatwillenhancetheCompany’soverallproductportfolio.Nogoodwillwasdeductiblefortax
purposes.
ThefollowingtablesummarizesthefairvalueoftheintangibleassetsacquiredbyVMwareinconjunctionwiththeacquisitionsofDesktoneandVirsto
(amountsintableinmillions):

Weighted-Average
Useful Lives
(in years)

Fair Value
Amount
Purchasedtechnology 6

$ 49
Vendorcontracts 8

3
In-processresearchanddevelopment(“IPR&D”)


10
Totalintangibleassets,net,excludinggoodwill


$ 62
AsofDecember31,2013,$9millionofthe$10millioninIPR&Dshowninthetableabovewascompletedandtransferredtopurchasedtechnologywitha
weighted-averagelifeof5years.TheremainingIPR&DwascompletedandtransferredtopurchasedtechnologyduringtheyearendedDecember31,2014.
TheresultsofoperationsofDesktoneandVirstodescribedabovehavebeenincludedinVMware’sconsolidatedfinancialstatementsfromtheirrespective
dateofpurchase.ProformaresultsofoperationshavenotbeenpresentedastheresultsoftheacquiredbusinesseswerenotmaterialtoVMware’sconsolidated
resultsofoperationsintheyearendedDecember31,2013.
Joint Venture
DuringtheyearendedDecember31,2014,VMwareestablishedajointventureintendedtoexpandVMwarevCloudAirservices(formerlyvCloudHybrid
Service)inJapan.AtDecember31,2015,VMwarehadacontrollinginterestinthejointventureandapproximately51%oftheownership.Accordingly,VMware
consolidatedthefinancialresultsofthejointventure.
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