2. Business Combinations

On October 28, 2016, the Company completed the acquisition of the wireless local area network (“WLAN”) business (“WLAN Business”) from Zebra Technologies Corporation (“Zebra”). Under the terms of the purchase agreement, the Company acquired customers, employees, technology and other assets as well as assumed certain contracts and other liabilities of the WLAN Business, for an initial purchase price of $51.1 million. Subsequent to year end, Zebra agreed to pay $1.6 million as a final settlement regarding all outstanding working capital claims of the Company, thereby reducing the net cash consideration to $49.5 million. The $1.6 million is included in “Prepaid expenses and other current assets” in the consolidated balance sheet as of June 30, 2017.

The acquisition has been accounted for using the acquisition method of accounting. The purchase price allocation as of the Acquisition Date is set forth in the table below and reflects fair values. The fair values were determined through established and generally accepted valuation techniques, including work performed by third-party valuation specialists. All valuations were considered finalized as of June 30, 2017.

The following table below summarizes the final allocation as of June 30, 2017, of the tangible and identifiable intangible assets acquired and liabilities assumed:

	Preliminary Allocation as of October 26, 2016			Adjustments				Final Allocation as of June 30, 2017
Receivables, net	$	17,818		$	(3,182	)	(a)	$	14,636
Inventory		12,408			1,185		(b)		13,593
Other current assets		808			—				808
Property and equipment		1,780			1,379		(c)		3,159
Identifiable intangible assets		20,500			(200	)	(d)		20,300
In-process research and development		1,600			(200	)	(d)		1,400
Other assets		7,634			—				7,634
Goodwill		9,836			(497	)			9,339
Deferred revenue		(13,533	)		(626	)	(e)		(14,159	)
Other liabilities		(7,763	)		562		(f)		(7,201	)
Total purchase price allocation	$	51,088		$	(1,579	)		$	49,509

The purchase price has been allocated based on the fair value of assets acquired and liabilities assumed as of the acquisition date. The fair value of working capital related items, such as other current assets and accrued liabilities, approximated their book values at the date of acquisition. Inventories were valued at fair value using the net realizable value approach. The fair value of property and equipment was determined using a cost approach. The fair value of the acquired deferred revenue was estimated using the cost build-up approach. The cost build-up approach determines fair value using estimates of the costs required to provide the contracted deliverables plus an assumed profit. The total costs including the assumed profit were adjusted to present value using a discount rate considered appropriate. The resulting fair value approximates the amount that the Company would be required to pay a third party to assume the obligation. Valuations of the intangible assets were valued using income approaches based on projections provided by management, which we consider to be Level 3 inputs.

The changes during the period in the table above is as follows: a) obtainment of information on accounts receivable and related reserves of matters that existed as of the acquisition date; b) additional receipts of products that existed as of the acquisition date; c) additional fixed assets acquired in India as of the acquisition date; d) revised net realizable value based on finalization of valuation; e) additional maintenance contracts identified and transferred from Zebra to the Company that existed as of the acquisition date; f) additional employee benefits assumed that existed as of the acquisition date.

The following table presents details of the identifiable intangible assets acquired as part of the acquisition (in thousands):

Intangible Assets	Estimated Useful Life (in years)	Amount
Developed technology	6	$	14,400
Customer relationships	4		3,300
Trademarks	5		2,600
Total identifiable intangible assets		$	20,300

The amortization for the developed technology is recorded in “Cost of revenues” for product and the amortization for the remaining intangibles is recorded in “Amortization of intangibles” on the condensed consolidated statement of operations. The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of the WLAN Business. The Company anticipates both the goodwill and intangible assets to be fully deductible for tax purposes.

The Company also has an indefinite lived asset of $1.4 million which represents the fair value of in-process research and development activities. Once the related research and development efforts are completed, the Company will determine whether the asset will continue to be an indefinite lived asset or become a finite lived asset and apply the appropriate accounting accordingly.

The results of operations of the WLAN Business are included in the consolidated results of operations beginning October 28, 2016. The WLAN Business revenue for fiscal 2017 was $86.0 million and has been incorporated into the revenue of the Company. The associated expenses of the WLAN Business have been incorporated with the results of operations of the Company as a product line and, therefore, stand-alone operating results are not available. The Company incurred $2.1 million of acquisition and $6.6 million of integration-related expenses during the year ended June 30, 2017 included in "Acquisition and integration costs" on the consolidated statements of operations. The costs, which the Company expensed as incurred, consist primarily of professional fees to financial and legal advisors and Information Technology consultants and companies.

Pro forma financial information

The following unaudited pro forma results of operations are presented as though the acquisition of the WLAN Business had occurred as of the beginning of the earliest period presented after giving effect to purchase accounting adjustments relating to inventories, deferred revenue, depreciation and amortization on acquired property and equipment and intangibles, acquisition costs, interest income and expense and related tax effects.

The pro forma results of operations are not necessarily indicative of the combined results that would have occurred had the acquisition been consummated as of the earliest period presented, nor are they necessarily indicative of future operating results. The unaudited pro forma results do not include the impact of synergies, nor any potential impacts on current or future market conditions which could alter the unaudited pro forma results.

The unaudited pro forma financial information for the year ended June 30, 2017, combines the results of Extreme for the year ended June 30, 2017, which include the results of the WLAN Business subsequent to the acquisition date, and the historical results of the WLAN Business for the four months ended October 28, 2016.

The unaudited pro forma financial information for the year ended June 30, 2016, combines the historical results of Extreme for that period, with the historical results of the WLAN Business for the year ended June 30, 2016.

The following table summarizes the unaudited pro forma financial information (in thousands, except per share amounts):

	Year Ended
	June 30, 2017		June 30, 2016
Net revenues	$	641,390	$	628,079
Net income (loss)	$	7,380	$	(62,281	)
Net earnings (loss) per share - basic	$	0.07	$	(0.60	)
Net earnings (loss) per share - diluted	$	0.07	$	(0.60	)
Shares used in per share calculation - basic		108,273		103,074
Shares used in per share calculation - diluted		111,472		103,074