EMC 2011 Annual Report Download - page 62

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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The total weighted-average amortization period for the intangible assets is 4.6 years. The intangible assets are being amortized over the pattern in which
the economic benefits of the intangible assets are being utilized, which in general reflects the cash flows generated from such assets. The goodwill associated
with this acquisition is reported within our Information Storage segment. None of the goodwill is deductible for tax purposes. The goodwill results from
expected synergies from the transaction, including complementary products that will enhance our overall product portfolio, which we believe will result in
incremental revenue and profitability.
Other 2010 Acquisitions
In the first quarter of 2010, we acquired all of the outstanding capital stock of Archer Technologies, LLC, a provider of governance, risk and
compliance software. This acquisition complemented and expanded our RSA Information Security segment. In the third quarter of 2010, we acquired all of
the outstanding capital stock of Greenplum, Inc., a provider of disruptive data warehousing technology. This acquisition complemented and expanded our
Information Storage segment. In the fourth quarter of 2010, we acquired all of the capital stock of Bus-tech, Inc., a provider of information infrastructure
solutions. This acquisition complemented and expanded our Information Storage segment. Additionally, during the year ended December 31, 2010, VMware
acquired six companies. The aggregate purchase price, net of cash acquired for all 2010 acquisitions, excluding Isilon, was $895.4 million, which consisted of
$893.5 million of cash and $1.9 million in fair value of our stock options issued in exchange for the acquirees' stock options and resulted in goodwill of
$631.4 million. The results of these acquisitions have been included in the consolidated financial statements from the date of purchase.
The fair value of our stock options for all acquisitions, including Isilon, in 2010 was estimated assuming no expected dividends and the following
weighted-average assumptions:
Expected term (in years) 2.0
Expected volatility 29.0 %
Risk-free interest rate 0.7 %
The following represents the aggregate allocation of the purchase price for all the aforementioned acquisitions, excluding Isilon, to intangible assets
(table in thousands):
Developed technology (weighted-average useful life of 4.7 years) $ 158,860
Customer relationships (weighted-average useful life of 6.4 years) 74,280
Tradename and trademark (weighted-average useful life of 2.5 years) 12,620
Other (weighted-average useful life of 2.1 years) 3,379
Total intangible assets $ 249,139
The total weighted-average amortization period for the intangible assets is 4.6 years. The intangible assets are being amortized over the pattern in which
the economic benefits of the intangible assets are being utilized. The total goodwill recognized from the aforementioned acquisitions, including Isilon, was
$2,605.9 million.
In-process Research and Development
In connection with the Isilon acquisition in 2010, we acquired and capitalized $43.9 million of IPR&D projects. All projects acquired in 2010 are
expected to be completed in 2012.
The value assigned to the IPR&D projects was determined utilizing the income approach by determining cash flow projections relating to the projects.
The stage of completion of each in-process project was estimated to determine the discount rates to be applied to the valuation of the in-process technology.
Based upon the level of completion and the risk associated with the in-process technology, we applied discount rates ranging from 19% to 22% to value the
IPR&D projects acquired in 2010. Under new business combination guidance effective in 2009, each IPR&D project is capitalized and will be assessed for
impairment until completed. Upon completion, the project will be amortized over its estimated useful life over the pattern in which the economic benefits of
the intangible assets are being utilized. Based on our annual assessment there was no impairment at December 31, 2011.
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