Business Combinations

9 Months Ended

Sep. 30, 2013

Business Combinations [Abstract]

Business Combinations

2. BUSINESS COMBINATIONS

On May 4, 2012, we acquired the NSN BBA business. This acquisition provides us with an established customer base in key markets and complementary, market-focused products and was accounted for as a business combination. We have included the financial results of the NSN BBA business in our consolidated financial statements since the date of acquisition. These revenues are included in the Carrier Networks division in the Broadband Access subcategory.

We received a cash payment of $7.5 million from NSN and recorded a bargain purchase gain of $1.8 million, net of income taxes, in the second quarter of 2012, subject to customary working capital adjustments between the parties as defined in the purchase agreement. As of September 30, 2013, the parties were in the process of resolving the working capital adjustments. We adjusted the purchase price allocation during the fourth quarter of 2012 to record additional estimated liabilities and an estimated receivable from NSN related to working capital adjustments under negotiation. The bargain purchase gain of $1.8 million represents the excess of the consideration exchanged over the fair value of the assets acquired and liabilities assumed. We have assessed the recognition and measurements of the assets acquired and liabilities assumed based on historical and pro forma data for future periods and have concluded that our valuation procedures and resulting measures were appropriate.

The allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date is as follows:

(In Thousands)
Other receivables	$	9,486
Inventory		21,068
Property, plant and equipment		5,035
Accounts payable		(5,194	)
Unearned revenue		(18,203	)
Accrued expenses		(1,931	)
Accrued wages and benefits		(2,251	)
Deferred tax liability		(788	)
Non-current unearned revenue		(21,316	)
Net liabilities assumed		(14,094	)
Customer relationships		5,162
Developed technology		3,176
Other		13
Gain on bargain purchase of a business, net of tax		(1,753	)
Net consideration received from seller	$	(7,496	)

The fair value of the customer relationships acquired was calculated using a discounted cash flow method (excess earnings) and is being amortized using a declining balance method derived from projected customer revenue over an average estimated useful life of 13 years. The fair value of the developed technology acquired was calculated using a discounted cash flow method (relief from royalty) and is being amortized using the straight-line method over an estimated useful life of five years.

The following supplemental pro forma information presents the financial results of the acquired NSN BBA business for the nine months ended September 30, 2012. The pro forma results for the period January 1, 2012 to May 4, 2012 are not included in our consolidated financial statements.

This supplemental pro forma information does not purport to be indicative of what would have occurred had the acquisition of the NSN BBA business been completed on January 1, 2012, nor are they indicative of any future results.

	Nine Months Ended
(In thousands)	September 30, 2012
Pro forma revenue	$	100,413
Pro forma pre-tax loss	$	(18,006	)
Weighted average exchange rate during the period (EURO/USD)	€	1.00/$1.29

For the three and nine months ended September 30, 2013, we incurred acquisition and integration related expenses and amortization of acquired intangibles of $0.6 million and $2.2 million related to this acquisition.