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
Fixed assets	1,499
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 includes the value of 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:



Intangible Asset Type	Weighted average amortization period	Fair Value
	(in years)	(in thousands)
Customer relationships	16	$	56,700
Backlog	1	3,890
Total		$	60,590

In connection with the integration of Sotera, the Company incurred $2.0 million and $13.9 million of integration related expenses for the years ended December 31, 2018 and 2017, respectively. During 2017, the Company also incurred $4.3 million of acquisition related expenses for Sotera. These acquisition and integration related expenses have been 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, 2016. 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, 2016, nor is it intended to be an indication of future operating results.



	Year Ended December 31,
	2017			2016
	(unaudited and in thousands)
Revenues	$	503,531		$	551,549
Net (loss) income from continuing operations	(19,261		)	3,000

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

Other Acquisition Related Activity

During the second quarter of 2016, in conjunction with the Milestone Intelligence Group acquisition earn out, the Company issued 129,530 shares of KeyW common stock with an approximate value of $1 million.

During the third quarter of 2016, the Company acquired a geospatial intelligence collection business for a purchase price of $3.9 million.