Business Combinations

EMCORE Corporation

On January 2, 2015, the Company closed an acquisition of certain assets and assumed certain liabilities of the tunable laser product lines of EMCORE Corporation (“EMCORE”) for an original purchase price of $17.5 million, pursuant to the terms of the Asset Purchase Agreement between the parties dated October 22, 2014. Consideration for the transaction consisted of $1.5 million in cash and a promissory note (the “EMCORE Note”) of approximately $16.0 million, which was subsequently adjusted to $15.5 million in connection with a True-Up Confirmation Agreement (the “True-Up Agreement”) executed by and between the Company and EMCORE on April 16, 2015. The final adjusted purchase price for the acquisition was approximately $17.0 million.

The Company accounted for this acquisition as a business combination. With the acquisition of the EMCORE ultra narrow linewidth tunable laser products, the Company aims to strengthen its portfolio of High Speed Products.

In connection with the acquisition, the Company incurred approximately $0.9 million in total acquisition-related costs related to legal, accounting and other professional services. The acquisition costs were expensed as incurred and included in operating expenses in the Company’s consolidated statement of operations.

The fair values assigned to intangible assets acquired were based on valuations using estimates and assumptions provided by management, with the assistance of an independent third party appraisal firm. The excess purchase price over those fair values was recorded as goodwill. The Company used best estimates and assumptions as part of the purchase price allocation process to value assets acquired and liabilities assumed at the acquisition date and during the Company’s process of obtaining further information, further refined estimates and assumptions, including the acquired property, plant and equipment, prepaid and other current assets, which primarily consisted of held-for-sale assets and accounts payable. As a result, during the measurement period completed in 2015, the Company recorded adjustments related to the acquired net accounts receivable, the acquired net inventories, the assumed sales tax accrual and the acquired prepaid expenses and other current assets by immaterial amounts, and decreased goodwill by a corresponding net amount. Goodwill recorded consisted of a valuable assembled workforce and market synergy. The amounts assigned to goodwill are deductible for income tax purposes.

The following table summarizes the allocation of the assets acquired and liabilities assumed as of the acquisition date and subsequent adjustments (in thousands):



Total purchase consideration:
Cash paid	$	1,500
Notes payable	15,482
Total	$	16,982
Fair value of assets acquired:
Accounts receivable	$	9,274
Inventories	1,693
Prepaid expenses and other current assets	670
Property, plant and equipment	6,917
Intangible assets acquired:
Developed technology	4,100
Customer relationships	700
Total	$	23,354

Less: fair value of liabilities assumed:
Accounts payable	$	(7,427	)
Accrued liabilities	(60		)
Total	$	(7,487	)
Goodwill	$	1,115

Purchased intangibles with finite lives will be amortized on a straight-line basis over their respective estimated useful lives. The following table presents details of the purchase price allocated to the acquired intangible assets at the acquisition date:



	Useful Life	Purchased intangible assets
	(In years)	(In thousands)
Developed technology	7	$	4,100
Customer relationships	2	700
Total purchased intangible assets		$	4,800

EigenLight Corporation

In November 2015 the Company closed an acquisition of the business and products of EigenLight Corporation for cash consideration of $0.4 million in an asset transaction. The Company accounted for this as a business combination and the majority of the purchase price was allocated to inventory and property, plant and equipment.