3. Acquisitions

Piscataway Acquisition

On June 6, 2016, the Company completed the acquisition of a data center in Piscataway, New Jersey (the “Piscataway facility”), from DuPont Fabros Technology, Inc., for approximately $125.6 million (based on the preliminary assessment of the fair value of assets acquired and liabilities assumed). This facility is located in the New York metro area on 38 acres and consists of 360,000 gross square feet, including approximately 89,000 square feet of raised floor, and approximately 18 MW of critical power. The Piscataway facility supports future growth with space for an additional approximately 87,000 square feet of raised floor in the existing structure, as well as capacity for over 8 MW of additional critical power. This acquisition was funded with a draw on the unsecured revolving credit facility.

The Company accounted for this acquisition in accordance with ASC 805, Business Combinations, as a business combination. The Company is generally valuing the assets acquired and liabilities assumed using Level 3 inputs.

The following table summarizes the consideration for the Piscataway facility and the preliminary allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (unaudited and in thousands). This allocation is subject to change pending the final valuation of these assets and liabilities:


	Piscataway Allocation as of June 30, 2016
Land	$ 7,440
Buildings and improvements	78,370
Construction in progress	13,900
Acquired intangibles	21,668
Deferred costs	4,084
Other assets	106
Total identifiable assets acquired	125,568

Acquired below market lease	568
Net working capital	2,019
Total liabilities assumed	2,587

Net identifiable assets acquired	$ 122,981

Carpathia Acquisition

On June 16, 2015, the Company completed the acquisition of 100% of the outstanding stock of Carpathia Hosting, Inc., a Virginia-based colocation, cloud and managed services provider for approximately $373.6 million (based on the final assessment of the fair value of assets acquired and liabilities assumed). Upon completion of this acquisition, the Company assumed all of the assets and liabilities of Carpathia Acquisition, Inc. Carpathia Acquisition, Inc. and its subsidiaries, including Carpathia, became indirect, wholly-owned subsidiaries of the Company. Carpathia was a provider of colocation, hybrid cloud and Infrastructure-as-a-Service (IaaS) servicing enterprise customers and federal agencies, with a customer base of approximately 230 customers as of June 16, 2015. Carpathia utilized eight domestic data centers located in Dulles, Virginia; Phoenix, Arizona; San Jose, California; Harrisonburg, Virginia and Ashburn, Virginia; and five international data centers located in Toronto, Canada; Amsterdam, Netherlands; London, United Kingdom; Hong Kong and Sydney, Australia.

The Company accounted for this acquisition in accordance with ASC 805, Business Combinations, as a business combination. The Company generally valued the assets acquired and liabilities assumed using Level 3 inputs.

In June 2016, the Company finalized the Carpathia purchase price allocation. The following table summarizes the consideration for the Carpathia acquisition and the final allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (unaudited and in thousands):


	Final Carpathia Allocation as of June 30, 2016	Original Allocation Reported as of June 30, 2015	Adjusted Fair Value
Land	$ 1,130	$ 1,130	$ -
Buildings and improvements	78,898	79,372	(474)
Construction in progress	12,127	12,127	-
Acquired intangibles (1)	108,100	89,847	18,253
Net working capital	2,851	2,569	282
Total identifiable assets acquired	203,106	185,045	18,061

Capital lease and lease financing obligations	43,832	43,832	-
Deferred income taxes	35,980	19,766	16,214
Acquired above market lease	2,453	-	2,453
Total liabilities assumed	82,265	63,598	18,667

Net identifiable assets acquired	120,841	121,447	(606)
Goodwill	173,843	173,237	606
Net assets acquired	$ 294,684	$ 294,684	$ -

(1)

During the three months ended March 31, 2016, a $14.7 million adjustment was recorded to increase acquired intangible assets following identified purchase price allocation adjustments, with a corresponding decrease to goodwill. An adjustment of $1.0 million to increase amortization expense related to this increase in acquired intangibles was recorded during the three months ended March 31, 2016, of which $0.7 million related to prior reporting periods.

Goodwill recognized in the transaction relates primarily to anticipated operating synergies, Carpathia’s in-place workforce and access to Carpathia’s customer pipeline. For tax purposes, the Company acquired goodwill with a tax basis of $16.6 million, which is deductible in subsequent periods. Based on the final purchase price allocation, amortization expenses relative to the intangible assets acquired are expected to be approximately $12.2 million, $12.2 million, $10.1 million, $8.0 million and $8.0 million for the years ended December 31, 2016 through December 31, 2020, respectively.

The following table represents the pro forma condensed consolidated statements of operations of the combined entities for the three and six month periods ended June 30, 2015 (in thousands):


	(Unaudited) Pro Forma Condensed Consolidated Statements of Operations
	Three Months Ended	Six Months Ended
	June 30, 2015	June 30, 2015
Revenue	$ 87,267	$ 170,592
Net income	$ 9,608	$ 13,568

These amounts have been calculated after applying the Company’s accounting policies, and give effect to the Carpathia acquisition.

The unaudited pro forma condensed consolidated financial information is for comparative purposes only and not necessarily indicative of what actual results of operations of the Company would have been had the transaction noted above been consummated on January 1, 2015, nor does it purport to represent the results of operations for future periods.