Acquisitions of Selected Assets of Manatee Works, Inc. (Notes)

9 Months Ended

Oct. 04, 2015

Business Combinations [Abstract]

Business Combination Disclosure

Acquisition of Selected Assets of Manatee Works, Inc.

On August 21, 2015, the Company acquired selected assets of Manatee Works, Inc. (Manatee), a privately-held U.S.-based developer of barcode scanning software development kits (SDKs). Under this transaction, the Company acquired technology and a product for use in mobile devices.

The Company paid $1,023,000 in cash upon closing and may pay additional contingent consideration over the next three years based upon milestone revenue levels. The undiscounted potential outcomes related to the contingent consideration range from $0 to approximately $5,000,000. The fair value of the contingent consideration as of the acquisition date was $3,790,000, resulting in a total purchase price of $4,813,000. The contingent consideration will be remeasured each reporting period with changes in fair value recorded in current operations. The fair value as of October 4, 2015 did not change from the August 21, 2015 acquisition date. As of October 4, 2015, the current portion of contingent consideration expected to be paid within the next year was $938,000 and was recorded in “Accrued expenses,” and the non-current portion expected to be paid beyond one year was $2,852,000 and was recorded in “Other non-current liabilities” on the Consolidated Balance Sheets.

The purchase price was allocated as follows (in thousands):

Prepaid expenses	$	23
Developer network	140
Completed technology	590
Goodwill	4,060
Purchase price	$	4,813

The developer network and completed technology are included in "Intangible assets" on the Consolidated Balance Sheets. The developer network will be amortized on a straight-line basis to selling, general, and administrative expenses over five years. The completed technology will be amortized on a straight-line basis to cost of revenue over five years. The goodwill is expected to be deductible for tax purposes. Transactions costs were immaterial and were expensed as incurred in the third quarter of 2015.

Manatee financial results are immaterial with respect to the inclusion of supplemental pro-forma information.