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advice of counsel and other information pertinent to a particular matter. See Note 11, ‘‘Commitments and Contingencies,’’
for additional information.
(s) Other Matters: In fiscal year 2013, the Company closed a transaction that assigned the rights to certain of the Company’s
intellectual property assets to a large technology company for $35 million. The entire contract amount is included in the
‘‘Other expenses (gains), net’’ line item of the Company’s Consolidated Statement of Operations for the year ended
March 31, 2013.
(t) New Accounting Pronouncements: In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU
2014-09), Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue
to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace
most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In April 2015, the FASB proposed a
one-year deferral of the effective date of the new revenue recognition standard. If finalized as proposed, the new guidance
will be effective for the Company’s first quarter of fiscal year 2019 and early application would be permitted. The Company
is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. ASU
2014-09 is expected to have a significant impact on the Company’s revenue recognition policies and disclosures. The
Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial
reporting.
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (Topic 835), which changes
the required presentation of debt issuance costs from an asset on the balance sheet to a deduction from the related debt
liability. This guidance will be effective for the Company in its first quarter of fiscal year 2017. The adoption of this
guidance is not expected to have a material impact on the Company’s consolidated financial statements.
Note 2 — Acquisitions
During fiscal year 2014, the Company acquired 100% of the voting equity interest in Layer 7 Technologies (Layer 7), a
provider of application programming interface (API) management and security software. The acquisition of Layer 7 will
enable the Company to provide security and management technology to the API marketplace that complements its current
identity and access management software suite. The total purchase price of the Layer 7 acquisition was approximately
$155 million.
The pro forma effects of the Company’s first quarter fiscal year 2014 acquisition of Layer 7 on the Company’s revenues and
results of operations during fiscal year 2013 were considered immaterial. The purchase price allocation as of March 31, 2014
was as follows:
ESTIMATED
(dollars in millions) LAYER 7 USEFUL LIFE
Finite-lived intangible assets(1) $ 26 3 years
Purchased software 87 5 years
Goodwill 55 Indefinite
Deferred tax liabilities (13) —
Other assets net of other liabilities assumed(2) ——
Purchase price $ 155
(1) Includes customer relationships and trade names.
(2) Includes approximately $9 million of cash acquired.
Transaction costs for the acquisition were immaterial. The excess purchase price over the estimated value of the net tangible
and identifiable intangible assets was recorded to goodwill. The allocation of a significant portion of the purchase price to
goodwill was predominantly due to synergies the Company expects from marketing and integration of the Layer 7 products
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 acquisition of Layer 7 was not deductible for tax purposes and was
allocated to the Enterprise Solutions segment.
The Company had approximately $27 million and $30 million of accrued acquisition-related costs at March 31, 2015 and
2014, respectively, related to purchase price amounts withheld to support indemnification obligations by the sellers.
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