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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
2009 Acquisitions
Acquisition of Data Domain, Inc.
In the third quarter of 2009, we acquired all of the outstanding capital stock of Data Domain, Inc. ("Data Domain"), a provider of storage solutions for
backup and archive applications based on deduplication technology. This acquisition complemented and expanded our Information Storage business. The
purchase price for Data Domain, net of cash and investments, was $2,017.3 million, which consisted of $1,933.9 million of cash consideration and $83.4
million for the fair value of our stock options granted in exchange for existing Data Domain options. We incurred $12.0 million of transaction costs for
financial advisory, legal and accounting services, which are included in restructuring and acquisition-related charges in our consolidated income statements.
The fair value of our stock options issued to employees of Data Domain was estimated using a Black-Scholes option pricing model.
The consolidated financial statements include the results of Data Domain from the date of acquisition. The purchase price has been allocated to the
assets acquired and the liabilities assumed based on estimated fair values as of the acquisition date.
The following represents the allocation of the Data Domain purchase price (table in thousands):
Trade accounts receivable (approximates contractual value) $ 72,455
Other current assets 9,275
Property and equipment 40,403
Intangible assets:
Developed technology (weighted-average useful life of 2.6 years) 106,300
Customer maintenance relationships (weighted-average useful life of 5.8 years) 133,700
Customer product relationships (weighted-average useful life of 4.2 years) 111,500
Tradename (weighted-average useful life of 2.0 years) 6,400
IPR&D 174,600
Total intangible assets 532,500
Other long-term assets 60
Goodwill 1,658,321
Current liabilities (67,212)
Income tax payable (4,671)
Deferred revenue (60,800)
Deferred income taxes (152,818)
Long-term liabilities (10,243)
Total purchase price $ 2,017,270
The total weighted-average amortization period for the intangible assets is 4.3 years. The intangible assets are being amortized over the pattern in which
the economic benefits of the intangible assets are being utilized. 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 2009 Acquisitions
In the second quarter of 2009, we acquired all of the outstanding capital stock of Configuresoft, Inc. ("Configuresoft"), a provider of server
configuration, change and compliance management software. The acquisition complemented and expanded our server configuration management solutions
within the Information Storage segment. In the third quarter of 2009, we acquired all of the capital stock of FastScale Technology, Inc., a provider of software
platforms and solutions that optimize deployments for physical, virtual and cloud infrastructures. This acquisition complemented and expanded our
Information Storage segment. In the third quarter of 2009, we acquired all of the capital stock of Kazeon Systems, Inc., a provider of eDiscovery products and
solutions which allow corporations, legal service providers and law firms to efficiently search, classify and analyze the growing volumes of information
dispersed through their networks. This acquisition complemented and expanded our Information Intelligence Group segment. VMware acquired the remaining
outstanding capital stock of SpringSource Global, Inc. ("SpringSource"), a leader in
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