5. Acquisition

Spatial Systems Nominees PTY LTD (“Spatial”)

On November 30, 2012 the Company acquired 100% of the capital stock of Spatial, an Australian company with operations in the U.S., for total cash consideration of $31.0 million and issued approximately 240 shares of the Company’s Common Stock. The total cash consideration was comprised of $30.0 million for the purchase of all of the shares of Spatial and $625 for the estimated surplus working capital on the date of purchase. Of the 240 shares of the Company’s Common Stock issued, only a portion valued at approximately $1.4 million based on the Company’s November 30, 2012 closing stock price per share was considered purchase price. The remaining value of the shares will be recognized as compensation expense and amortized over the service period of three years. In addition, the Company potentially may make payments totaling up to approximately $5.0 million in cash and may issue up to 260 shares of stock based on the ability to achieve a range of business objectives for the period from December 1, 2012 through November 30, 2013.

The Company accounted for this business combination by applying the acquisition method, and accordingly, the purchase price was allocated to the tangible assets acquired and liabilities assumed based upon their fair values at the acquisition date. The excess of the purchase price over the net tangible assets and liabilities, approximately $36.1 million was recorded as goodwill, which is not tax deductible. The Company is in the process of finalizing the purchase allocation, thus the provisional measures of deferred revenue, deferred income taxes, intangibles and goodwill are subject to change. The purchase price allocation will be finalized in 2013.

The Company believes that Spatial will help to augment the Company’s activation services offerings with more powerful broadband bundled offerings and expand into new and emerging markets. In addition, the acquisition of Spatial will help to increase the Company’s penetration of its domestic customer base and expand the Company’s engagements in the Asia-Pacific markets.

Allocation of Consideration Transferred

Total purchase price is summarized as follows:

	November 30, 2012
Cash consideration	$	30,000
Working Capital Surplus	625
Value of Synchronoss common stock issued	1,386
Estimated fair value of the Earn-out payments	4,600
Total purchase price	$	36,611

The Company prepared an initial determination of the fair value of assets acquired and liabilities assumed as of the acquisition date using preliminary information. In accordance with ASC 805, during the measurement period an acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of the acquisition date. Accordingly, the Company has recognized measurement period adjustments made during the first quarter of 2013 to the fair value of certain assets acquired and liabilities assumed as a result of the further refinements in the Company’s provisional amounts. These adjustments were retrospectively applied to the November 30, 2012 acquisition date balance sheet. The effect of these adjustments on the preliminary purchase price allocation was a decrease in accounts receivable of $2.6 million, an increase in prepaid expenses and other assets of $5.0 million, an increase to goodwill of $11.8 million, an increase in accrued expenses of $4.6 million, and an increase to deferred revenues of $9.6 million. None of the adjustments had a material impact on the Company’s previously reported results of operations.

The following table summarizes the preliminary estimated fair values of the assets and liabilities assumed at the acquisition date, as adjusted:

	November 30, 2012
Cash and cash equivalents	$	2,395
Accounts receivable	4,409
Prepaid expenses and other assets	5,232
Property and equipment	584
Intangible assets	11,322
Other assets, non-current	70
Total identifiable assets acquired	24,012

Accounts payable and accrued liabilities	(9,860		)
Deferred revenue	(11,111		)
Deferred tax liability	(2,129		)
Other liabilities, non-current	(389		)
Total liabilities assumed	(23,489		)

Net identifiable assets acquired	523

Goodwill	36,088
Net assets acquired	$	36,611

Total goodwill changed during the three months ended March 31, 2013 as follows:

Balance at December 31, 2012	$	127,322
Acquisitions	—
Reclassifications, adjustments and other	(67		)
Translation adjustments	(1,149		)
Balance at March 31, 2013	$	126,106