8. Acquisitions

Z-Wave

On April 18, 2018, the Company completed the acquisition of the Z-Wave business from Sigma Designs, Inc. for $243 million in cash. Z-Wave is an Internet of Things (IoT) technology for smart home solutions.

This strategic acquisition expands the Company's IoT connectivity portfolio in the connected home market, while further scaling the Company's engineering team. These factors contributed to a purchase price that was in excess of the fair value of the net assets acquired and, as a result, the Company recorded goodwill. A portion of the goodwill is deductible for tax purposes. The purchase price was allocated as follows (in thousands):

	Amount			Weighted-Average Amortization Period (Years)

Intangible assets:
In-process research and development	$	20,900		Not amortized
Developed technology		69,875		7
Customer relationships		25,000		4
Trademarks		9,900		7

		125,675
Cash and cash equivalents		2,841
Accounts receivable		5,311
Inventory		15,581
Other current assets		329
Goodwill		109,117
Other non-current assets		2,587
Accounts payable		(3,306	)
Other current liabilities		(8,918	)
Other non-current liabilities		(6,648	)

Total purchase price	$	242,569

In-process research and development (IPR&D) represents acquired smart home technology that had not been completed as of the acquisition date. The fair value of IPR&D was determined using the income approach. The discount rate applied to the projected cash flows was 15.0%, which reflects the engineering and technical risks related to the projects. The allocation of the purchase price is preliminary and subject to change, based on the finalization of income tax matters.

Revenues attributable to the Z-Wave business from the date of acquisition to December 29, 2018 were $37.0 million. The Company recorded approximately $4.9 million of acquisition-related costs in selling, general and administrative expenses during fiscal 2018.

The following unaudited pro forma financial information presents combined results of operations for each of the periods presented, giving effect to the acquisition as if it had been completed on January 1, 2017. The pro forma financial information includes charges for the fair value write-up associated with acquired inventory, adjustments for amortization expense of acquired intangible assets and tax-related expenses. The pro forma results of operations are presented for informational purposes only and are not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2017 or of results that may occur in the future (in thousands, except per share data):

	Year Ended

	December 29, 2018		December 30, 2017
	(Unaudited)
Revenues	$	882,109	$	824,009
Net income	$	87,874	$	27,958
Earnings per share:
Basic	$	2.04	$	0.66
Diluted	$	2.00	$	0.65

Zentri

On January 20, 2017, the Company acquired Zentri, Inc., a private company. Zentri is an innovator in low-power, cloud-connected Wi-Fi technologies for the IoT. The Company acquired Zentri for approximately $18.1 million, including initial cash consideration of approximately $14.3 million, and potential additional consideration with an estimated fair value of approximately $3.8 million at the date of acquisition.

The purchase price was allocated as follows: intangible assets—$6.7 million; goodwill—$12.1 million; and other net liabilities—$0.7 million. The goodwill is not deductible for tax purposes. Pro forma information related to this acquisition has not been presented because it would not be materially different from amounts reported.

Micrium

On October 3, 2016, the Company acquired Micrium, a private company. Micrium is a supplier of real-time operating system (RTOS) software for the IoT. The Company acquired Micrium for approximately $12.4 million, consisting of approximately $8.2 million in cash and $4.2 million in stock consideration. An additional approximately $1.0 million in stock consideration was accounted for as a transaction separate from the business combination based on its economic substance and will be recorded as post-combination compensation expense over four years.

The purchase price was allocated as follows: intangible assets—$9.5 million; goodwill—$3.4 million; and other net liabilities—$0.5 million. A portion of the goodwill is deductible for tax purposes. Pro forma information related to this acquisition has not been presented because it would not be materially different from amounts reported.

Energy Micro

On July 1, 2013, the Company acquired Energy Micro. In fiscal 2016, the Company entered into an agreement which settled the amount of the earn-out to be paid for fiscal 2015 through 2018. The total settlement amount was approximately $16.0 million (in lieu of potential payments of up to $26.7 million) and was paid on May 11, 2016.