
3.	Acquisitions and Divestitures


(a)	Acquisition Summary

The Company completed six business combinations during fiscal 2015. A summary of the allocation of the total purchase consideration is presented as follows (in millions):



Fiscal 2015	Purchase Consideration		Net Liabilities Assumed			Purchased Intangible Assets		Goodwill
Metacloud	$	149	$	(7	)	$	29	$	127
All others (five in total)	185		(13		)	70		128
Total acquisitions	$	334	$	(20	)	$	99	$	255

On September 29, 2014, the Company completed its acquisition of Metacloud, Inc. ("Metacloud"), a provider of private clouds for global organizations. With its acquisition of Metacloud, the Company aims to advance its Intercloud strategy to deliver a globally distributed, highly secure cloud platform. Revenue from the Metacloud acquisition has been included in the Company's Service category.

The total purchase consideration related to the Company’s business combinations completed during fiscal 2015 consisted of cash consideration and vested share-based awards assumed. The total cash and cash equivalents acquired from these business combinations was approximately $5 million.

Fiscal 2014 and 2013 Business Combinations

Allocation of the purchase consideration for business combinations completed in fiscal 2014 is summarized as follows (in millions):



Fiscal 2014	Purchase Consideration		Net Tangible Assets Acquired (Liabilities Assumed)			Purchased Intangible Assets		Goodwill
Composite Software	$	160	$	(10	)	$	75	$	95
Sourcefire	2,449		81			577		1,791
WhipTail	351		(34		)	105		280
Tail-f	167		(7		)	61		113
All others (four in total)	54		(5		)	20		39
Total acquisitions	$	3,181	$	25		$	838	$	2,318

The Company acquired privately held Composite Software, Inc. (“Composite Software”) in the first quarter of fiscal 2014. Prior to its acquisition, Composite Software provided data virtualization software and services that connect many types of data from across the network and make it appear as if the data is in one place. With its acquisition of Composite Software, the Company intends to extend its next-generation services platform by connecting data and infrastructure. The Company has included revenue from the Composite Software acquisition, subsequent to the acquisition date, in the Company's Service category.

The Company acquired Sourcefire, Inc. (“Sourcefire”) in the first quarter of fiscal 2014. Prior to its acquisition, Sourcefire delivered innovative, highly automated security through continuous awareness, threat detection, and protection across its portfolio, including next-generation intrusion prevention systems, next-generation firewalls, and advanced malware protection. With its acquisition of Sourcefire, the Company aims to accelerate its security strategy of defending, discovering, and remediating advanced threats to provide continuous security solutions to the Company’s customers in more places across the network. The Company has included revenue from the Sourcefire acquisition in its Security product category.

The Company acquired privately held WhipTail Technologies, Inc. (“WhipTail”) in the second quarter of fiscal 2014. Prior to its acquisition, WhipTail was a provider of high-performance, scalable solid state memory systems. In the fourth quarter of fiscal 2015, the Company announced the end-of-sale and end-of-life dates for the Cisco UCS Invicta Series in connection with the decision to shut down the WhipTail unit.

The Company acquired privately held Tail-f Systems AB ("Tail-f") in the fourth quarter of fiscal 2014. Prior to its acquisitions, Tail-f was a provider of multi-vendor network service orchestration solutions for traditional and virtualized networks. With its acquisition of Tail-f, the Company intends to advance its cloud virtualization strategy. The Company has included revenue from the Tail-f acquisition in the Company's cloud and virtualization offerings within the Other products.

The total purchase consideration related to the Company’s business combinations completed during fiscal 2014 consisted of cash consideration and vested share-based awards assumed. The total cash and cash equivalents acquired from these business combinations was approximately $134 million.

Allocation of the purchase consideration for business combinations completed in fiscal 2013 is summarized as follows (in millions):



Fiscal 2013	Purchase Consideration		Net Liabilities Assumed			Purchased Intangible Assets		Goodwill
NDS	$	5,005	$	(185	)	$	1,746	$	3,444
Meraki	974		(59		)	289		744
Intucell	360		(23		)	106		277
Ubiquisys	280		(30		)	123		187
All others (nine in total)	363		(25		)	127		261
Total acquisitions	$	6,982	$	(322	)	$	2,391	$	4,913

The Company completed its acquisition of NDS Group Limited (“NDS”) in the first quarter of fiscal 2013. Prior to its acquisition, NDS was a provider of video software and content security solutions that enable service providers and media companies to securely deliver and monetize new video entertainment experiences. With the acquisition of NDS, the Company enhances its comprehensive content delivery platform that enables service providers and media companies to deliver next-generation entertainment experiences. The Company has included revenue from the NDS acquisition, subsequent to the acquisition date, in its Service Provider Video product category.

