America Online 2011 Annual Report Download - page 84

Table of Contents
AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
the execution of the share purchase agreement, AOL and Mitsui each owned 50% interest in the joint venture, and AOL accounted for its 50% interest using
the equity method of accounting. As part of this transaction, AOL obtained control of the board and of the day-to-day operations of the joint venture. AOL
will therefore account for the incremental 3% share purchase as a business combination achieved in stages in the first quarter of 2012, and will consolidate the
joint venture beginning on February 9, 2012.
2011 Acquisitions
goviral
On January 31, 2011, the Company completed the acquisition of goviral ApS ("goviral", formerly goviral A/S), a company that distributes branded
online video for media agencies, creative agencies and content producers, for a purchase price of $69.1 million, net of cash acquired.
AOL recorded $58.3 million of goodwill (which is not deductible for tax purposes) and $18.4 million of intangible assets related to this acquisition. The
intangible assets associated with this acquisition consist primarily of customer relationships and acquired technology to be amortized on a straight-line basis
over a weighted average period of approximately four years.
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 are being recognized as
compensation expense on an accelerated basis over the expected service period of two years from the acquisition date. For tax purposes, a significant majority
of the incentive compensation being treated as additional basis in goviral and a tax deduction will only be obtained upon disposition of goviral.
The Huffington Post
On March 4, 2011, the Company acquired The Huffington Post.com, Inc. ("The Huffington Post") for a purchase price of $295.5 million, net of cash
acquired. The Huffington Post is an innovative internet source of online news, analysis, commentary, entertainment and community engagement. In addition
to the market conditions at the time of acquisition and the early stage of development of The Huffington Post, the Company's expectation that the acquisition
would enhance the Company's ability to serve audiences across several platforms contributed to the allocation of a significant portion of the purchase price to
goodwill.
In addition to the purchase price of $295.5 million disclosed above, the Company incurred $8.7 million of restructuring charges associated with
payments made for stock options that vested on or shortly after the closing date as a result of the termination of certain The Huffington Post employees. In
connection with the acquisition, the Company assumed The Huffington Post Long-Term Incentive Plan (the "Huffington Post Plan"). The fair value of
unvested Huffington Post Plan options held by The Huffington Post employees that were converted into unvested AOL stock options was $12.1 million. Of
the fair value of The Huffington Post options that were converted, $3.6 million was included in the purchase price, $8.1 million is being recognized as equity-
based compensation expense over the remaining award vesting periods (subject to adjustments for actual forfeitures), which for most employees is 24 months
from the acquisition date, and the remaining $0.4 million was recorded as a restructuring charge.
AOL preliminarily recorded $192.4 million of goodwill (which is not deductible for tax purposes) and $108.2 million of intangible assets associated
with this acquisition. The intangible assets associated with this acquisition consist primarily of trade names to be amortized on a straight-line basis over a
period of ten years and
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