ACQUISITIONS:

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, which was a level 3 fair value measurement 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 on January 2, 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 $16.7 million was paid in cash and $6.6 million was applied against the outstanding loan owed to the Company. The acquisition-related costs for the purchase of CamSemi totaled $1.0 million, with $0.8 million recognized in 2014 and $0.2 million recognized in 2015.

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 estimated fair values of the assets acquired and the liabilities assumed as of January 2, 2015, the completion of the acquisition of CamSemi:



(in thousands)		Total Amount
Assets Acquired
	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 (in thousands)		Estimated Useful Life (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 consolidated financial statements.

Corporate Headquarters Building

In August 2015, the Company purchased a building adjacent to its corporate headquarters in San Jose, California to support the continued growth of the business. The purchase has been accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations, as the building had existing rental income resulting from in-place lease agreements with third-party tenants. The aggregate purchase price of $10.4 million, funded with cash on hand, was allocated as follows: $3.5 million for land, $6.3 million for building and improvements, $0.7 million for in-place leases and $(0.1) million for liabilities assumed. The building and improvements are being depreciated on a straight-line basis over an estimated useful life of up to 30 years. Additionally, as a result of the purchase, the Company acquired existing third-party leases that were valued as in-place lease intangible assets and are being amortized over the weighted average estimated life of 2 years. The valuation of the acquired in-place leases were estimated by the Company based on the amount of avoided cash outflows necessary to originate such leases. Acquisition-related costs in connection with the building purchase were included in other income, net in the consolidated statements of income and were not material for the periods presented.

Rental income from third-party leases, and the proportionate share of building expenses for those leases, are included in other income, net in the consolidated statements of income from the date of acquisition. These amounts were not material for the periods presented.