NOTE B – ACQUISITIONS

On October 11, 2016, the Company acquired BlazeMeter Ltd. (BlazeMeter), a privately-held provider of open source-based continuous application performance testing. BlazeMeter will integrate with the Company’s continuous delivery solutions to further improve testing efficiency and accelerate the deployment of applications. The acquisition of BlazeMeter was not material to the Company’s financial position or results of operations for the three and nine months ended December 31, 2016. The results of operations of BlazeMeter are reported predominately in the Company’s Enterprise Solutions segment and were included in the consolidated results of operations of the Company from the date of acquisition.

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 purchase price allocation for Rally is provided in the table below.

The 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 allocation of purchase price to acquired identifiable assets, including intangible assets, for Rally was finalized during the first quarter of fiscal year 2017. The excess purchase price over the estimated value of the net tangible and identifiable intangible assets was recorded to goodwill. The allocation of 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 fiscal year 2016 acquisitions was not deductible for tax purposes and was allocated to the Enterprise Solutions segment. The pro forma effects of the Company’s fiscal year 2016 acquisitions on the Company’s revenues and results of operations during fiscal year 2016 were considered immaterial.

Transaction costs for the Company’s fiscal year 2016 acquisitions, which were primarily included in “General and administrative” in the Company’s Condensed Consolidated Statements of Operations, were less than $1 million and $20 million for the three and nine months ended December 31, 2015, respectively.

Since Rally and Xceedium were acquired during the second quarter of fiscal year 2016, the Condensed Consolidated Statements of Operations for the nine months ended December 31, 2015 included six months of activity for revenue and expenses associated with these acquisitions. During the first quarter of fiscal 2017, the Condensed Consolidated Statements of Operations included total revenue of $35 million and net loss of $5 million for the Company’s fiscal year 2016 acquisitions of Rally and Xceedium.

The Company had approximately $12 million and $3 million of accrued acquisition-related costs at December 31, 2016 and March 31, 2016, respectively, related to purchase price amounts withheld subject to indemnification protections.