America Online 2010 Annual Report Download - page 91

Table of Contents
AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As discussed below, buy.at and substantially all of the assets of Bebo were sold during 2010.
2011 Acquisition Activity
Unaudited pro forma results of operations assuming these acquisitions had taken place at the beginning of each period are not provided because the
historical operating results of the acquired companies were not significant and pro forma results would not be significantly different from reported results for
the periods presented.
goviral
On January 31, 2011, the Company completed the acquisition of goviral A/S ("goviral"), a company that distributes branded online video for media
agencies, creative agencies and content producers, for a purchase price of $74.1 million, net of cash acquired. In addition to the purchase price paid for this
business, the Company agreed to pay up to $22.6 million to certain employees of goviral 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 on an accelerated basis over the expected future
service period of two years. For tax purposes, a significant majority of the incentive compensation is expected to be treated as additional basis in goviral and a
tax deduction will only be obtained upon disposition of goviral.
It is anticipated that a significant portion of the purchase price will be allocated to intangible assets and goodwill. The Company has not completed the
allocation of the consideration transferred to acquired assets and liabilities assumed. The acquisition offers AOL and partners significant web distribution,
which, along with market conditions at the time of acquisition, contributed to a purchase price that is expected to result in the allocation of a significant
portion of the purchase price to goodwill.
The Huffington Post
On February 6, 2011, the Company entered into an agreement and a plan of merger with TheHuffingtonPost.com, Inc. ("The Huffington Post"). The
Huffington Post is an innovative internet source of online news, commentary, and information. This merger is expected to enhance AOL's ability to serve its
audiences across several platforms, including social, local, video, mobile and tablet.
AOL will acquire The Huffington Post for estimated aggregate consideration of approximately $315 million, subject to working capital adjustments and
reduction for indebtedness and transaction expenses of The Huffington Post that remain unpaid as of closing.
This acquisition is subject to customary conditions, including expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, no material adverse effect with respect to The Huffington Post having occurred and the execution of employment
arrangements by certain employees of The Huffington Post. The acquisition is expected to close by April 2011.
Disposition-Related Activities
Buy.at
On February 26, 2010, the Company sold buy.at to Digital Window Limited for $16.4 million in net cash. The Company recorded a pre-tax loss on this
sale of $18.9 million, calculated as the excess of the carrying value of the net assets sold (including goodwill allocated to the sale of $12.6 million) over the
cash proceeds, net of transaction costs. Due primarily to the Company's ability to utilize a portion of the capital loss deferred tax asset generated by the sale of
buy.at to offset capital gains, the Company recorded an income tax benefit on the sale of buy.at of $27.6 million for the year ended December 31, 2010. The
financial condition, results of operations and
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