NOTE 7 – ACQUISITIONS

While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement. As a result, during the preliminary purchase price allocation period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with a corresponding offset to goodwill. The Company records adjustments to the assets acquired and liabilities assumed subsequent to the purchase price allocation period in the Company’s operating results in the period in which the adjustments were determined.

In the fiscal year ended March 31, 2012, the Company completed the acquisitions of Psytechnics, Ltd (Psytechnics), Fox Replay BV (Replay) and Simena, LLC (Simena) described more fully in Note 7 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2012. The results of operations of these acquired businesses have been included in our consolidated financial statements beginning on their respective acquisition dates. During the three months ended June 30, 2012, the Company recorded $4.6 million of revenue directly attributable to the acquisitions of Simena and Replay.

Simena

On November 18, 2011, the Company completed the acquisition of Simena for $10.1 million. Simena’s results of operations have been included in our consolidated financial statements since that date.

In connection with the acquisition of Simena, the Company became obligated to pay the seller up to $10.8 million in additional purchase consideration subject to adjustment based on the final determination of certain assets and liabilities. As a result, a majority of the changes to the value of the contingent consideration would be expected to have an offsetting impact on the recorded values of the assets and liabilities assumed as part of the transaction. Additionally, the Company is working with the seller to get additional information on such assets and liabilities. The Company will continue to refine its estimates of fair value related to these items in the next four months. Certain information was not available in the reporting period as Simena had not previously created GAAP basis financial statements and the analysis which would underlie estimates thereto.

The contingent liability was recorded at its fair value of $8.0 million at the acquisition date. The Company has re-measured the fair value at June 30, 2012 and will re-measure the fair value of the consideration at each subsequent reporting period and recognize any adjustment to fair value as part of earnings.

Replay

On October 3, 2011, the Company completed the acquisition of Replay for $20.2 million. Replay’s results of operations have been included in our consolidated financial statements since that date.

Psytechnics

On April 1, 2011, the Company completed the acquisition of Psytechnics for $17.0 million. Psytechnics’ results of operations have been included in our consolidated financial statements since that date.

The following table presents unaudited pro forma results of the historical Consolidated Statements of Operations of the Company and Psytechnics, Replay and Simena for the three months ended June 30, 2011, giving effect to the mergers as if they occurred on April 1, 2011 (in thousands, except per share data):


	Three Months Ended June 30, 2011
Pro forma revenue	$	65,064
Pro forma net income	$	3,004
Pro forma income per share
Basic	$	0.07
Diluted	$	0.07
Pro forma shares outstanding
Basic		42,608
Diluted		43,343

The pro forma results for the three months ended June 30, 2011 primarily includes adjustments for amortization of intangibles. This pro forma information does not purport to indicate the results that would have actually been obtained had the acquisition been completed on the assumed date, or which may be realized in the future.