8.	ACQUISITIONS

Acquisitions completed in 2014:

The Company completed three acquisitions during the year ended December 31, 2014, which were determined to be immaterial, both individually and in the aggregate, for $6.3 million in cash consideration, inclusive of $2.1 million in cash acquired, and $1.1 million in additional cash consideration to be paid in 2015, which is included in accrued expenses. In addition, up to $1.5 million in additional cash consideration may be payable to the selling shareholders of one of the three acquired companies based on the achievement of certain performance milestones through the end of 2016.

Acquisitions completed in 2013

Antenna

On October 9, 2013, the Company acquired Antenna, a leading provider of mobile application development platforms. The Company acquired all of the outstanding capital stock of Antenna in a cash merger for $27.1 million, including the final working capital adjustment to the purchase price, which was paid by the Company in the first quarter of 2014. During 2014 and 2013, the Company incurred direct and incremental expenses associated with the transaction of $0.3 million and $1.3 million, respectively, which were primarily professional fees.

The operations of Antenna are included in the Company’s operating results from the date of acquisition. Due to the rapid integration of the products, sales force, and operations of Antenna, other than the maintenance and hosting revenue attributable to the recognition of the fair value of acquired deferred maintenance and hosting revenue, it is no longer feasible for the Company to identify revenue from new arrangements solely attributable to Antenna.

In 2014, the Company made $6 million in purchase price adjustments to goodwill primarily related to the final determination of assumed sales tax liabilities and deferred tax assets associated with the acquired NOLs. These purchase price adjustments are also reflected retrospectively as of December 31, 2013 in the accompanying audited consolidated balance sheet.

As of December 31, 2014, as a result of the final purchase price allocation, the Company recognized $23 million of goodwill, which is primarily due to the expected synergies of the combined entities and the workforce in place. The goodwill created by the transaction is nondeductible for tax purposes. A summary of the final purchase price allocation for the acquisition of Antenna is as follows:


(in thousands)
Total purchase consideration:

Cash	$	27,141

Allocation of the purchase consideration:
Cash	$	783
Accounts receivable, net of allowance		4,184
Other assets		3,951
Property and equipment		655
Deferred tax assets, net		2,638
Identifiable intangible assets		10,355
Goodwill		23,018
Accounts payable		(1,396	)
Accrued liabilities		(12,861	)
Deferred revenue		(4,186	)

Net assets acquired	$	27,141

The valuation of the assumed deferred revenue was based on the Company’s contractual commitment to provide post-contract customer support to Antenna clients and future contractual performance obligations under existing hosting arrangements. The fair value of this assumed liability was based on the estimated cost plus a reasonable margin to fulfill these service obligations. The majority of the deferred revenue was recognized in the 12 months following the acquisition.

The valuation of the acquired intangible assets is inherently subjective and relies on significant unobservable inputs. The Company used an income approach to value the acquired customer related, technology and trade name intangible assets. The non-compete assets were valued using the with-and-without method, a form of the income approach which considers the cash flow differentials under multiple scenarios with or without key executives. The valuation for each of these intangible assets was based on estimated projections of expected cash flows to be generated by the assets, discounted to the present value at discount rates commensurate with perceived risk. The valuation assumptions take into consideration the Company’s estimates of contract renewal, technology attrition and revenue growth projections.

The estimated fair values for specifically identifiable intangible assets acquired, by major asset class, are as follows:


(in thousands)			Weighted-average amortization period (in years)
Customer related intangible assets	$	4,279		4
Technology		3,656		3
Non-compete		1,342		1
Trade name		1,078		3

	$	10,355		3.2

Pro forma Information (Unaudited)

The following pro forma financial information presents the combined results of operations of the Company and Antenna as if the acquisition had occurred on January 1, 2012 after giving effect to certain pro forma adjustments. The pro forma adjustments reflected herein include only those adjustments that are directly attributable to the Antenna acquisition, factually supportable, and expected to have a continuing impact on the Company. These pro forma adjustments include a net increase in amortization expense to eliminate historical amortization of Antenna intangible assets and to record amortization expense for the $10.4 million of acquired identifiable intangibles, a decrease in interest income as a result of the cash paid for the acquisition, a decrease in interest expense as a result of the repayment of all Antenna outstanding debt in connection with the acquisition, and the elimination of approximately $1.3 million of acquisition-related costs, including transaction costs incurred by the Company and Antenna. The pro forma financial information does not reflect any adjustments for anticipated synergies resulting from the acquisition and is not necessarily indicative of the operating results that would have actually occurred had the transaction been consummated on January 1, 2012.


	Pro Forma Year Ended December 31,
(in thousands, except per share amounts)	2013		2012
Revenue	$	532,978	$	499,839
Net income	$	35,814	$	9,028
Net income per basic share (1)	$	0.47	$	0.12

Net income per diluted share (1)	$	0.46	$	0.12

(1)

The per share amounts have been retroactively restated for all prior periods presented to reflect the Company’s two-for-one common stock split effected in the form of a common stock dividend distributed on April 1, 2014. See Note 1 “Basis of Presentation” (d) for further discussion of the Stock Split.