Avid 2011 Annual Report Download - page 73

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The values of the customer relationships, trademarks and trade names, and non-compete agreement are being amortized on a
straight-line basis over their estimated useful lives of four years, two years and two years, respectively. The value of the
developed technology is being amortized over the greater of the amount calculated using the ratio of current quarter revenues to
the total of current quarter and anticipated future revenues, and the straight-line method, over the estimated useful life of three
years. The weighted-average amortization period for these amortizable identifiable intangible assets is approximately 3.2 years.
Amortization expense for Euphonix identifiable intangible assets totaled $1.6 million and $1.1 million, respectively, for the years
ended December 31, 2011 and 2010.
The goodwill, which is not deductible for tax purposes, reflects the value of the assembled workforce and the company-specific
synergies the Company expects to realize by selling Euphonix's digital audio consoles, media controllers and peripherals to its
existing customers.
The results of operations of Euphonix have been included prospectively in the results of operations of the Company since the date
of acquisition. The Company's results of operations giving effect to the Euphonix acquisition as if it had occurred at the
beginning of 2010 would not differ materially from reported results.
Blue Order Solutions AG
On January 5, 2010, the Company acquired all the outstanding shares of Blue Order Solutions AG (“Blue Order”), a Germany-
based developer and provider of workflow and media asset management solutions, for cash, net of cash acquired, of $16.1
million. During the three months ended March 31, 2011, the Company completed its evaluation of the information necessary to
determine the fair value of the acquired assets and liabilities of Blue Order and finalized the purchase price allocation as follows
(in thousands):
Tangible liabilities assumed, net
Identifiable intangible assets:
Core technology
Customer relationships
Non-compete agreements
Trademarks and trade name
Goodwill
Deferred tax liabilities, net
Total assets acquired
$ (2,375)
4,597
3,160
1,293
287
9,711
(586)
$ 16,087
The Company used the cost approach to value the core technology intangible asset and the income approach to determine the
values of the customer relationships, non-compete agreements and trademarks and trade names intangible assets. The cost
approach measures the value of an asset by quantifying the aggregate expenditures that would be required to replace the asset.
The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life
of the asset discounted to present value. The weighted-average discount rate (or rate of return) used to determine the value of
Blue Order's intangible assets was 20% and the effective tax rate used was 30%.
The values of the customer relationships, non-compete agreements, and trademarks and trade names are being amortized on a
straight-line basis over their estimated useful lives of four years, three years and two years, respectively. The value of the
developed technology is being amortized over the greater of the amount calculated using the ratio of current quarter revenues to
the total of current quarter and anticipated future revenues, and the straight-line method, over the estimated useful life of three and
one-half years. The weighted-average amortization period for these amortizable identifiable intangible assets is approximately
3.6 years. Amortization expense for Blue Order identifiable intangible assets totaled $2.6 million and $2.4 million, respectively,
for the years ended December 31, 2011 and 2010.
The goodwill, which is not deductible for tax purposes, reflects the value of the assembled workforce and the customer-specific
synergies the Company expects to realize by incorporating Blue Order's workflow and media asset management technology into
future solutions offered to customers.
The results of operations of Blue Order have been included prospectively in the results of operations of the Company since the