20. Acquisitions

For the year ended December 31, 2015, the Company completed eight acquisitions for an aggregate purchase price consideration of approximately $544 million in cash. These acquisitions primarily expand NOW’s market in Australia, Canada, Mexico, Norway, the Philippines, the United Kingdom and the United States. The Company has included the financial results of the acquisitions in its consolidated financial statements from the date of acquisition. In connection with one of the acquisitions, the Company agreed to make contingent consideration payments of up to $6 million upon the attainment of certain profitability milestones. At the acquisition date, the Company estimated the fair value for contingent consideration to be approximately $4 million by using a Monte Carlo simulation using level 3 inputs because the fair value was derived using significant unobservable inputs, which include discount rates and probability-weighted cash flows. Changes in fair value of the contingent consideration liability subsequent to the acquisition date, such as changes in the probability assessment, are recognized in the period when the change in estimated fair value occurs.

The Company completed its preliminary valuations as of the applicable acquisition dates of the acquired net assets and recognized goodwill of $276 million and intangible assets of $103 million which is subject to change. If additional information is obtained about these assets and liabilities within the measurement period (not to exceed one year from the date of acquisition), including through asset appraisals and learning more about the newly acquired businesses, the Company will refine its estimates of fair value to allocate the purchase price more accurately; any such revisions are not expected to be significant.

The following table summarizes the adjusted consideration paid for the eight acquisitions and the adjusted amounts of the assets acquired and liabilities assumed recognized at the acquisition date (in millions):

	As of December 31, 2015
Purchase price including contingent consideration				$	544
Less: cash acquired					(29	)
Net purchase price					515
Fair value of net assets acquired:
Current assets other than cash		181
Property, plant and equipment		59
Trade names (estimated useful lives of 1-20 years)		24
Customer relationships (estimated useful lives of 6-10 years)		79
Current liabilities		(72	)
Deferred tax liabilities		(31	)
Other non-current liability		(1	)
Total fair value of net assets acquired					239
Goodwill ⁽¹⁾					276

⁽¹⁾

The amount of goodwill represents the excess of its purchase price over the fair value of net assets acquired. Goodwill includes the expected benefits that the Company believes will result from combining its operations with those of businesses acquired. An immaterial amount of the goodwill recognized is expected to be deductible for income tax purposes.

For the year ended December 31, 2015, the Company recognized $6 million in acquisition-related costs. During the measurement period the aggregated working capital adjustment was approximately $6 million. Actual results included in the consolidated statements of operations for the Company’s acquisitions consist of approximately $341 million revenues and $171 million net loss for the year ended December 31, 2015.

Pro Forma Financial Information (unaudited)

The following unaudited pro forma information has been presented as if the acquisitions occurred on January 1, 2014. This information is based on historical results of operations, adjusted to give effect to pro forma events that are directly attributable to the acquisitions and factually supportable. Additionally, certain pro forma adjustments have been made to the historical results in order to (i) present them in U.S. dollars; (ii) align accounting periods (iii) conform their statutory income tax rates to those applied by the Company; (iii) reflect the increase of cost of goods sold, depreciation and amortization from the fair value step-up as if the acquisitions had occurred on January 1, 2014.

The pro forma information is for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisitions occurred at the beginning of fiscal year 2014 (in millions).

	Year Ended December 31,
	2015			2014
Revenue	$	3,255		$	4,847
Net income (loss)	$	(482	)	$	131