ACQUISITION:

Cambridge Semiconductor Limited

In December 2014, the Company entered into a loan agreement with Cambridge Semiconductor Limited ("CamSemi"), a UK company, in which $6.6 million was outstanding as of December 31, 2014. The estimated fair value of the loan approximated the carrying value of $6.6 million, as the loan was outstanding for less than a month and the interest rate approximated a market rate for such a loan. The loan was in anticipation of a definitive agreement the Company entered into to acquire CamSemi in January 2015.

On January 2, 2015, the Company acquired 100% of the shares outstanding of CamSemi for total consideration of approximately $23.3 million, of which $16.5 million was paid in cash at closing, $6.6 million was applied against the outstanding loan owed to the Company, and $0.2 million was recorded as a liability related to the working capital adjustment to be paid during the second quarter of 2015. The acquisition-related costs for the purchase of CamSemi were $0.2 million in the three months ended March 31, 2015, and $0.8 million in the three months ended December 31, 2014. The acquisition has been accounted for using the acquisition method of accounting in accordance with ASC 805 - Business Combinations. Goodwill is not expected to be deductible for tax purposes.

CamSemi was acquired to accelerate the Company's product-development efforts for the low-power market. The acquisition also broadens the Company's technology and product portfolio for low-power applications, particularly in the mobility and LED lighting markets. The purchase price allocated to goodwill in the acquisition (as noted in the purchase price allocation below) is related largely to synergies and economies of scale expected from combining the operations of CamSemi with those of the Company.

The following table summarizes the purchase price and preliminary estimated fair values of the assets acquired and the liabilities assumed as of January 2, 2015. The allocation of the purchase price is preliminary as certain pre-acquisition liabilities and corporate taxes are still being finalized and may be adjusted should further information regarding events or circumstances existing as of the acquisition date become available.



		Total Amount
Assets Acquired		(in thousands)
	Cash	$	1,134
	Accounts receivable	1,891
	Inventories	1,409
	Prepaid expenses and other current assets	408
	Tax receivable	1,093
	Intangible assets:
	Developed technology	6,600
	Customer relationships	2,420
	Goodwill	11,250
	Total assets acquired	26,205
Liabilities Assumed
	Current liabilities	1,832
	Taxes payable	1,090
	Total liabilities assumed	2,922
	Total purchase price	$	23,283

The following table represents details of the purchased intangible assets:



	Fair Value Amount		Estimated Useful Life
	(in thousands)		(in years)
Developed technology	$	6,600	3 - 7
Customer relationships	2,420		5
Total acquired CamSemi intangibles	$	9,020

The fair value of the identifiable intangible assets, developed technology and customer relationships, were determined based on the following approach.

Developed Technology. The income approach was used to value the acquired developed technology. Revenue attributable to the Company's technology was estimated based on expected evolution of the technology over time. Expenses were assumed to reflect the costs necessary to support the developed technology. The present value was capitalized as developed technology as of the acquisition date and is being amortized using a straight-line method to cost of revenues over the estimated life of 3 - 7 years.

Customer Relationships. An intangible customer relationship asset was recognized to the extent that the Company was expected to benefit from future revenues reasonably anticipated given the historical customer relationships and operating practices of CamSemi. In order to determine the fair value of the customer relationships, the Company's analysis assumed that the Company would immediately benefit from the economics generated by CamSemi's existing customer relationships. This amount was reduced by the potential impact given no past customer relationships and the assumption that the Company could reacquire the customer relationships and ramp up to a similar level of revenue within two years. The fair value of customer relationships was capitalized as of the acquisition date and is being amortized on a straight line basis to sales and marketing expenses over the estimated life of 5 years.

Pro forma results of operations for this acquisition have not been presented because it is not material to the Company’s condensed consolidated financial statements.