America Online 2009 Annual Report Download - page 86

Table of Contents
provide advertising services to customers, which, along with market conditions at the time of acquisition, contributed to purchase prices that resulted in the
allocation of a significant portion of the purchase price to goodwill. The intangible assets consist primarily of acquired technology to be amortized on a
straight-line basis over a weighted-average period of three years and customer relationships to be amortized on an accelerated basis over a weighted-average
period of three years.
Other Significant Transactions
Sale of German Access Service Business
On February 28, 2007, the Company completed the sale of its German access service business to Telecom Italia S.p.A. for $849.6 million in cash,
resulting in a net pre-tax gain of $668.2 million, calculated as the excess of the cash proceeds over the carrying value of the net assets sold (including goodwill
allocated to the sale of $136.4 million). In connection with this sale, the Company entered into a separate agreement to provide ongoing web services,
including content, e-mail and other online tools and services, to Telecom Italia S.p.A.'s wholly-owned subsidiary, Hansenet Telekommunikation GmbH,
which expires on February 26, 2012; however, Hansenet Telekommunikation GmbH and AOL have unilateral rights to terminate the web services agreement
effective August 31, 2010 if certain revenue thresholds are not achieved by February 26, 2010. For the year ended December 31, 2007, AOL's German access
service business had subscription revenues of $88.2 million.
As a result of the historical interdependency of AOL's German access service and web service businesses, the historical cash flows and operations of
the German access service and web service businesses were not clearly distinguishable. Accordingly, AOL's German access service business has not been
reflected as discontinued operations in the consolidated financial statements.
Asset Dispositions
On December 28, 2007, AOL completed the sale of a building in Reston, Virginia, for a net sales price of $43.4 million, which resulted in a pre-tax gain
of $15.8 million.
Divestitures of Certain Wireless Businesses
On August 24, 2007, the Company completed the sale of Tegic Communications, Inc. ("Tegic") to Nuance Communications, Inc. for $265.0 million in
cash, which resulted in a pre-tax gain of approximately $201.4 million. In addition, in the third quarter of 2007, the Company transferred the assets of
Wildseed LLC ("Wildseed") to a third party to settle an outstanding dispute. The Company recorded a pre-tax charge of $6.5 million related to this divestiture
in the second quarter of 2007 and an impairment charge of $18.5 million on the long-lived assets of Wildseed in the first quarter of 2007. All amounts related
to both Tegic and Wildseed have been reflected as discontinued operations for all periods presented.
Financial data associated with the Tegic and Wildseed businesses reflected as discontinued operations in 2007 is as follows (in millions):
Year Ended
December 31,
2007
Total revenues $ 43.0
Pre-tax loss (before gain on sale of business) (29.1)
Gain on sale of business 201.4
Income tax benefit 9.8
Net income attributable to AOL Inc. 182.1
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