BUSINESS COMBINATIONS

9 Months Ended

Aug. 31, 2012

BUSINESS COMBINATIONS

3. BUSINESS COMBINATIONS

While we use our best estimates and assumptions as part of the purchase price allocation process to value assets acquired and liabilities assumed at the business combination date, our estimates and assumptions are subject to refinement. As a result, during the preliminary purchase price allocation period, which may be up to one year from the business combination date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. We record adjustments to assets acquired or liabilities assumed subsequent to the purchase price allocation period in our operating results in the period in which the adjustments were determined.

The total purchase price allocated to the tangible assets acquired is assigned based on the fair values as of the date of the acquisition. The fair value assigned to identifiable intangible assets acquired is determined using the income approach which discounts expected future cash flows to present value using estimated assumptions determined by management. We believe that these identified intangible assets will have no residual value after their estimated economic useful lives. The identifiable intangible assets are subject to amortization on a straight-line basis as this best approximates the benefit period related to these assets.

The excess of the purchase price over the identified tangible and intangible assets, less liabilities assumed, is recorded as goodwill and primarily reflects the value of the synergies expected to be generated from combining our and the acquired entities’ technology and operations. Generally none of the goodwill recorded in connection with the acquisitions is deductible for income tax purposes.

Acquisition of LogLogic, Inc.

On April 10, 2012, we acquired LogLogic, Inc. (“LogLogic”), a private company based in San Jose, California and incorporated in Delaware. LogLogic is a provider of scalable log and security management platforms. We paid $131.6 million, net of cash acquired, to acquire all of the outstanding shares of capital stock of LogLogic. We have also incurred $0.7 million of transaction costs associated with the acquisition. As a result of the acquisition, we assumed facility leases, certain liabilities and commitments of LogLogic. We are currently evaluating the purchase price allocation for this transaction.

The preliminary allocation of the purchase price for the LogLogic acquisition, is as follows (in thousands):

Cash	$	5,018
Accounts receivable (approximate contractual value)		5,359
Other assets		1,524
Identifiable intangible assets		61,200
Goodwill		73,189
Liabilities		(7,006	)
Deferred Revenue		(7,297	)
Deferred income tax asset, net		4,642
Total preliminary purchase price	$	136,629

Identifiable intangible assets (in thousands, except amortization period):

	Gross Amount at Acquisition Date		Weighted Average Amortization Period
Existing technology	$	32,800		6.0 years
Customer contracts		3,200		7.0 years
Maintenance agreements		22,300		6.0 years
Trademarks		2,900		7.0 years
	$	61,200		6.1 years

Nimbus Partners Limited

On August 30, 2011, TIBCO International Holdings B.V., one of our indirect wholly-owned subsidiaries, acquired Nimbus Partners Limited (“Nimbus”), a private company organized under the laws of England and Wales and a provider of business process discovery and analysis applications that help companies drive adoption of business process initiatives. We paid $42.0 million of cash to acquire the outstanding equity of Nimbus. We have also incurred $1.0 million of acquisition related and other expenses associated with the acquisition. As a result of the acquisition, we assumed facility leases, certain liabilities and commitments of Nimbus.

The allocation of the purchase price for the Nimbus acquisition, is as follows (in thousands):

Cash	$	971
Accounts receivable (approximate contractual value)		3,634
Other assets		763
Identifiable intangible assets		19,800
Goodwill		28,194
Liabilities		(6,693	)
Deferred income tax liabilities, net		(4,669	)
Total preliminary purchase price	$	42,000

Identifiable intangible assets (in thousands, except amortization period):

	Gross Amount at Acquisition Date		Weighted Average Amortization Period
Existing technology	$	13,900		5.0 years
Subscriber base		1,200		5.0 years
Customer base		700		5.0 years
Maintenance agreements		3,100		7.0 years
Trademarks		900		5.0 years
	$	19,800		5.3 years

LoyaltyLab, Inc.

On December 7, 2010, we acquired LoyaltyLab, Inc. (“Loyalty Lab”), a private company incorporated in Delaware. Loyalty Lab is an independent provider of loyalty management solutions that allow marketers to manage loyalty programs from their desktop. This acquisition provides us international presence in the customer loyalty market. We paid $23.5 million in cash to acquire all of the outstanding shares of capital stock of Loyalty Lab. We have also incurred $0.4 million of acquisition related and other expenses associated with the acquisition. As a result of the acquisition, we assumed facility leases and certain liabilities and commitments of Loyalty Lab.

The allocation of the purchase price for the Loyalty Lab acquisition is as follows (in thousands):

Cash	$	905
Accounts receivable (approximate contractual value)		5,118
Deferred income tax assets, net		3,758
Other assets		729
Identifiable intangible assets		6,600
Goodwill		11,966
Liabilities		(5,590	)
Total purchase price	$	23,486

Identifiable intangible assets (in thousands, except amortization period):

	Gross Amount at Acquisition Date		Weighted Average Amortization Period
Existing technology	$	2,000		5.0 years
Customer base		4,100		5.0 years
Trademarks		500		5.0 years
	$	6,600		5.0 years

Other Business Combination

During fiscal year 2012, we acquired a privately held company for $0.6 million. We accounted for the transaction as a business combination and allocated $0.8 million, the excess of the purchase price over the identified tangible and intangible assets, less liabilities assumed, to goodwill.

Pro Forma Adjusted Summary

The results of operations of LogLogic, Nimbus and Loyalty Lab have been included in the Consolidated Financial Statements subsequent to the acquisition dates. The following unaudited pro forma adjusted summary for the three and nine months ended August 31, 2012 and 2011 assumes LogLogic, Nimbus and Loyalty Lab had been acquired at the beginning of fiscal year 2011 (in thousands, except per share data):

	Three Months Ended August 31,				Nine Months Ended August 31,
	2012		2011		2012		2011
Pro forma adjusted total revenue	$	255,021	$	242,580	$	740,891	$	671,555
Pro forma adjusted net income attributable to TIBCO Software Inc.	$	26,086	$	21,087	$	68,121	$	53,203
Pro forma adjusted net income per share attributable to TIBCO Software Inc.:
Basic	$	0.16	$	0.13	$	0.42	$	0.33
Diluted	$	0.15	$	0.12	$	0.40	$	0.31

The unaudited pro forma results presented include amortization charges for acquired intangible assets, adjustments for incremental compensation expense related to the post-combination service arrangements entered into with the continuing employees and related tax effects. The unaudited pro forma adjusted summary combines the historical results for TIBCO for those periods with the historical results for LogLogic, Nimbus and Loyalty Lab for the same periods. The summary is presented for informational purposes only and is not intended to be indicative of future results of operations or whether similar results would have been achieved if the acquisition had taken place at the beginning of fiscal year 2011.