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Business Combinations
 12 Months Ended
Dec. 31, 2016
Business Combinations [Abstract]  
Business Combinations

Note 2 – Business Combinations

On September 13, 2016, we acquired key fiber access products, technologies and service relationships from subsidiaries of CommScope, Inc. for $0.9 million in cash. This acquisition will enhance our solutions for the cable MSO industry and will provide cable operators with the scalable solutions, services and support they require to compete in the multi-gigabit service delivery market. This transaction was accounted for as a business combination. We have included the financial results of this acquisition in our consolidated financial statements since the date of acquisition. These revenues are included in the Network Solutions reportable segment, and in the Access & Aggregation and Customer Devices categories.

We recorded a bargain purchase gain of $3.5 million, net of income taxes, subject to customary working capital adjustments between the parties. The bargain purchase gain represents the excess fair value of the net assets acquired over the consideration exchanged. We have assessed the recognition and measurement of the assets acquired and liabilities assumed based on historical and pro forma data for future periods and have concluded that our valuation procedures and resulting measures were appropriate. The gain is included in the line item “Gain on bargain purchase of a business” in the 2016 Consolidated Statements of Income.

The allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date, subject to working capital adjustments, is as follows:

 

(In Thousands)

 

 

 

 

Assets

 

 

 

 

Inventory

 

$

3,131

 

Property, plant and equipment

 

 

352

 

Intangible assets

 

 

4,700

 

Total assets acquired

 

 

8,183

 

Liabilities

 

 

 

 

Accounts payable

 

 

(1,250

)

Warranty payable

 

 

(61

)

Accrued wages and benefits

 

 

(122

)

Deferred income taxes

 

 

(2,265

)

Total liabilities assumed

 

 

(3,698

)

Total net assets

 

 

4,485

 

Gain on bargain purchase of a business, net of tax

 

 

(3,542

)

Total purchase price

 

$

943

 

 

The details of the acquired intangible assets are as follows:

 

In thousands

 

Value

 

 

Life (years)

 

Supply agreement

 

$

1,400

 

 

 

0.8

 

Customer relationships

 

 

1,200

 

 

 

6.0

 

Developed technology

 

 

800

 

 

 

10.0

 

License

 

 

500

 

 

 

1.3

 

Patent

 

 

500

 

 

 

7.3

 

Non-compete

 

 

200

 

 

 

2.3

 

Trade name

 

 

100

 

 

 

2.0

 

Total

 

$

4,700

 

 

 

 

 

 

The actual revenue and net loss included in our Consolidated Statements of Income for the period September 13, 2016 to December 31, 2016 are as follows:

 

(In thousands)

 

September 13 to

December 31,

2016

 

Revenue

 

$

2,768

 

Net loss

 

$

(805

)

 

The following supplemental unaudited pro forma information presents the financial results as if the acquisition had occurred on January 1, 2015. This supplemental unaudited pro forma information does not purport to be indicative of what would have occurred had the acquisition been completed on January 1, 2015, nor is it indicative of any future results. Aside from revising the 2015 net income for the effect of the bargain purchase gain, there were no material, non-recurring adjustments to this unaudited pro forma information.

 

(In thousands)

 

2016

 

 

2015

 

Pro forma revenue

 

$

641,170

 

 

$

603,923

 

Pro forma net income

 

$

31,212

 

 

$

22,945

 

 

For the year ended December 31, 2016, we incurred acquisition and integration related expenses and amortization of acquired intangibles of $1.0 million related to this acquisition.