Shutterfly 2013 Annual Report Download - page 86

Of the total purchase price, $4.2 million was allocated to the customer base, which will be amortized
over an estimated useful life of four years, $1.0 million was allocated to developed technologies, which will
be amortized over an estimated useful life of approximately three years, and $1.6 million was allocated to
the BorrowLenses tradename, which will be amortized over an estimated useful life of four years. The
assets and liabilities acquired totaled approximately $13.3 million and $0.8 million, respectively. The
remaining excess purchase price of approximately $17.7 million was allocated to goodwill primarily
representing the assembled workforce and synergies from BorrowLenses’ market position. The results of
operations for the acquired business have been included in the consolidated statement of income for the
period subsequent to the Company’s acquisition of BorrowLenses. BorrowLenses’ results of operations for
periods prior to this acquisition were not material to the consolidated statement of operations and,
accordingly, pro forma financial information has not been presented.
R&R Images, Inc.
On August 29, 2013, the Company acquired certain assets of R&R Images, Inc. (‘‘R&R’’) primarily to
expand product innovation and printing capabilities. The acquisition was accounted for as a business
combination. This acquisition was not significant individually or when aggregated with other acquisitions
during the year ended December 31, 2013. The Company has included financial results of R&R in the
consolidated financial statements from the acquisition date of August 29, 2013 through December 31,
2013.
MyPublisher, Inc.
On April 29, 2013, the Company acquired MyPublisher, Inc. (‘‘MyPublisher’’) for a total aggregate
cash purchase price of $40.4 million, or $38.6 million net of cash acquired. MyPublisher is one of the
pioneers in the photo book industry and creator of easy-to-use photo book making software. The
acquisition was accounted for as a non-taxable purchase transaction and, accordingly, the purchase price
has been allocated to the acquired tangible assets, liabilities assumed, and identifiable intangible assets
acquired based on their estimated fair values on the acquisition date. The excess of the purchase price over
the aggregate fair values was recorded as goodwill.
Of the total purchase price, $9.5 million was allocated to the customer base, which will be amortized
over an estimated useful life of four years, $7.8 million was allocated to developed technologies and will be
amortized over an estimated useful life of approximately two years, $1.3 million to the MyPublisher
tradename, which will be amortized over an estimated useful life of two years, and $0.1 million to favorable
leases which will be amortized over an estimated useful life of five years. The tangible assets and liabilities
acquired totaled approximately $8.2 million and $7.8 million, respectively. Included within assets and
liabilities is a net deferred tax liability of approximately $0.3 million representing the difference between
the assigned values of the assets acquired and the tax basis of those assets, with the offset recorded as
additional goodwill. The remaining excess purchase price of approximately $21.3 million was allocated to
goodwill primarily representing the assembled workforce and synergies from MyPublisher’s market
position. The results of operations for the acquired business have been included in the consolidated
statement of income for the period subsequent to the Company’s acquisition of MyPublisher.
MyPublisher’s results of operations for periods prior to this acquisition were not material to the
consolidated statement of operations and, accordingly, pro forma financial information has not been
presented.
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