ACQUISITION - Note 13

12 Months Ended

Mar. 31, 2015

Business Combinations [Abstract]

ACQUISITION - Note 13

13. ACQUISITION

Voicenet Solutions Limited

On November 11, 2013, the Company entered into a share purchase agreement with the shareholders and optionholders of Voicenet Solutions Limited ("Voicenet"), a provider of cloud communications and collaboration services in the United Kingdom (the "Transaction"). The Company completed the acquisition of Voicenet on November 29, 2013. The Company purchased all of the outstanding shares of Voicenet for total consideration transferred of $19.3 million; $3.0 million was placed in escrow and eligible for release to the Voicenet shareholders and optionholders in installments on the first and second anniversaries of the closing date. The shares of Voicenet are held by a wholly-owned subsidiary of 8x8 recently formed in the United Kingdom, such that Voicenet is an indirect, wholly-owned subsidiary of 8x8.

The Company recorded the acquired tangible and identifiable intangible assets and liabilities assumed based on their estimated fair values. The excess of the consideration transferred over the aggregate fair values of the assets acquired and liabilities assumed is recorded as goodwill. The amount of goodwill recognized is primarily attributable to the expected contributions of the entity to the overall corporate strategy in addition to synergies and acquired workforce of the acquired business. The finite−lived intangible assets consist of customer relationship, with an estimated weighted-average useful life of 7 years. The fair value assigned to identifiable intangible assets acquired was based on estimates and assumptions made by management using the excess earnings method. Intangible assets are amortized on a straight-line basis.

The fair values of the assets acquired and liabilities assumed are as follows (in thousands):

		Fair Value
Assets acquired:
Cash	$	854
Current assets		1,114
Property and equipment		956
Intangible asset - customer relationship		6,381
Total assets acquired		9,305
Liabilities assumed:
Current and non-current liabilities		(4,132)
Total liabilities assumed		(4,132)
Net identifiable assets acquired		5,173
Goodwill		14,155
Total consideration transferred	$	19,328

None of the goodwill recognized is expected to be deductible for income tax purposes.

Voicenet contributed revenue of approximately $3.3 million and a net loss of approximately $0.8 million for the period from the date of acquisition to March 31, 2014. The Company determined that it is impractical to include such pro forma information given the difficulty in obtaining the historical financial information of Voicenet. Inclusion of such information would require the Company to make estimates and assumptions regarding Voicenet's historical financial results that we believe may ultimately prove inaccurate.