Business Combinations

12 Months Ended

Apr. 25, 2014

Business Combinations

5. Business Combinations

Fiscal 2013 Acquisitions

On February 11, 2013, we acquired all of the outstanding shares of ionGrid, a privately-held software company based in California, for $17.1 million in cash. This acquisition provides our customers with a secure, simple to use solution for accessing enterprise file shares from mobile devices. On November 14, 2012, we acquired all of the outstanding shares of CacheIQ, Inc., a privately-held storage solutions company based in Texas, for $91.0 million in cash and equity. This acquisition provides us with technology that extends our capabilities to support non-disruptive operations for enterprise data center environments. We will integrate this technology into our product offerings over time. Together we refer to these acquisitions as our fiscal 2013 acquisitions.

Consideration related to our fiscal 2013 acquisitions consisted of the following (in millions):

Cash	$	106.9
Equity		1.2
Total purchase price	$	108.1

The purchase price was allocated to the respective net tangible and intangible assets of our fiscal 2013 acquisitions as of the dates of the acquisitions based on various fair value estimates and analyses, including work performed by third-party valuation specialists.

The following are the fair value of assets acquired and liabilities assumed as of the respective closing dates (in millions):

Cash	$	0.4
Other current assets		6.0
Finite-lived intangible assets		30.3
Goodwill		82.9
Other assets		1.0
Total assets acquired		120.6
Current liabilities		(0.5	)
Deferred income taxes		(12.0	)
Total purchase price	$	108.1

The goodwill recorded from our fiscal 2013 acquisitions is comprised of expected synergies from combining their respective operations and that of the Company.

None of the goodwill recognized upon acquisition of our fiscal 2013 acquisitions is deductible for tax purposes. The finite-lived intangible assets acquired from our fiscal 2013 acquisitions consist of developed technology and are amortized on a straight-line basis over three to five year estimated useful lives.

The results of operations of our fiscal 2013 acquisitions have been included in our consolidated statements of operations from their respective acquisition dates. Pro forma results of operations have not been presented because the acquisitions, individually and collectively, were not material to our results of operations.

Fiscal 2012 Acquisition

On May 6, 2011, we completed the acquisition of certain assets related to the Engenio external storage systems business (Engenio) of LSI Corporation (LSI). We paid LSI $480.0 million in cash and also assumed certain liabilities related to Engenio. During the three years following the acquisition, LSI will pay us a total of $13.0 million to service certain LSI customer warranties. This acquisition enables us to address growing customer requirements in the areas of high bandwidth and intensive analytics workloads.

The purchase price was allocated to Engenio’s net tangible and intangible assets as of the date of acquisition based on various fair value estimates and analyses, including work performed by third-party valuation specialists.

The following are the fair value of assets acquired and liabilities assumed as of the closing date (in millions):

Current assets	$	49.8
Property and equipment		33.3
Finite-lived intangible assets		272.1
Goodwill		143.7
Other assets		9.3
Total assets acquired		508.2
Current liabilities		(20.9	)
Other liabilities		(7.3	)
Total purchase price	$	480.0

As this was an asset acquisition, U.S. goodwill is deductible for income tax purposes. The goodwill is comprised of expected synergies in utilizing Engenio’s technology in our products and channels (and vice versa), reduction in future combined research and development expenses, and intangible assets, such as acquired workforce, that do not qualify for separate recognition.

The identified intangible assets as of the date of acquisition, which are amortized on a straight-line basis over their estimated useful lives, consisted of the following (in millions):

	Estimated  Fair Value		Useful Life (Years)
Developed technology	$	216.0		5
Customer contracts/relationships		45.0		2
Trademarks and trade names		7.0		2
Order backlog		2.5		0
Covenant not to compete		1.6		3
Total identified intangible assets	$	272.1

Our consolidated net revenues for fiscal 2012 included $665.9 million attributable to Engenio since the acquisition. Due to the integration of the combined businesses since the date of acquisition, it is impracticable to determine the earnings contributed by Engenio.