America Online 2010 Annual Report Download - page 44

Table of Contents
AOL INC.
PART II—ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
On January 31, 2011, we completed the acquisition of goviral A/S ("goviral"), a provider of an online branded video syndication platform used by
advertisers to distribute their branded videos to be viewed online, for a purchase price of $74.1 million, net of cash acquired. In addition, we agreed to pay up
to $22.6 million in aggregate to certain employees of the acquired company over the expected future service period of two years contingent on their future
service to AOL. The payments of up to $22.6 million will be recognized as compensation expense over the expected future service period of two years. See
"Note 4" in our accompanying consolidated financial statements for additional information on this acquisition.
On February 6, 2011, we signed an agreement to acquire all of the outstanding equity of TheHuffingtonPost.com, Inc. ("The Huffington Post") for
estimated aggregate consideration of $315 million, in a transaction expected to be completed by April 2011. The Huffington Post is an innovative, internet
source of online news, analysis, commentary and entertainment. This acquisition is expected to enhance our ability to serve our audiences across several
platforms, including social, local, video, mobile and tablet. We currently expect cash restructuring charges of approximately $30 million in the aggregate in
connection with this transaction, of which $10 million is included in the aggregate consideration of $315 million disclosed above and will be reflected as a
restructuring charge immediately following the acquisition, as this amount is associated with stock options that will vest upon the termination of certain The
Huffington Post employees. See "Note 4" in our accompanying consolidated financial statements for additional information on this acquisition.
Disposition-Related Activities
On November 15, 2010, we sold a portion of our campus in Dulles, Virginia referred to as "Pacific Corporate Park" for a sales price of $144.5 million
in cash, exclusive of customary closing costs. Based on the estimated sales proceeds at the time we entered into the agreement to sell, we determined that the
carrying value of Pacific Corporate Park exceeded the fair value less costs to sell. As a result, an impairment charge of $6.2 million was recorded within costs
of revenues during 2010. We did not record a significant gain or loss upon completion of this sale in the fourth quarter of 2010.
During the fourth quarter of 2010, we sold our investment in Brightcove, Inc. ("Brightcove") for $17.0 million in net cash proceeds, which resulted in a
pre-tax gain of $8.0 million recorded in "Other income, net" in our accompanying consolidated financial statements.
On July 8, 2010, we completed the sale of ICQ resulting in a pre-tax gain of $119.6 million recorded in the third quarter of 2010. Sales proceeds
included $5.4 million which was allocated to our obligation to provide certain network infrastructure related services to the buyer. This amount has been
deferred and will be recognized as other income when the obligation is fulfilled.
After our disposition of ICQ, the Committee on Foreign Investment in the United States ("CFIUS") contacted Mail.ru and, subsequently, we submitted
a joint voluntary filing, with Mail.ru, to CFIUS commencing a review of the transaction under Section 721 of Title VII of the Defense Production Act of
1950, as amended. AOL and Mail.ru are currently working with CFIUS to address their concerns. As a result of this process, it is probable that we will agree
to provide certain network infrastructure and other operational services to Mail.ru at a level and for a period in excess of our contractual obligations under the
original transaction agreements as well as other modifications to the parties' respective obligations under the transaction agreements. Our estimate of the range
of loss to be incurred as a result of these developments is $13.6 million to $28 million. Given that no amount within the range of loss appears to be a better
estimate as of the date of issuing these financial statements, we have accrued a loss of $13.6 million, the low end of the range of estimated loss, in our fourth
quarter 2010 consolidated statement of operations and reflected such loss as a reduction to the previously recorded $119.6
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