America Online 2014 Annual Report Download - page 102

AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
its redemption right is determined by taking the sum of 2 billion Japanese yen (approximately $26.0 million as of
the closing date) plus any incremental cash over the $7.8 million cash balance at December 31, 2011, and
multiplying that total by Mitsui’s percentage ownership of Ad.com Japan (47% at closing). The Company elected
to recognize changes in the redemption value as they occur.
The undiscounted redemption value of the put option held by Mitsui was approximately $8.0 million as of
December 31, 2014, which exceeded the carrying value of Mitsui’s interest in Ad.com Japan by an immaterial
amount, and is therefore reflected in redeemable noncontrolling interest on the consolidated balance sheets for
the year ended December 31, 2014. The undiscounted redemption value of the put option held by Mitsui was
approximately $9.2 million as of December 31, 2013, which is below the $9.7 million carrying value as of
December 31, 2013.
The Company recorded $9.7 million of goodwill (which is not deductible for tax purposes) and $19.2
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 advertiser
relationships to be amortized on a straight-line basis over a period of five years. The weighted average
amortization period for all intangible assets is approximately eight years. The fair value of the significant
identified intangible assets was estimated by using relief from royalty, cost savings and multi-period excess
earnings valuation methodologies, 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.
Other 2012 Acquisitions
The Company also completed the following acquisitions during the year ended December 31, 2012:
• During the third quarter of 2012, the Company completed the acquisition of the following: a 49%
interest that the Company did not already own in AJM Productions, LLC, a company that operates a
leading online content and lifestyle platform for pre-teen and teen audiences, and StyleMePretty, a
company which operates a leading online provider of style-savvy wedding resources devoted to the
modern bride.
• During the fourth quarter of 2012, the Company completed the acquisition of Everlater, Inc., a
company that produces software to simplify the creation and sharing of web content and Buysight, Inc.
(“Buysight”), a company that operates a targeted advertising platform which uses machine learning
technology to allow for real time optimization of advertising campaigns.
The aggregate purchase price of these acquisitions was $27.8 million, net of cash acquired. The Company
recorded $12.5 million of goodwill, of which $6.6 million is deductible for tax purposes, and $16.4 million of
intangible assets related to these acquisitions. With respect to the Buysight acquisition, during negotiations the
Company agreed to pay a bonus to certain employees of Buysight immediately after the closing, and the $4.7
million paid was recognized as compensation expense during the fourth quarter of 2012.
The intangible assets associated with these acquisitions consist of acquired technology and trademarks to be
amortized on a straight-line basis over a weighted average period of five years, non-compete agreements to be
amortized on a straight-line basis over a weighted average period of three years and customer relationships to be
amortized on a straight-line basis over a weighted average period of four years. The weighted average
amortization period for all intangible assets is approximately five years.
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