Dish Network 2004 Annual Report Download - page 93

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
During March 2004, we entered into an agreement with Gemstar-TV Guide International, Inc. (“Gemstar”) for use
of certain Gemstar intellectual property and technology, use of the TV Guide brand on our interactive program
guides, and for distribution arrangements with Gemstar to provide for the launch and carriage of the TV Guide
Channel as well as the extension of an existing distribution agreement for carriage of the TVG Network, and
acquired Gemstar’s Superstar/Netlink Group LLC (“SNG”), UVTV distribution, and SpaceCom businesses and
related assets, for an aggregate cash payment of $238.0 million, plus transaction costs. We further agreed to resolve
all of our outstanding litigation with Gemstar. These transactions were entered into contemporaneously and
accounted for as a purchase business combination in accordance with Statement of Financial Accounting Standard
No. 141, “Business Combinations” (“SFAS 141”).
Based on an independent third-party valuation, the purchase consideration was allocated to identifiable tangible and
intangible assets and liabilities as follows (in thousands):
Current assets............................... 1,184$
Property and equipment............... 3,749
Intangible assets........................... 260,546
Total assets acquired.................... 265,479$
Current liabilities......................... (26,269)
Long-term liabilities..................... (600)
Total liabilities assumed............... (26,869)
N
et assets acquired....................... 238,610$
The total $260.5 million of acquired intangible assets resulting from the Gemstar transactions is comprised of
contract-based intangibles totaling approximately $187.2 million with estimated weighted-average useful lives of
twelve years, and customer relationships totaling approximately $73.3 million with estimated weighted-average
useful lives of four years.
The business combination did not have a material impact on our results of operations for the year ended December
31, 2004 and would not have materially impacted our results of operations for these periods had the business
combination occurred on January 1, 2004. Further, the business combination would not have had a material impact
on our results of operations for the comparable periods in 2003 and 2002 had the business combination occurred on
January 1, 2002.
As of December 31, 2004 and 2003, our identifiable intangibles subject to amortization consisted of the following:
As of
December 31, 2004 December 31, 2003
Intangible Accumulated Intangible Accumulated
Assets Amortization Assets Amortization
(In thousands)
Contract based......................................................... 223,873$ (46,852)$ 36,668$ (27,767)$
Customer relationships............................................ 73,298 (13,493) - -
Technology based.................................................... 17,181 (17,181) 17,181 (16,221)
Total ..................................................................... 314,352$ (77,526)$ 53,849$ (43,988)$
Amortization of these intangible assets, recorded on a straight line basis over an average finite useful life primarily
ranging from approximately four to twelve years, was $33.5 million and $10.3 million for the years ended
December 31, 2004 and 2003, respectively. The aggregate amortization expense is estimated to be approximately
$35.7 million for 2005, $34.5 million for 2006, $34.0 million for 2007, $20.3 million for 2008 and $15.5 million for
2009.
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