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 enhanced our solutions for the cable MSO industry and provided cable operators with the scalable solutions, services and support they required 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 during the year ended December 31, 2016, net of income taxes, which was subject to customary working capital adjustments between the parties. The bargain purchase gain of $3.5 million 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.

Working capital adjustments were recorded in the fourth quarter of 2016 and resulted in an immaterial reduction in the inventory acquired, accounts payable assumed, deferred income taxes and bargain purchase gain. If these adjustments had been recorded on the date of acquisition, the bargain purchase gain would have been reduced by $8 thousand for the three months ended September 30, 2016. The final allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date 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 following unaudited supplemental pro forma information presents the financial results as if the acquisition had occurred on January 1, 2015. This unaudited supplemental 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
Pro forma earnings per share – basic	$	0.64	$	0.45
Pro forma earnings per share – diluted	$	0.64	$	0.45

For the years ended December 31, 2017 and 2016, we incurred acquisition and integration related expenses and amortization of acquired intangibles of $1.8 million and $1.0 million, respectively, related to this acquisition.