Apple Final Cut Pro 5 - Manual (Page 1160)

Chapter 18 Compositing and Layering 373
II
Working With Clips That Have Alpha Channels
You can edit clips that have alpha channels into your sequence as you would any other
clip, but you must make sure that a clip with an alpha channel is on a higher numbered
video track than any clips that are supposed to be beneath it.
For example, suppose you have a title graphic that was created in Photoshop, so it has
an alpha channel already set up. When you import it into Final Cut Pro, the alpha
channel is recognized automatically. To create your title sequence, you edit the title
graphic and a background image into your sequence, so that the background image is
on track V1 and the title graphic is on track V2.
The area around the
text in the graphic file
becomes transparent,
without setting any
opacity settings.
The title graphic with the
alpha channel is on a
higher track.