America Online 2014 Annual Report Download - page 100

AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
million of accretion expense in 2014 related to the difference between the $10.0 million gross contingent
consideration paid and the $8.9 million fair value recognized on the acquisition date. In addition to the purchase
price paid for this business, the Company agreed to pay up to a $9.0 million retention bonus to certain Convertro
employees which is being recorded as compensation expense over the two year required service period.
The Company recorded $73.3 million of goodwill (which is not deductible for tax purposes) and $28.3
million of intangible assets associated with this acquisition. The intangible assets associated with this acquisition
consist of technology, a trade name and customer relationships, all of which are being amortized on a straight-
line basis over a period of five years, consistent with the useful lives of comparable intangible assets purchased
under similar circumstances.
The fair value of the significant identified intangible assets was estimated by using a discounted cash flow
analysis using the relief from royalty approach to value the technology and trade name and the replacement cost
approach to value customer relationships, which represent level 3 fair value measurements. Inputs used in the
methodologies primarily included projected future cash flows, discounted at a rate commensurate with the risk
involved.
Vidible
On December 1, 2014, the Company acquired Vidible, a cross-device, programmatic video distribution
platform that offers self-service through a set of video tools and exchange capabilities, for a purchase price of
$55.9 million, net of $1.3 million cash acquired. Additionally, the Company issued replacement restricted stock
awards related to unvested in-the-money options held by Vidible employees with an estimated fair value of $2.8
million which will be recognized as equity-based compensation expense over the remaining requisite service
periods of the awards.
The Company preliminarily recorded $44.2 million of goodwill (which is not deductible for tax purposes)
and $14.7 million of intangible assets associated with this acquisition. The intangible assets associated with this
acquisition consist of technology, a trade name and customer relationships. The intangible assets will be
amortized on a straight-line basis over a period of up to five years, consistent with the useful lives of comparable
intangible assets purchased under similar circumstances.
In connection with the transaction, $9.7 million of cash special retention bonus consideration was deferred
and will be paid over a three year service period to certain Vidible employees contingent upon their future
service to the Company. The special retention bonus will be recorded as compensation expense over the required
service period. Additionally, a $10.0 million retention bonus pool was established and will be paid over a three
year period, subject to meeting specified performance metrics in the first year, and conditioned upon continued
employment.
The fair value of the significant identified intangible assets was estimated by using a discounted cash flow
analysis using the relief from royalty method to value the technology and trade name and the replacement cost
approach to value customer relationships, which represent level 3 fair value measurements. Inputs used in the
valuations primarily included projected future cash flows discounted at a rate commensurate with the risk
involved. The primary area where preliminary estimates are not yet finalized relates to deferred taxes.
2013 Acquisitions
Adap.tv
On September 5, 2013, the Company acquired Adap.tv for a purchase price of $405.0 million plus a
working capital adjustment (which increased the total consideration paid to $410.6 million). The consideration
paid to acquire Adap.tv included $329.5 million in cash, net of cash acquired, and 2.4 million shares of AOL
84