Acquisitions

In January 2016 we placed an offer to acquire the share capital of KBC Advanced Technologies plc (“KBC”) for 185 Pence Sterling per share, which valued KBC at approximately £158 million ("the Acquisition Bid"). The Acquisition Bid was to have been funded by cash on hand of approximately $91.0 million, which was held in escrow, and $140.0 million to be funded by a credit facility. On February 26, 2016, we entered into a $250.0 million credit agreement (the “Credit Agreement”) and borrowed $140.0 million (refer to Note 9 for further discussion of the Credit Agreement). In February 2016, KBC announced it had agreed to accept an acquisition offer of 210 Pence Sterling per share from Yokogawa Electric Corporation (“Yokogawa”) and we announced we did not intend to revise our offer. In April 2016 KBC was acquired by Yokogawa. A portion of the escrow balance was held in GBP for a period of time, which resulted in foreign exchange losses. During the year ended June 30, 2016, we incurred $5.2 million of costs related to the Acquisition Bid, as well as $3.4 million of foreign exchange losses, which were recognized in our results of operations as a component of general and administrative expenses and other income (expense), net, respectively.

In June 2016, we completed the acquisition of all the outstanding shares of Fidelis Group, LLC ("Fidelis"), a provider of asset reliability software used to predict and optimize asset performance. The purchase price consisted of $8.0 million of cash paid at closing and up to $2.0 million payment to be paid in December 2017.

A preliminary allocation of the purchase price is as follows. The valuation of acquired intangible assets and the deferred tax liabilities are considered preliminary as of June 30, 2016.



	Amount
	(Dollars in Thousands)
Tangible assets acquired, net	$	65
Identifiable intangible assets:
Developed technology	1,100
Customer relationships	700
In-process Research and Development	3,200

Goodwill	6,784
Deferred tax liabilities, net	(1,849		)
Total assets acquired	$	10,000

We used the income approach to determine the values of the identifiable intangible assets. The weighted-average discount rate (or rate of return) used to determine the value of the Fidelis intangible assets was 18% and the effective tax rate used was 34%. The values of the developed technology, in-process research and development and customer relationships are being amortized on a straight-line basis over their estimated useful lives of 10.0 years, 11.0 years and 8.0 years, respectively. The in-process research and development will begin amortization upon completion, which is expected in fiscal 2017. The weighted-average amortization period for these amortizable identifiable intangible assets is approximately 10.4 years.

The goodwill, which is not deductible for tax purposes, reflects the value of the assembled workforce and the company-specific synergies we expect to realize by selling Fidelis products and services to our existing customers. The results of operations of Fidelis have been included prospectively in our results of operations since the date of acquisition. Our results of operations giving effect to the Fidelis acquisition as if it had occurred at the beginning of fiscal 2016 would not differ materially from reported results.