Acquisitions

Fiscal 2016 Acquisitions

On December 11, 2015, CSC acquired Axon Puerto Rico, Inc. (Axon), a provider of enterprise application and infrastructure managed services to aerospace and defense, and other commercial industries, for cash consideration of $29 million (net of cash acquired of $5 million), which was funded from existing cash balances. The acquisition further advances CSC’s position as a leader in providing cost effective, highly-secure IT managed services to firms worldwide, strengthens CSC’s next-generation delivery model and expands its network of regional delivery centers. The purchase price was allocated to assets acquired and liabilities assumed based on preliminary estimates of fair value at the date of acquisition, as follows: $5 million to current assets, $2 million to noncurrent assets, $8 million to an intangible asset other than goodwill, $2 million to current liabilities, and $15 million to goodwill. The goodwill is associated with the Company's GBS segment and is expected to be tax deductible. Transaction costs associated with the acquisition, which were less than $1 million, were expensed and are included within selling, general and administrative expenses.

On September 24, 2015, CSC acquired Fixnetix, Limited (Fixnetix), a privately held provider of front-office managed trading solutions for capital markets, for total estimated purchase consideration of $110 million. The acquisition enhances CSC's ability to offer capital market clients an expanded range of as-a-service front office capabilities and address growing demand for greater efficiency and innovation in trading, market data, hosting, infrastructure, connectivity and risk management.

The purchase consideration included cash of $88 million (net of $1 million of cash acquired) paid at closing, and the preliminarily estimated fair value of contingent consideration of $21 million (see Note 8). The estimated amount of contingent consideration was based on a contractually defined multiple of Fixnetix's revenues during two specified periods, as well as other considerations. Should the final amount of contingent consideration be different from the preliminary estimate of $21 million, the difference will be recorded as other income or expense in the future periods. The range of possible outcomes for the final fair value of the contingent consideration is $0 to $26 million. A portion of the earnout is expected to be paid on the first anniversary of the acquisition date and the remainder is expected to be paid on the second anniversary of the acquisition date. The acquisition was funded from CSC's existing cash balances. Transaction costs, which were approximately $1 million, were expensed and are included within selling, general and administrative expenses.

The preliminary allocation of the Fixnetix purchase price to the assets acquired and liabilities assumed is presented below:



(Amounts in millions)	Estimated Fair Value
Accounts receivable and other current assets	$	13
Intangible asset - developed technology	12
Intangible assets - customer relationships and trade names	31
Property and equipment and other noncurrent assets	8
Trade payables, accrued expenses and deferred revenue	(24		)
Leases and other long-term liabilities	(6		)
Deferred tax liability, net	(4		)
Total identifiable net assets acquired	30
Goodwill	80
Total estimated consideration	$	110

The goodwill recognized in the acquisition is attributable to the intellectual capital, the acquired assembled work force, and expected cost synergies, none of which qualify for recognition as a separate intangible asset; it is associated with the GIS segment and is not tax-deductible.

On September 17, 2015, CSC acquired Fruition Partners (Fruition), a privately-held company that is a leading provider of technology-enabled solutions for the service management sector and the largest ServiceNow-exclusive service management consulting firm. The acquisition bolsters CSC's ability to offer enterprise and emerging clients an expanded range of cloud-based service-management solutions to improve their business through organizational efficiency and lower operating costs.

Cash consideration of $148 million (net of cash acquired of $2 million) was paid at closing for this acquisition. The acquisition was funded from CSC's existing cash balances. The Company incurred transaction costs of approximately $2 million associated with this acquisition. These costs were expensed and are included within selling, general and administrative expenses.

The preliminary allocation of the Fruition purchase price to the assets acquired and liabilities assumed is presented below:



(Amounts in millions)	Estimated Fair Value
Accounts receivable and other current assets	$	19
Intangible asset - developed technology	9
Intangible assets - customer relationships and trade names	34
Property and equipment and other noncurrent assets	1
Trade payables, accrued expenses and deferred revenue	(12		)
Deferred tax liabilities, net	(6		)
Total identifiable net assets acquired	45
Goodwill	105
Total consideration	$	150

The Company’s purchase price allocations for the Axon, Fixnetix and Fruition acquisitions are preliminary and subject to revision as additional information related to the fair value of assets and liabilities becomes available. Pro forma financial information for these acquisitions has not been presented as they were neither individually nor in the aggregate material to CSC’s consolidated results.