Business Acquisitions

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Business Acquisitions

Business Acquisitions

The Company acquired Xerocole, Inc. ("Xerocole") in February 2015 and Codemate A/S and its wholly-owned subsidiary Octoshape ApS (together, "Octoshape") in April 2015. The consolidated financial statements include the operating results of each business from the date of acquisition. Pro forma results of operations for these acquisitions have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to the Company's consolidated financial results. Revenue and earnings of the acquired companies since the date of the acquisitions that are included in the Company's consolidated statements of income are also not presented separately because they are not material. The total amount of acquisition-related costs were $1.1 million for the nine months ended September 30, 2015 and are included in general and administrative expense in the consolidated statements of income.

Xerocole

On February 27, 2015, the Company acquired Xerocole, a provider of recursive Domain Name System ("DNS") functionality, for $16.6 million in cash. The Company acquired Xerocole with a goal of expanding its existing Authoritative DNS products. The Company allocated $12.9 million of the cost of the acquisition to goodwill and $4.9 million to acquired intangibles, which have a weighted average useful life of 8.8 years. The allocation of the purchase price has been finalized.    

Octoshape

On April 6, 2015, the Company acquired all of the outstanding capital stock of Octoshape in exchange for $107.0 million in cash. Octoshape is a cloud service provider focused on delivering broadcast, enterprise and carrier solutions. The goal of acquiring Octoshape is to make available for customers additional delivery and optimization technologies for video streams of over-the-top (also known as OTT) content and to enable the Company to more fully support Internet Protocol television (also known as IPTV) solutions.

The allocation of the purchase price has been finalized, with the exception of evaluating certain accounts receivable, current liabilities and tax-related assets and liabilities. The Company is in the process of gathering the facts and circumstances existing as of the acquisition date in order to finalize the valuation of these items.

The following table presents the preliminary allocation of the purchase price for Octoshape (in thousands):

Total purchase consideration	$	107,047
Allocation of the purchase consideration:
Cash	$	664
Accounts receivable	1,976
Other current assets	393
Identifiable intangible assets	41,950
Goodwill	69,445
Deferred tax assets	5,230
Total assets acquired	119,658
Other current liabilities	(1,983		)
Current deferred revenue	(770		)
Deferred tax liabilities	(9,858		)
Total liabilities assumed	(12,611		)
Net assets acquired	$	107,047

The value of the goodwill can be attributed to a number of business factors, including a trained technical and sales workforce and cost synergies expected to be realized. The total amount of goodwill related to the acquisition of Octoshape expected to be deducted for tax purposes is $69.4 million.

The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except years):

	Gross Carrying Amount		Weighted Average Useful Life (in years)
Completed technologies	$	25,310	9.8
Customer-related intangible assets	16,560		11.8
Non-compete agreements	80		2.0
Total	$	41,950

Bloxx

On October 30, 2015, the Company acquired Bloxx Limited ("Bloxx"), a provider of Secure Web Gateway ("SWG") technology, for $18.7 million in cash. The allocation of the purchase price has not been finalized as of the date of the filing of these financial statements. The acquisition is expected to provide us with technology to complement the Company's cloud security strategy for protecting businesses against Internet vulnerabilities. Pro forma results of operations for the acquisition of Bloxx have not been presented because the effects are not material to the Company's consolidated financial statements.