Computer Associates 2012 Annual Report Download - page 78

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Consolidated Statement of Operations: The Company has changed the presentation of the fiscal year 2010 restructuring plan (Fiscal
2010 Plan) expenses in the fiscal year 2010 Consolidated Statement of Operations. The Company previously presented the Fiscal
2010 Plan expenses in “Restructuring and other” in the Consolidated Statements of Operations. For fiscal year 2012, the Company
has reclassified these expenses for fiscal year 2010 into their respective individual line descriptions. This expense reclassification had
no effect on previously reported total expense or total revenue. The total expense incurred in fiscal year 2010 was approximately $48
million and has been reclassified as follows: $19 million into “Product development and enhancements;” $18 million into “Selling
and marketing;” $7 million into “General and administrative;” $2 million into “Costs of licensing and maintenance;” and $2 million
into “Cost of professional services” in the Consolidated Statement of Operations.
Note 2 — Acquisitions
During fiscal year 2012, the Company acquired 100% of the voting equity interest of Interactive TKO, Inc. (ITKO), a privately held
provider of service simulation solutions for developing applications in composite and cloud environments. The acquisition expands
solutions the Company offers enterprises and service providers for using and providing cloud computing to deliver business
services. The total purchase price of the acquisition was approximately $315 million. The Company’s other acquisitions during fiscal
year 2012 were immaterial, both individually and in the aggregate.
The pro forma effects of the Company’s fiscal year 2012 acquisitions on the Company’s revenues and results of operations during
fiscal years 2012 and 2011 were considered immaterial. The purchase price allocation of the Company’s fiscal year 2012 acquisitions
is as follows:
(dollars in millions)
ITKO
ACQUISITION(2)
OTHER FISCAL YEAR
2012 ACQUISITIONS
ESTIMATED
USEFUL LIFE
Finite-lived intangible assets(1) $ 16 $ 11 3-15 years
Purchased software
Goodwill
Deferred tax liabilities
190
159
(70)
8
20
(3)
7 years
Indefinite
—
Other assets net of other liabilities assumed(3) 20 3 —
Purchase price $ 315 $ 39
(1) Includes customer relationships and trade names.
(2) Purchase price allocation is preliminary due to ongoing analysis to determine the fair value of acquired intangibles and the tax basis of acquired assets and liabilities.
(3) Includes approximately $20 million of cash acquired relating to ITKO.
Transaction costs for acquisitions were immaterial for fiscal year 2012. The excess purchase price over the estimated value of the net
tangible and identifiable intangible assets was recorded to goodwill. The preliminary allocation of a significant portion of the
purchase price to goodwill was predominantly due to synergies the Company expects from marketing and integration with other
products of the Company and intangible assets that are not separable, such as assembled workforce and going concern. The goodwill
relating to the Company’s second quarter fiscal year 2012 acquisition of ITKO is not expected to be deductible for tax purposes and
was allocated to the Enterprise Solutions segment. The allocation of purchase price to acquired identifiable assets, including
intangible assets, is preliminary because the final tax returns of ITKO relating to the pre-acquisition period have not yet been filed. A
majority of the goodwill relating to the Company’s other fiscal year 2012 acquisitions is expected to be deductible for tax purposes
and was primarily allocated to the Services segment.
During fiscal year 2011, the Company acquired 100% of the voting equity interests of Arcot Systems, Inc. (Arcot), a privately held
provider of authentication and fraud prevention solutions through on-premises software or cloud services. The acquisition of Arcot
adds technology for fraud prevention and authentication to the Company’s Identity and Access Management offerings. The purchase
price of the acquisition was approximately $197 million.
66