Dish Network 2008 Annual Report Download - page 120

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DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-38
December 31, 2008, we recorded $6 million in interest and penalty expense to earnings. Accrued interest
and penalties was $7 million at December 31, 2008.
11. Acquisition of Sling Media, Inc.
During October 2007, we acquired all remaining outstanding shares (94%) of Sling Media, Inc. (“Sling
Media”) for cash consideration of $342 million, including direct transaction costs of $8 million. We also
exchanged Sling Media employee stock options for our options to purchase approximately 342,000 of our
common stock valued at approximately $16 million. Sling Media, a leading innovator in the digital-
lifestyle space, was acquired to allow us to offer new products and services to our subscribers. On January
1, 2008, Sling Media was distributed to EchoStar in the Spin-off.
This transaction was accounted for as a purchase business combination in accordance with Statement of
Financial Accounting Standards No. 141, “Business Combinations” (“SFAS 141”). The purchase
consideration was allocated based on the fair values of identifiable tangible and intangible assets and
liabilities as follows:
Final
Purchase Price
Allocation
(In thousands)
Tangible assets.......................................... 28,779$
Prepaid compensation costs....................... 11,844
Other noncurrent assets (1)........................ (9,541)
Acquisition intangibles.............................. 61,800
In-process research and development........ 22,200
Goodwill.................................................... 256,917
Total assets acquired................................. 371,999$
Current liabilities....................................... (19,233)
Long-term liabilities (2)............................. (10,922)
Net assets acquired.................................... 341,844$
(1) Represents the elimination of our previously recorded 6% non-controlling interest in Sling
Media.
(2) Includes $9 million deferred tax liability related to the acquisition intangibles.
The total $62 million of acquired intangible assets resulting from the Sling Media transaction is comprised
of technology-based intangibles and trademarks totaling approximately $34 million with estimated
weighted-average useful lives of seven years, reseller relationships totaling approximately $24 million with
estimated weighted-average useful lives of three years and contract-based intangibles totaling
approximately $4 million with estimated weighted-average useful lives of four years. The in-process
research and development costs of $22 million were expensed to general and administrative expense upon
acquisition in accordance with SFAS 141. The goodwill recorded as a result of the acquisition is not
deductible for income tax purposes.
The business combination did not have a material impact on our results of operations for the year ended
December 31, 2007 and would not have materially impacted our results of operations for these periods had
the business combination occurred on January 1, 2007. Further, the business combination would not have
had a material impact on our results of operations for the comparable period in 2006 had the business
combination occurred on January 1, 2006.