(2)	Acquisition

On February 25, 2015, we acquired 91.5% of the outstanding common shares and voting interest of D.R. Systems, Inc. (“DR Systems”) for cash consideration of $76,514. Cash acquired was $13,455. The results of DR System’s operations have been included in the consolidated financial statements since that date. DR Systems is a provider of PACS, RIS and CVIS advanced image processing systems and other medical imaging information system products and services primarily in the United States. We acquired DR Systems to expand our customer base and gain access to its intellectual property and employees.

The following table summarizes preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date. We are in the process of finalizing third-party valuations of certain intangible assets; thus, the provisional measurements of intangible assets, goodwill and deferred income tax liabilities are subject to change.

	Estimated Fair Value
Cash	$	13,455
Other tangible assets		4,773
Deferred revenue		(11,196	)
Deferred tax liabilities		(18,817	)
Liabilities assumed		(4,446	)
Customer relationships		17,620
Trade names		420
Non-competes		280
Purchased software and technology		28,640
Goodwill		52,889
Fair value of assets acquired and liabilities assumed	$	83,618
Less noncontrolling interest		7,104
Total consideration	$	76,514

Acquired intangible assets are subject to a weighted-average useful life as shown in the following table:

	Years		Amortization Method

Customer relationships		12.0	Other
Trade names		2.0	Straight-line
Non-competes		4.0	Straight-line
Purchased software and technology		9.8	Straight-line
Goodwill	Indefinite		N/A

As noted above, the fair value of the acquired identifiable intangible assets is provisional pending receipt of the final valuations for these assets.

The $52,889 of goodwill was assigned to our Merge Healthcare segment. The goodwill recognized is attributable primarily to expected synergies, the assembled workforce and business activities of DR Systems. None of the goodwill is expected to be deductible for income tax purposes.

We recognized $351 of acquisition related costs that were expensed in the current period. These costs are included in the condensed consolidated statements of operations in the line item acquisition-related expenses. From the acquisition date to the period ended March 31, 2015, our condensed consolidated statements of operations include revenues of $2,824 and a loss of $885 related to DR Systems. The loss includes $645 of restructuring charges and $388 in amortization expense related to acquired intangible assets.

The following represents the pro forma consolidated statements of operations as if DR Systems had been included in our consolidated results for the entire three months ended March 31, 2015 and 2014:

Pro forma consolidated statements of operations:

	Three Months Ended March 31,
	2015			2014
Net sales	$	61,031		$	60,446
Net income (loss) attributable to common shareholders of Merge		(1,858	)		13,369

Net income (loss) per share attributable to common shareholders of Merge:
Basic	$	(0.02	)	$	0.13
Diluted	$	(0.02	)	$	0.13

These results have been adjusted to reflect the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied on January 1, 2014. The results also include the effects of the 8.5% dividend on the Series A Convertible Preferred Stock (“Preferred Stock”) we issued to enable us to complete the acquisition as if the issuance had occurred on January 1, 2014. The recognition of an $18,393 deferred tax asset valuation reserve release and the $4,915 of dividend equivalents related to the Preferred Stock issuance have been shown as 2014 adjustments to net income (loss) attributable to common shareholders of Merge and have been excluded from the 2015 pro forma results.

The fair value of the 8.5% non-controlling interest in DR Systems is estimated to be $7,104. During the second quarter of 2015, we completed a process to acquire the non-controlling interest at the same per share price as was paid to the majority shareholders. Therefore, we have not assumed adjustments due to the lack of control or lack of marketability that market participants would normally consider when estimating the fair value of the noncontrolling interest in DR Systems. See Note 15 for further discussion of our acquisition of the non-controlling interest.