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Acquisitions | 6 Months Ended
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Jun. 30, 2013
Acquisitions | Note 2: Acquisitions Softel Limited We acquired Softel Limited (Softel) for $9.1 million, net of cash acquired, on January 25, 2013. Softel is a key technology supplier to the media sector with a portfolio of technologies well aligned with industry trends and growing demand. Softel is located in the United Kingdom. The results of Softel have been included in our Consolidated Financial Statements from January 25, 2013, and are reported within the Broadcast segment. The Softel acquisition was not material to our financial position or results of operations reported as of and for the three and six months ended June 30, 2013. PPC Broadband, Inc. We acquired 100% of the outstanding shares of PPC Broadband, Inc. (PPC) in exchange for cash of $522.4 million on December 10, 2012. PPC is a leading manufacturer and developer of advanced connectivity technologies for the broadband market and expands our solution offerings in the broadband end-market. PPC is headquartered in Syracuse, New York. PPC’s strong brands and technology enhance our portfolio of broadband products. The results of PPC have been included in our Consolidated Financial Statements from December 10, 2012, and are reported within the Broadcast segment. The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed as of December 10, 2012 (in thousands).
Cash |  | $ | 6,874 |
Receivables |  |  | 27,082 |
Inventories |  |  | 45,370 |
Other current assets |  |  | 468 |
Property, plant and equipment |  |  | 28,020 |
Goodwill |  |  | 277,005 |
Intangible assets |  |  | 164,500 |
Other non-current assets |  |  | 134 |
Total assets |  | $ | 549,453 |
Accounts payable |  | $ | 22,499 |
Accrued liabilities |  |  | 3,916 |
Other long-term liabilities |  |  | 646 |
Total liabilities |  |  | 27,061 |
Net assets |  | $ | 522,392 |
The above purchase price allocation has been determined provisionally, and is subject to revision as additional information about the fair value of individual assets and liabilities becomes available and we ensure our accounting policies are applied at PPC. The provisional measurement of receivables, inventories, property, plant, and equipment, goodwill, deferred income taxes, and other assets and liabilities are subject to change. Any change in the acquisition date fair value of the acquired net assets will change the amount of the purchase price allocable to goodwill. A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The judgments we have used in estimating the fair values assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations. The fair value of acquired receivables is $27.1 million, with a gross contractual amount of $27.7 million. We do not expect to collect $0.6 million of the acquired receivables. For purposes of the above allocation, we have estimated a fair value adjustment for inventories based on the estimated selling price of the work-in-process and finished goods acquired at the closing date less the sum of the costs to complete the work-in-process, the costs of disposal, and a reasonable profit allowance for our post acquisition selling efforts. We based our estimate of the fair value for the acquired property, plant, and equipment on a valuation study performed by a third party valuation firm. We used various valuation methods including discounted cash flows to estimate the fair value of the identifiable intangible assets. Goodwill and other intangible assets reflected above were determined to meet the criterion for recognition apart from tangible assets acquired and liabilities assumed. The goodwill is primarily attributable to expected synergies and the assembled workforce. Our tax basis in the acquired goodwill is $277.0 million. The goodwill balance we recorded is deductible for tax purposes up to the amount of the tax basis. Intangible assets related to the PPC acquisition consisted of the following:
|  | Estimated Fair Value |  |  | Amortization Period |
|  | (In thousands) |  |  | (In years) |
Intangible assets subject to amortization: |  |  |  |  |  |  |  |
Developed technologies |  | $ | 76,000 |  |  |  | 5.0 |
Customer relationships |  |  | 55,000 |  |  |  | 20.0 |
Backlog |  |  | 1,500 |  |  |  | 0.5 |
Total intangible assets subject to amortization |  |  | 132,500 |  |  |  |  |
Intangible assets not subject to amortization: |  |  |  |  |  |  |  |
Goodwill |  |  | 277,005 |  |  |  |  |
In-process research and development |  |  | 5,000 |  |  |  |  |
Trademarks |  |  | 27,000 |  |  |  |  |
Total intangible assets not subject to amortization |  |  | 309,005 |  |  |  |  |
Total intangible assets |  | $ | 441,505 |  |  |  |  |
Weighted average amortization period |  |  |  |  |  |  | 11.2 |
Trademarks have been determined by us to have indefinite lives and are not being amortized, based on our expectation that the trademarked products will generate cash flows for us for an indefinite period. We expect to maintain use of trademarks on existing products and introduce new products in the future that will also display the trademarks, thus extending their lives indefinitely. In-process research and development assets are considered indefinite-lived intangible assets until the completion or abandonment of the associated research and development efforts. Upon completion of the development process, we will make a determination of the useful life of the asset and begin amortizing it over that period. If the project is abandoned, we will write-off the asset at such time. The amortizable intangible assets reflected in the table above were determined by us to have finite lives. The useful life for the developed technologies intangible asset was based on the estimated time that the technology provides us with a competitive advantage and thus approximates the period of consumption of the intangible asset. The useful life for the customer relationship intangible asset was based on our forecasts of customer turnover. The useful life of the backlog intangible asset was based on our estimate of when the ordered items would ship. Miranda Technologies Inc. We acquired Miranda Technologies Inc. (Miranda) for cash of $374.7 million in July 2012. The results of Miranda are reported within the Broadcast segment. There have been no significant changes to the provisional purchase price allocation as compared to December 31, 2012. As of June 30, 2013, we remain in the process of finalizing our analysis of Miranda’s income tax assets and liabilities and ensuring our accounting policies are applied at Miranda. Therefore, the provisional measurement of goodwill, deferred income taxes, deferred revenue, and other assets and liabilities are subject to change. Pro forma – PPC and Miranda The following table illustrates the unaudited pro forma effect on operating results as if the Miranda and PPC acquisitions had been completed as of January 1, 2011.
|  | Three Months Ended July 1, 2012 |  |  | Six Months Ended July 1, 2012 |
|  | (In thousands, except per share data) |
|  | (Unaudited) |
Revenues |  | $ | 560,487 |  |  | $ | 1,096,399 |
Income from continuing operations |  |  | 42,274 |  |  |  | 65,384 |
Diluted income per share from continuing operations |  | $ | 0.91 |  |  | $ | 1.40 |
For purposes of the unaudited pro forma disclosures, the three and six months ended July 1, 2012 include interest expense from the term loan borrowed to finance the acquisition of Miranda and from the borrowings under our senior secured credit facility to finance the acquisition of PPC. The above unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what our results of operations would have been had we completed the acquisitions on the date assumed, nor is it necessarily indicative of the results that may be expected in future periods. Pro forma adjustments exclude cost savings from any synergies resulting from the acquisitions.

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