ACQUISITIONS

On April 4, 2017, the Company's wholly owned operating company, Opco, completed the merger (the “Merger”) of Sandpiper Acquisition Corporation, a wholly owned subsidiary of Opco, with and into Sotera Holdings Inc., a Delaware corporation and its wholly owned subsidiary Sotera Defense Solutions Inc., a Delaware corporation (Sotera), with Sotera surviving the Merger as a wholly-owned subsidiary of Opco. The purchase consideration net of cash acquired, for the acquisition of Sotera was $236.1 million less $0.2 million of escrow holdback funds returned to the Company during the fourth quarter of 2017. The acquisition of Sotera was completed as an all-cash transaction.

The fair values of the assets acquired and liabilities assumed at the date of the transaction were as follows (in thousands):




Cash	$	11,583
Receivables	37,521
Prepaid expenses	1,679
Property and equipment	1,499
Other intangibles	60,590
Goodwill	164,487
Deferred tax assets	142
Other assets	1,149
Total assets acquired	278,650
Accounts payable	7,007
Accrued expenses	9,818
Accrued salaries and wages	10,784
Deferred revenue	1,505
Long-term obligations	2,097
Total liabilities assumed	31,211
Net assets acquired	$	247,439
Net cash paid	$	235,856
Actual cash paid	$	247,439

The goodwill primarily represents the acquiring of an assembled workforce of cleared personnel to expand our presence with new and existing customers. The value of having that assembled workforce generated the majority of the goodwill from the acquisition of Sotera and drove much of the purchase price in addition to other identified intangibles. The goodwill presented above includes $103.5 million of tax deductible goodwill.

The Company identified $60.6 million of other intangible assets, including backlog and customer relationships. The following table summarizes the fair value of intangibles assets acquired at the date of acquisition and the related weighted average amortization period:



	Weighted average amortization period	Fair Value
	(in years)	(in thousands)
Customer relationships	16.0	$	56,700
Backlog	1.0	3,890
Total		$	60,590

Related to the acquisition of Sotera, during the three and six months ended June 30, 2017, the Company incurred $2.6 million and $4.3 million of acquisition related expenses, respectively. In connection with the integration of Sotera, during the three and six months ended June 30, 2018, the Company incurred $0.8 million and $1.5 million of integration related expenses. During the three and six months ended June 30, 2017, the Company incurred $10.2 million of expenses related to the integration of Sotera. Acquisition and integration related expenses were recorded as part of operating expenses.

Unaudited Pro Forma Financial Information

The table below summarizes the unaudited pro forma consolidated results of operations as if the acquisition of Sotera had occurred on January 1, 2017. The unaudited pro forma financial information was prepared based on historical financial information. The unaudited pro forma results below do not include any adjustments that may have resulted from synergies, eliminations of intercompany transactions or from amortization of intangibles (other than during the period following the closing of the Sotera acquisition). The pro forma financial information is not intended to reflect the actual results of operations that would have occurred if the acquisition had been completed on January 1, 2017, nor is it intended to be an indication of future operating results.



	Three months ended			Six months ended
	June 30, 2017			June 30, 2017
	(unaudited and in thousands)
Revenues	$	124,058		$	254,259
Net (loss) income from continuing operations	(18,386		)	(28,802		)

The Sotera acquisition was accounted for using the acquisition method of accounting. Results of operations were included in the condensed consolidated financial statements from the date of acquisition.