ACQUISITION

On May 13, 2015 ("Acquisition Date"), the Company entered into an Asset Purchase Agreement with Eureka Genomics Corporation (“Eureka”), a developer of cost-effective, low- to mid-plex, high throughput genotyping assays that use next-generation sequencing (NGS) platforms for signal readout (the “Acquisition”). The Acquisition will extend the continuum of product offerings of the Company, enabling the Company to support more applications for current customers and also serve new customers.

The Acquisition was accounted for using the acquisition method of accounting. Under the acquisition method of accounting, the tangible and intangible assets and liabilities of Eureka were recorded at their respective fair values as of the Acquisition Date, including an amount for goodwill representing the difference between the Acquisition consideration and the fair value of the net assets.

The results of operations of the acquired Eureka business and the estimated fair values of the assets acquired and liabilities assumed have been included in the Company's consolidated financial statements since the Acquisition Date.

Purchase Price

The total purchase price for Eureka was $15.0 million of cash, including $14.0 million funded as of Acquisition Date through cash on hand and $1.0 million that has been held back and is payable within 12 months of the Acquisition Date to former shareholders of Eureka.

Fair values of assets acquired and liabilities assumed

Assets acquired and liabilities assumed were recorded at their estimated fair values as of the Acquisition Date and included $12.9 million of identifiable intangible assets and $0.5 million of current liabilities with residual goodwill amounting to $2.6 million. The allocation of acquisition consideration was finalized in the third quarter of 2015.

Identified intangible assets included in process research and development (“IPR&D) and customer relationships with estimated fair values of $12.0 million and $0.9 million respectively. These estimated fair values were determined using an income approach, which recognizes that the fair value of an asset is premised upon the expected receipt of future economic benefits such as earnings and cash inflows based on current sales projections and estimated direct costs. Indications of value are developed by discounting these benefits to their present worth at a discount rate that reflects the current return requirements of market participants. The finite-lived intangible assets are being amortized over their estimated useful lives ranging from ten to fifteen years.

Goodwill

The excess of Acquisition consideration over the provisional fair value of assets acquired and liabilities assumed represents goodwill. The Company believes the factors that contributed to goodwill include synergies that are specific to the Company's consolidated business, and not available to other market participants, or other companies participating in the market, and the acquisition of a talented workforce that expands the Company's expertise in low- to mid-plex, high throughput genotyping assays. The Company expects this goodwill to be deductible for tax purposes in its entirety.

Transaction costs

The Company cumulatively incurred approximately $0.5 million of Acquisition-related costs that are reported in Selling, general and administrative expense in its Consolidated Statement of Operations for the year ended December 31, 2015.

Pro Forma Financial Information (Unaudited)

The following unaudited pro forma financial information presents the combined results of operations for the years ended December 31, 2015 and 2014 as if the Acquisition had been completed on January 1, 2014, with adjustments to give effect to pro forma events that are directly attributable to the Acquisition. The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings that may result from the consolidation of the operations of the Company and Eureka. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the Acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations (in thousands, except per share data):



	Years Ended December 31,
	2015		2014
Revenues	$	360,171	$	349,386
Net income (loss)	9,347		(7,137		)
Basic earnings per share	0.12		(0.10		)
Diluted earnings per share	0.12		(0.10		)