Computer Associates 2006 Annual Report Download - page 131

Note 2 — Acquisitions, Divestitures and Restructuring (Continued)
The acquisition cost of iLumin has been allocated to assets acquired and liabilities assumed based on estimated fair
values at the date of acquisition as follows:
(in millions)
Purchased software products ............................................. $ 2
Other assets ......................................................... 4
Customer relationships . . . .............................................. 21
Goodwill............................................................ 36
Deferred tax liability ................................................... (9)
Other liabilities assumed . . .............................................. (6)
Purchase price........................................................ $48
Purchased software products are being amortized over an estimated life of seven years, and customer relationships
will be amortized over ten years.
The allocation of the purchase price is based upon estimates which may be revised within one year of the date of
acquisition as additional information becomes available. It is anticipated that the final purchase price allocation will
not differ materially from the preliminary allocation presented above.
The allocation of a significant portion of the iLumin purchase price to goodwill was predominantly due to the
relatively short lives of the acquired developed technology assets, whereby a substantial amount of the purchase
price was based on earnings beyond the estimated lives of the intangible assets.
During the second quarter of fiscal year 2006, the Company acquired the common stock of Niku, including its
information technology governance (ITG) solution, for approximately $337 million. In addition, the Company
converted options to acquire the common stock of Niku and incurred acquisition costs of approximately $5 million
and $3 million, respectively, for an aggregate purchase price of $345 million. Niku was a provider of information
technology management and governance (IT-MG) solutions, and the Company is in the process of integrating
Niku’s ITG solutions with the Business Service Optimization (BSO) unit. The acquisition of Niku has been
accounted for as a purchase and accordingly, its results of operations have been included in the Consolidated
Financial Statements since the date of its acquisition, July 29, 2005 (the Niku Acquisition Date).
The acquisition cost of Niku has been allocated to assets acquired, liabilities assumed and in-process research and
development based on estimated fair values as follows:
(in millions)
Cash ............................................................... $ 44
Marketable securities ................................................... 19
Deferred taxes assets ................................................... 102
Other assets acquired................................................... 20
Purchased software products ............................................. 23
In-process research and development ....................................... 14
Customer relationships . . . .............................................. 42
Trademarks/tradenames . . . .............................................. 2
Goodwill............................................................ 143
Deferred revenue...................................................... (4)
Deferred tax liabilities .................................................. (28)
Other liabilities assumed . . .............................................. (32)
Purchase price........................................................ $345
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