Business Combinations

6 Months Ended

Jul. 31, 2011

Business Combinations

Business Combinations

5. BUSINESS COMBINATIONS

Verint Segment

Iontas Acquisition

On February 4, 2010, Verint acquired all of the outstanding shares of Iontas Limited ("Iontas"), a privately held provider of desktop analytics solutions, which measure application usage and analyze workflows to help improve staff performance in contact center, branch, and back-office operations environments. Verint acquired Iontas, among other objectives, to expand the desktop analytical capabilities of its workforce optimization solutions. The financial results of Iontas have been included in the condensed consolidated financial statements since the acquisition date.

Verint acquired Iontas for total consideration valued at $21.7 million, including cash consideration of $17.7 million, and additional milestone-based contingent payments of up to $3.8 million, tied to certain performance targets being achieved over the two-year period following the acquisition date.

Verint recorded the acquisition-date estimated fair value of the contingent consideration of $3.2 million as a component of the purchase price of Iontas. During the three months ended April 30, 2011, $2.0 million of the previously recorded contingent consideration was paid to the former shareholders of Iontas. The estimated fair value of the remaining contingent consideration was $1.7 million as of July 31, 2011. Changes in the fair value of this contingent consideration of $0.1 million and $0.2 million for the three and six months ended July 31, 2011, respectively, were recorded within "Selling, general and administrative" expenses for those fiscal periods.

Transaction costs, primarily professional fees, directly related to the acquisition of Iontas, totaled $1.3 million, were expensed as incurred and recorded within "Selling, general and administrative" expenses. 

Revenue from Iontas for the three and six months ended July 31, 2011 and 2010 was not material.

Other Business Combinations

In December 2010, Verint acquired certain technology and other assets in a transaction that qualified as a business combination. Total consideration for this acquisition was less than $20.0 million. The impact of this acquisition was not material to the Company's condensed consolidated financial statements. The fair value of Verint's liability for contingent consideration related to this acquisition increased by $1.9 million during the six months ended July 31, 2011, resulting in a corresponding charge recorded within "Selling, general and administrative" expenses for that fiscal period. Substantially all of the increase occurred during the three months ended April 30, 2011. The earned contingent consideration related to this acquisition was paid to the sellers during the three months ended July 31, 2011.

In March 2011, Verint acquired a company for total consideration, including potential future contingent consideration, of less than $20.0 million. The impact of this acquisition was not material to the Company's condensed consolidated financial statements.

The pro forma impact of these acquisitions is not material to the Company's historical consolidated operating results and is therefore not presented. Revenue from these acquisitions for the three and six months ended July 31, 2011 also were not material.

For information regarding business combinations completed subsequent to July 31, 2011, see Note 21, Subsequent Events.