The Company acquired privately held Meraki, Inc. (“Meraki”) in the second quarter of fiscal 2013. Prior to its acquisition, Meraki offered mid-market customers on-premise networking solutions centrally managed from the cloud. With its acquisition of Meraki, the Company addresses the shift to cloud networking as a key part of the Company’s overall strategy to accelerate the adoption of software-based business models that provide new consumption options for customers and revenue opportunities for partners. The Company has included revenue from the Meraki acquisition, subsequent to the acquisition date, in its Wireless product category.

The Company acquired privately held Intucell, Ltd. (“Intucell”) in the third quarter of fiscal 2013. Prior to its acquisition, Intucell provided advanced self-optimizing network software for mobile carriers. With its acquisition of Intucell, the Company enhances its commitment to global service providers by adding a critical network intelligence layer to manage and optimize spectrum, coverage, and capacity, and ultimately the quality of the mobile experience. The Company has included revenue from the Intucell acquisition, subsequent to the acquisition date, in its NGN Routing product category.

The Company acquired privately held Ubiquisys Limited (“Ubiquisys”) in the fourth quarter of fiscal 2013. Prior to its acquisition, Ubiquisys offered service providers intelligent 3G and long-term evolution (LTE) small-cell technologies for seamless connectivity across mobile networks. With its acquisition of Ubiquisys, the Company strengthens its commitment to global service providers by enabling a comprehensive small-cell solution that supports the transition to next-generation radio access networks. The Company has included revenue from the Ubiquisys acquisition, subsequent to the acquisition date, in its NGN Routing product category.

The total purchase consideration related to the Company’s business combinations completed during fiscal 2013 consisted of cash consideration and vested share-based awards assumed. The total cash and cash equivalents acquired from these business combinations was approximately $156 million.


(b)	Pending Acquisitions and Divestitures

Acquisition of OpenDNS On August 26, 2015, the Company completed its acquisition of privately held OpenDNS, Inc. ("OpenDNS"). Under the terms of the agreement, the Company paid approximately $635 million in cash and share-based awards assumed to acquire OpenDNS. OpenDNS provides advanced threat protection for endpoint devices. With the OpenDNS acquisition, the Company aims to strengthen its security offerings by adding broad visibility and threat intelligence delivered through a software-as-a-service platform. Revenue from the OpenDNS acquisition will be included in the Company's Security product category. The Company expects that most of the purchase price will be allocated to goodwill and purchased intangible assets.

Pending Divestiture On July 22, 2015, the Company entered into an exclusive agreement to sell the client premises equipment portion of its Service Provider Video connected devices business unit to French-based Technicolor for approximately $600 million in cash and stock subject to certain adjustments provided for in the agreement. In connection with this transaction, the Company had tangible assets of approximately $190 million which were held for sale (of which the most significant component is inventories of approximately $160 million), and current liabilities of approximately $125 million (primarily comprised of supply chain-related liabilities, warranties, rebates and other accrued liabilities), which were held for sale. The Company estimates that approximately $150 million of goodwill is attributable to this business, based on its relative fair value. The Company expects the transaction to close at the end of the second quarter of fiscal 2016, subject to customary closing conditions, including regulatory approvals.


(c)	Other Acquisition and Divestiture Information

Total transaction costs related to the Company’s acquisitions during fiscal 2015, 2014, and 2013 were $10 million, $7 million, and $40 million, respectively. These transaction costs were expensed as incurred in general and administrative (G&A) expenses in the Consolidated Statements of Operations.

The Company’s purchase price allocation for acquisitions completed during recent periods are preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available. Additional information, which existed as of the acquisition date but at that time was unknown to the Company, may become known to the Company during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date. Adjustments in the purchase price allocation may require a recasting of the amounts allocated to goodwill retroactive to the period in which the acquisition occurred.

The goodwill generated from the Company’s acquisitions completed during fiscal 2015 is primarily related to expected synergies. The goodwill is generally not deductible for income tax purposes.

The Consolidated Financial Statements include the operating results of each acquisition from the date of acquisition. Pro forma results of operations for the acquisitions completed during the fiscal years presented have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to the Company’s financial results.

During the third quarter of fiscal 2013, the Company completed the sale of its Linksys product line to a third party. The financial statement impact of the Company’s Linksys product line and its resulting sale were not material for any of the fiscal years presented.