NOTE B – ACQUISITIONS

In the fourth quarter of fiscal year 2017, the Company acquired Automic Holding GmbH (Automic) and Veracode, Inc. (Veracode). The results of operations of Automic and Veracode are reported predominantly in the Company’s Enterprise Solutions segment. The purchase price allocation for Automic and Veracode is provided within the table below.



(dollars in millions)	Automic			Veracode			Estimated Useful Life
Finite-lived intangible assets ⁽¹⁾	$	174		$	99		2-12 years
Purchased software	273			240			1-8 years
Goodwill	303			339			Indefinite
Deferred tax liabilities, net	(92		)	(36		)	—
Other assets (liabilities), net ⁽²⁾	17			(24		)	—
Purchase price	$	675		$	618


(1)	Includes customer relationships and trade names.


(2)	Includes approximately $34 million and $16 million of cash acquired from Automic and Veracode, respectively.

The excess purchase price over the estimated value of the net tangible and identifiable intangible assets was recorded to goodwill. The 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 acquisitions of Automic and Veracode is not expected to be deductible for tax purposes and is allocated to the Enterprise Solutions segment. The purchase price allocation for Automic was finalized during the third quarter of fiscal year 2018. During the third quarter of fiscal year 2018, the Company recorded $72 million of additional deferred tax assets relating to Veracode based on further review of their historical tax records. The Company expects to complete its analysis of Veracode’s historical tax records and finalize the purchase price allocation for Veracode in the fourth quarter of fiscal year 2018.

The Condensed Consolidated Statement of Operations for the three and nine months ended December 31, 2017 included total revenue of approximately $68 million and $182 million, respectively, and net loss of approximately $16 million and $53 million, respectively, from Automic and Veracode.

The unaudited pro forma combined financial information in the table below summarizes the results of operations for the Company, Automic and Veracode as though the companies were combined as of the beginning of fiscal year 2017. The pro forma financial information presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of fiscal year 2017, nor does it attempt to represent the results of future operations of the combined entities under the ownership and operation of the Company. The pro forma results of operations also do not include any cost savings or other synergies that may result from these acquisitions or any estimated costs that have been or will be incurred by the Company to integrate the acquired assets.

The pro forma results below were based on estimates and assumptions, which the Company believes are reasonable. The pro forma financial information for all periods presented also includes the business combination accounting effects resulting from these acquisitions, including the amortization charges from acquired intangible assets and other purchase accounting adjustments, employee retention costs and the related tax effects as though the Company, Automic and Veracode were combined as of the beginning of fiscal year 2017.



	Three Months Ended December 31, 2016		Nine Months Ended December 31, 2016
(in millions, except per share amounts)	unaudited
Total revenue	$	1,061	$	3,178
Net income	$	181	$	527
Basic income per common share	$	0.43	$	1.26
Diluted income per common share	$	0.43	$	1.25

The pro forma effects of the Company’s other fiscal year 2017 acquisitions on the Company’s revenues and results of operations during the three and nine months ended December 31, 2016 were immaterial.

The Company had approximately $11 million and $12 million of accrued acquisition-related costs at December 31, 2017 and March 31, 2017, respectively, related to purchase price amounts withheld subject to indemnification protections.