3. Acquisitions

Silevo

On September 23, 2014, the Company completed its acquisition of Silevo, a designer and manufacturer of high performance solar cells that are manufactured into photovoltaic panels. Silevo’s primary operations are in the United States, where it carries-out research and development activities as well as sales of products, and in China, where it is the managing partner in a joint venture that manufactures the solar cells for the subsequent contract manufacturing of high performing photovoltaic panels. The acquisition was expected to enable the Company to manage its supply chain and control the design and manufacturing of solar cells and photovoltaic panels that are a key component of the Company’s solar energy systems, as well as enable the Company to utilize and combine Silevo’s technology with economies of scale to achieve significant cost reductions.

The purchase consideration was comprised of $0.3 million in cash and 2,284,070 shares of the Company’s common stock with an aggregate fair value of $138.0 million based on the closing price of the Company’s common stock on the acquisition date. Additionally, the Company may pay up to approximately $150.0 million in additional shares of the Company’s common stock to Silevo’s former stockholders, subject to the achievement of specified production milestones, as contingent consideration. No amounts would be payable for any milestones not achieved. As of the acquisition date, the Company estimated the fair value of the contingent consideration was $115.3 million using a probability-weighted discounted cash flow methodology. The Company also issued to Silevo employees rights to receive shares of the Company’s common stock as replacements for unvested Silevo common stock options, which vest as the employees provide future services to the Company. The purchase consideration included $16.8 million that comprised amounts that had previously been advanced to Silevo and also costs paid by the Company on behalf of the sellers. The following table summarizes the fair value of the purchase consideration as of the acquisition date (in thousands):

Cash	$	326
Common stock		137,958
Restricted stock units issued to replace Silevo's unvested stock options		132
Amounts advanced to Silevo prior to acquisition and costs paid on behalf of sellers at acquisition		16,760
Closing consideration payable		413
Contingent consideration payable		115,319
Total purchase consideration	$	270,908

The following table summarizes the fair values of the assets acquired, the liabilities assumed and the noncontrolling interests as of the acquisition date (in thousands):

Cash	$	2,899
Accounts receivable		642
Inventories		8,182
Prepaid and other assets		899
Property, plant and equipment		28,281
Accounts payable and other liabilities		(5,427	)
Term loan		(9,103	)
Deferred tax liabilities		(27,332	)
Intangible assets		119,000
Total identifiable net assets at fair value		118,041
Redeemable noncontrolling interests		(14,174	)
Goodwill		167,041
Total purchase consideration	$	270,908

The goodwill recognized was primarily attributable to the value of expected synergies, efficiencies and cost savings that the Company expects to achieve in leveraging Silevo’s technology in the volume manufacturing of high efficiency photovoltaic panels, in addition to the value of the assembled workforce and the manufacturing experience of Silevo. The acquisition of Silevo’s technology is anticipated to reduce the Company’s costs of procuring photovoltaic panels, reduce the number of photovoltaic panels and other components used in solar energy systems, reduce the installation time of solar energy systems and improve efficiencies and profitability. The full amount of the goodwill is not deductible for tax purposes.

The following table summarizes the acquired intangible assets as of the acquisition date:

			Weighted-
			Average
	Fair Value		Useful Life
	(in thousands)		(in years)
Developed technology	$	115,000		10
Build-to-suit lease arrangement		4,000		10
Total	$	119,000

Ilioss

On August 7, 2015, the Company acquired all of the outstanding shares of ILIOSSON, S.A. de C.V., or Ilioss, a designer and marketer of commercial and industrial solar energy systems in Mexico. Historically, Ilioss subcontracted the installation of its solar energy systems and sold them to financing companies along with the related customer power purchase agreements. The Company has vertically integrated Ilioss’ operations, and expects to continue to expand throughout Mexico.

The purchase consideration was comprised of $9.7 million payable in cash. Additionally, the Company would pay earn-outs comprising of (i) $5.0 million in cash upon the successful achievement of a commercial battery storage deployment milestone on or before June 30, 2016 and (ii) additional cash consideration based on the number of megawatts deployed by Ilioss in Mexico from the acquisition date through December 31, 2019. The terms of the earn-out payments require the sellers to remain employed to receive the earn-out payments. No amounts would be payable for any earn-outs not achieved. The Company has determined that any earn-out payments would be compensation for post-acquisition services, and the Company will, therefore, recognize them as they are earned. The Company estimates that the aggregate earn-out payments will be approximately $15.6 million, the majority of which is expected to be deferred on the consolidated balance sheet as costs of originating customer contracts and subsequently recognized as expenses over the term of the associated customer lease or power purchase agreements.

The following table summarizes the preliminary assessment of the fair values of the assets acquired and the liabilities assumed as of the acquisition date (in thousands). The Company is in the process of completing the valuation of the assets acquired and the liabilities assumed. Accordingly, the preliminary fair values reflected in the following table are subject to change.

Cash	$	145
Accounts receivable		241
Prepaid and other assets		307
Property, plant and equipment		18
Accounts payable and other liabilities		(1,015	)
Deferred revenue		(553	)
Deferred tax liabilities		(1,855	)
Intangible assets		6,420
Total identifiable net assets at fair value		3,708
Goodwill		5,945
Total purchase consideration	$	9,653

The goodwill recognized was primarily attributable to Ilioss’ assembled workforce and their knowledge and experience with the Mexican solar energy market that would enable the Company to grow its presence in Mexico. The full amount of the goodwill is not deductible for tax purposes.

The following table summarizes the acquired intangible assets as of the acquisition date:

			Weighted-
			Average
	Fair Value		Useful Life
	(in thousands)		(in years)
Customer relationships	$	6,190		6
Non-compete agreements		230		3
Total	$	6,420

Pro forma financial information and the historical revenue and earnings of Ilioss are not presented as they were not material to the consolidated statements of operations.