EMC 2002 Annual Report Download - page 56

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In September 2002, EMC acquired 1.8 million shares of Series A Preferred Stock of Diligent Technologies Corporation ("Diligent"), a software
development company, in exchange for EMC's equity interest in one of its wholly owned subsidiaries, which had a net book value of $4.6 million. In October
2002, EMC acquired an additional 2.0 million shares of Series A Preferred Stock of Diligent for a purchase price of $5.0 million. As a result of these
transactions, EMC owns approximately 24% of the outstanding equity in Diligent, which is majority owned by two former EMC employees. EMC's
investment in Diligent is being accounted for under the equity method. As of December 31, 2002, the carrying value of the investment was $9.5 million.
In 2001, EMC acquired all of the outstanding shares of capital stock of FilePool N.V. and Luminate Software Corporation ("Luminate"), both software
development companies, as well as other minor acquisitions, for an aggregate consideration, including stock options, of $112.5 million, net of cash acquired.
EMC accounted for these acquisitions under the purchase method of accounting. Pro forma results of operations have not been presented because the effects
of these acquisitions were not material to EMC on either an individual or an aggregate basis. Based upon the final purchase price allocation, an aggregate of
$20.0 million was allocated to developed technology and an aggregate of $89.3 million was allocated to goodwill, including the impact of deferred taxes. The
intangible assets, with the exception of the goodwill arising from the Luminate and FilePool N.V. acquisitions, are being amortized on a straight-line basis
over their estimated useful life of five years.
A summary of the assets acquired and liabilities assumed in the 2001 transactions set forth above is as follows (table in thousands):
Fair value of assets acquired $ 119,484
Cash paid for stock, net of cash acquired (111,455)
Liabilities assumed $ 8,029
In 2000, EMC acquired all of the outstanding shares of common stock of Softworks, Inc., a software company, by means of a tender offer, whereby all
of the shares of Softworks were converted into the right to receive cash. Also in 2000, EMC acquired all of the outstanding common stock of software
companies Terascape Software, Inc., Avalon Consulting Group and Digital Bitcasting, Inc. The aggregate consideration issued in these transactions, including
stock options, was $245.0 million, net of cash acquired of $28.0 million. EMC accounted for each of these acquisitions under the purchase method. Pro forma
results of operations have not been presented because the effects of these acquisitions were not material to EMC on either an individual or an aggregate basis.
A summary of the assets acquired and liabilities assumed in the 2000 transactions set forth above is as follows (table in thousands):
Fair value of assets acquired $ 274,686
Cash paid for stock, net of cash acquired (233,554)
Liabilities assumed $ 41,132
In October 2000, EMC acquired all of the outstanding common stock of CrosStor Software, Inc., a software company, in exchange for approximately
3,495,000 shares of Common Stock. EMC accounted for this acquisition under the pooling-of-interests method. CrosStor's historical operations were not
material to EMC's consolidated operations and therefore prior period statements have not been restated for this transaction.
In July 2001, the FASB issued FAS No. 141, "Business Combinations" and FAS No. 142, "Goodwill and Other Intangible Assets." FAS No. 141
supercedes Accounting Principles Board Opinion No. 16, "Business
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