Business Combinations

12 Months Ended

Sep. 30, 2012

Business Combinations [Abstract]

Business Combinations

Business Combinations

Acquisition of GlobalExpense

On July 1, 2011, we completed the acquisition of GlobalExpense Limited (“GlobalExpense”) for total cash consideration of $19.2 million. In addition, the Company is required to make additional payments (“GlobalExpense contingent consideration”) up to £2.0 million in cash, based on the achievement of certain revenue targets related to GlobalExpense’s service through September 30, 2012. The estimated fair value using a discounted cash flow model of the GlobalExpense contingent consideration at July 1, 2011 was $2.6 million and was included in the total purchase price. We re-measure the fair value of the GlobalExpense contingent consideration each reporting period based on GlobalExpense’s achievement of revenue targets. The change in fair value of contingent consideration was recorded in the consolidated statements of operations. As of September 30, 2012, the revenue targets have been fully met. The additional GlobalExpense consideration of £2.0 million (US$3.2 million) was recorded as acquisition related liabilities in the consolidated balance sheets.

GlobalExpense is a provider of web-based expense management in the United Kingdom. The acquisition of GlobalExpense improves our ability to serve the travel and expense management market in Europe. The acquisition also expands and enhances Concur’s extended services offerings by leveraging GlobalExpense’s strengths in receipt validation, VAT and income tax compliance, and knowledge of tax legislation in the United Kingdom.

During 2012, we finalized the assessment of the fair value of the assets and liabilities assumed at the acquisition date. The impacts of purchase price adjustments were an increase of goodwill by $1.1 million, an increase of intangible assets by $0.8 million, and a decrease of deferred tax liability by $1.9 million. All purchase price adjustments are reflected in the tables below.

The total purchase price was allocated to the net tangible and intangible assets based on their fair values as of the acquisition date as set forth below.

Current assets	$	2,597
Property, plant and equipment	329
Current liabilities	(2,817		)
Intangible assets	10,350
Deferred tax liability	(1,784		)
Goodwill	13,135
Total purchase price	$	21,810

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The following table presents the details of the intangible assets we acquired in connection with the GlobalExpense acquisition as of acquisition date:

	Fair Value		Useful Life
Software technology	$	3,570	2	years
User base	6,600		9	years
Trademark and trade name	180		2	years
Total intangible assets subject to amortization	$	10,350

The goodwill recorded in connection with our business combinations are primarily related to the synergies to be achieved that are unique to our business. The goodwill balance is not deductible for tax purposes.

Transaction costs of $906 associated with GlobalExpense were included in general and administrative expenses in our consolidated statement of operations for 2011.

Acquisition of TripIt

On January 24, 2011, we completed the acquisition of TripIt, Inc. (“TripIt”), a market leader in mobile trip management. The combination of Concur and TripIt delivers additional value to existing customers and travelers while helping to expand the addressable market for Concur’s services by reaching a new class of travelers previously unaddressed by traditional managed travel solutions.

Subject to the terms of the acquisition agreement, we acquired all of the outstanding shares of TripIt for $24.7 million of cash, and 814 shares of Concur’s common stock valued at approximately $41.2 million at closing, of which 217 shares were held in escrow, plus future contingent consideration with an acquisition date fair value of $28.9 million (further discussed under “Top-Up Payment” below). Of the $28.9 million, $17.4 million was recorded as part of the purchase consideration. The remaining $11.5 million is related to certain individuals whose ability to receive a Top-Up Payment was subject to a continued employment requirement. The portion of the fair value of the contingent consideration subject to the continued employment requirement is recognized as compensation expense in post combination financial statements.

In addition, we issued unvested Concur restricted stock units in exchange for cancellation of unvested TripIt stock options outstanding with an aggregate value of $9.9 million. The portion of the fair-value of the replacement award that is attributable to the pre-combination service period is $3.6 million and has been included as part of the purchase consideration. We accounted for this acquisition using the purchase method of accounting. We have included the financial results of TripIt in our consolidated financial statements beginning on the acquisition date.

The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of acquisition:

Net obligations assumed	$	(1,853	)
Intangible assets	19,604
Deferred tax liability, net of deferred tax asset	(147		)
Goodwill	69,205
Total purchase price	$	86,809

The following table presents the details of the intangible assets we acquired in connection with the TripIt acquisition:

	Fair value		Useful Life
Software technology	$	8,980	5	years
User base	8,524		5	years
Trademark and trade name	2,100		10	years
Total intangible assets subject to amortization	$	19,604

The goodwill recorded in connection with our business combinations are primarily related to the synergies to be achieved that are unique to our business. The goodwill balance is not deductible for tax purposes.

Transaction costs of $1.9 million associated with TripIt were included in general and administrative expenses in our consolidated statements of operations for 2011.

Top-Up Payment

As part of the TripIt acquisition, we agreed to pay additional cash consideration of up to $38.3 million to the former TripIt shareholders on the 30 month anniversary of the closing or at such earlier time as specified in the Agreement (“Top-Up Payment Date”). If, on the Top-Up Payment Date, the value of the consideration issued at the closing (“Market Value”) is less than approximately $82.1 million or $100.90 per share (“Guaranteed Value”), subject to adjustments, we will make a payment to such holders in an aggregate amount equal to the difference between the Guaranteed Value and the Market Value (“Top-Up Payment”), subject to certain limited exceptions. Such right to receive the Top-Up Payment will terminate in the event the value of the shares paid at closing increases by approximately $38.3 million to $100.90 per share at any time prior to the Top-Up Payment Date. If shares were sold or transferred before the Top-Up Payment Date, such holders will not be eligible to receive a Top-Up Payment. In addition, certain former TripIt shareholders that became employees of Concur will not be eligible to receive a Top-Up Payment if these employees terminate employment with Concur prior to the required service period. As of September 30, 2012, the potential undiscounted amount of the payment that we could be required to make on the Top-Up Payment Date is between $0 and approximately $38.3 million. As of September 30, 2011, the potential undiscounted amount of the payment that we could be required to make on the Top-Up Payment Date is between $0 and approximately $38.3 million.

As of September 30, 2011, the total fair value of the acquisition-related contingent consideration associated with TripIt was $35.4 million, of which $30.9 million was recorded as a liability. The remaining $4.5 million was compensation related and recorded during the requisite service period.

As of September 30, 2011, the acquisition-related contingent consideration liability of $30.9 million included a $9.5 million Top-Up Payment related to certain individuals whose Top-Up Payment has been subject to a continued employment requirement. The acquisition-related contingent consideration also included $21.4 million related to the portion of the Top-Up Payment due to other former TripIt shareholders.

As of September 30, 2012, the total fair value of the acquisition-related contingent consideration associated with TripIt was $22.7 million, which was classified as a current liability recorded under acquisition-related contingent consideration in our consolidated balance sheets. The $22.7 million liability included two components: (i) a $9.1 million Top-Up Payment related to certain individuals whose Top-Up Payment has been subject to a continued employment requirement. As of September 30, 2012, the required employment services have been fulfilled. The portion of contingent consideration that was subject to service requirement along with its change of fair value have been recognized as compensation expense; (ii) a $13.6 million Top-Up Payment due to other former TripIt shareholders. The fair value of the contingent consideration, including both components above, will continue to be remeasured at each reporting period until the Top-Up Payment Date, with any changes in the value recorded as income or expense.

Pro forma results of operations have not been presented because the effects of the acquisitions individually or in the aggregate were not significant.