Note 2 — Acquisitions

On July 8, 2015, the Company completed its acquisition of Rally Software Development Corp. (Rally), a provider of Agile development software and services. The acquisition of Rally broadens the Company’s solution set and capabilities to better serve customers in the application economy. Pursuant to the terms of the acquisition agreement and related tender offer, the Company acquired 100% of the outstanding shares of Rally common stock for approximately $519 million. The preliminary purchase price allocation for Rally is provided within the table below.

The preliminary purchase price allocation for the Company’s other acquisitions during fiscal year 2016, including the second quarter acquisition of Xceedium, Inc. (Xceedium), is included within the “Other Fiscal Year 2016 Acquisitions” column below. The acquisition of Xceedium and the Company’s other acquisitions during fiscal year 2016 were immaterial, both individually and in the aggregate.



(dollars in millions)	Rally			Other Fiscal Year 2016 Acquisitions			Estimated Useful Life
Finite-lived intangible assets ⁽¹⁾	$	78		$	14		1-15 years
Purchased software	178			96			5-7 years
Goodwill	257			59			Indefinite
Deferred tax liabilities, net	(45		)	(24		)	—
Other assets net of other liabilities assumed ⁽²⁾	51			2			—
Purchase price	$	519		$	147


(1)	Includes customer relationships and trade names.


(2)	Includes approximately $13 million of cash acquired and approximately $48 million of short-term investments acquired relating to Rally.

The excess purchase price over the estimated value of the net tangible and identifiable intangible assets was recorded to goodwill. The preliminary allocation of the purchase price to goodwill was predominantly due to synergies the Company expects to achieve through integration of the acquired technology with the Company’s existing product portfolio and the intangible assets that are not separable, such as assembled workforce and going concern. The goodwill relating to the Company’s acquisition of Rally is not expected to be deductible for tax purposes and is allocated to the Enterprise Solutions segment. The allocation of purchase price to acquired identifiable assets, including intangible assets, is preliminary because the Company has not completed its analysis of the historical tax records for Rally. The goodwill relating to the Company’s other fiscal year 2016 acquisitions is not expected to be deductible for tax purposes and is allocated to the Enterprise Solutions segment.

Transaction costs for the Company’s fiscal year 2016 acquisitions, which are primarily included in “General and administrative” in the Company’s Consolidated Statements of Operations, was approximately $20 million for fiscal year 2016.

The pro forma effects of the Company’s fiscal year 2016 acquisitions on the Company’s revenues and results of operations during fiscal years 2016 and 2015 were considered immaterial.

The Consolidated Statements of Operations for fiscal year 2016 included total revenue of approximately $97 million since the date of acquisition through March 31, 2016 for the Company’s fiscal year 2016 acquisitions of Rally and Xceedium. The Consolidated Statements of Operations for fiscal year 2016 included net loss of approximately $33 million since the date of acquisition through March 31, 2016 for the Company’s fiscal year 2016 acquisitions of Rally and Xceedium. Revenues and results of operations since the date of acquisition for the Company’s other fiscal 2016 acquisitions were considered immaterial.

The Company had approximately $3 million and $27 million of accrued acquisition-related costs at March 31, 2016 and 2015, respectively, related to purchase price amounts withheld subject to indemnification protections.