Avid 2000 Annual Report Download - page 48

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effects of the purchase price allocation from amortization of acquisition-related intangible assets and exclude the charge for
the purchased in-process technology and related tax benefit.
Pro Forma Unaudited
(in thousands, except per share amounts)
For the Year Ended December 31,
1998
Net revenue $505,382
Net income (loss) ($22,329)
Net income (loss) per common share - basic ($0.89)
Net income (loss) per common share - diluted ($0.89)
Weighted average common shares outstanding - basic 25,071
Weighted average common shares outstanding - diluted 25,071
iNews, LLC.
In January 1999, Avid and Tektronix, Inc. established a 50/50 owned and funded newsroom computer system joint venture,
AvStar Systems LLC (AvStar). The joint venture was dedicated to providing the next generation of newsroom computer
systems products by combining both companies newsroom computer systems technology and certain personnel. In
September 1999, Tektronix transferred its interest in AvStar to a third party, Grass Valley Group, Inc. The Companys
investment in the joint venture was being accounted for under the equity method of accounting. The Companys initial
contribution to the joint venture was approximately $2.0 million, consisting of $1.5 million of cash and $0.5 million of fixed
assets and inventory. During the fourth quarter of 1999, AvStar distributed $1.5 million to each joint venture partner, which
was recorded by Avid as a return on investment during 1999. The pro rata share of earnings of the joint venture recorded by
the Company during 2000 and 1999 was approximately $0.9 million and $0, respectively. Since September 2000, AvStar
has been doing business as iNews, LLC.
In January 2001, the Company acquired Grass Valley Groups 50% interest in iNews for approximately $6.0 million. This
acquisition will be accounted for under the purchase method of accounting. Thereafter, the operating results of iNews will
be fully consolidated by the Company.
The Motion Factory and Pluto Technologies
During the second and third quarters of 2000, the Company acquired selected assets and liabilities of two companies, The
Motion Factory, Inc. (TMF) and Pluto Technologies International Inc. (Pluto), for cash payments totaling
approximately $2.0 million and guaranteed future bonus payments of $0.3 million. TMF specializes in applications for the
creation, delivery and playback of interactive, rich 3-D media for character-driven games and the web. Pluto is a provider
of video storage and networking solutions for broadcast news, post-production and other bandwith-intensive markets. The
business combinations were accounted for using the purchase method of accounting. Accordingly, the fair market values of
the acquired assets and assumed liabilities have been included in the Companys financial statements as of the acquisition
dates, and the results of operations of TMF and Pluto have been included in the Companys financial statements thereafter.
The purchase prices, aggregating $2.3 million, were allocated to net tangible assets of $0.1 million, completed technologies
of $1.2 million and acquired workforce of $1.0 million. These identifiable intangible assets are being amortized on a
straight-line basis through 2004, resulting in accumulated amortization of $0.3 million at December 31, 2000. As part of the
purchase agreements, the Company may be required to make certain contingent cash payments, limited in the aggregate up
to an additional $13.5 million, dependent upon future revenues and/or gross margin levels of products acquired from TMF
and Pluto through December 2004. There were no contingent payments owed or paid as of December 31, 2000. Any
contingent payments will be recorded as additional purchase price, allocated to identifiable intangible assets or goodwill, as