Computer Associates 2007 Annual Report Download - page 105

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(IT-MG) solutions and the Company has integrated Niku’s ITG solutions with its business service optimization solutions. 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 104
Other assets acquired 20
Purchased software products 23
In-process research and development 14
Customer relationships 42
Trademarks/tradenames 2
Goodwill 139
Deferred revenue (4)
Deferred tax liabilities (27)
Other liabilities assumed (31)
Purchase price $ 345
Approximately $14 million of the purchase price represents the estimated fair value of projects that, as of the Niku Acquisition
Date, had not reached technological feasibility and had no alternative future use. Accordingly, this amount was immediately
expensed and has been included in the “Charge for in-process research and development costs” line item in the Consolidated
Statement of Operations for the fiscal year ended March 31, 2006.
Purchased software products are being amortized over approximately five years, trademarks/tradenames will be amortized
over seven years, and customer relationships will be amortized over eight years.
The allocation of a significant portion of the Niku 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.
Based upon additional information received subsequent to the Niku Acquisition Date, goodwill was adjusted downward by
approximately $87 million as of March 31, 2007, primarily due to the recognition of deferred tax assets associated with
acquired net operating losses. This adjustment has been included in the allocation presented above.
The following unaudited pro-forma financial information presents the combined results of operations of the Company, Wily,
iLumin and Niku as if the acquisitions had occurred at April 1, 2004. The historical results of the Company for the fiscal year
ended March 31, 2006 include the results of Wily, iLumin and Niku from their respective acquisition dates. The pro-forma
results presented below for the fiscal year ended March 31, 2006 combine the results of the Company for the fiscal year ended
March 31, 2006 and the historical results of Wily, iLumin and Niku for their comparable reporting periods. The pro-forma
results for the fiscal year ended March 31, 2005 combine the historical results of the Company for the fiscal year ended
March 31, 2005 with the combined historical results for the comparable reporting periods for Wily, iLumin and Niku. The
unaudited pro-forma financial information is not intended to represent or be indicative of the Company’s consolidated results
of operations or financial condition that would have been reported had the acquisitions of Wily, iLumin and Niku been
completed as of the beginning of the periods presented and should not be taken as indicative of the Company’s future
consolidated results of operations or financial condition. Pro-forma adjustments are tax-effected at the Company’s statutory
tax rate.
93