Classmates.com 2006 Annual Report Download - page 83
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intermediary between members, allowing them to send messages through the site to one another. The acquisition was accounted for under the
purchase method in accordance with SFAS No. 141. The primary reason for the acquisition was to acquire The Names Database’s member
relationships and software, which had the effect of expanding the Company’s social-networking services. The Names Database’s results of
operations are included in the Company’s consolidated financial statements from the date of acquisition.
The purchase price was allocated based on the estimated fair values of assets and liabilities, including identifiable intangible assets. The
purchase price allocation is considered final. The following table summarizes the net liabilities assumed and the intangible assets and goodwill
acquired in connection with the acquisition (in thousands):
The weighted-
average amortizable life of the acquired intangible assets is 6.6 years. The $9.1 million of goodwill acquired is not deductible
for tax purposes. The pro forma effect of the transaction is immaterial to the consolidated financial statements.
PhotoSite
In March 2005, the Company acquired certain assets related to PhotoSite, the online digital photo-sharing service of Homestead
Technologies, Inc., for approximately $10.1 million in cash, including acquisition costs, and entered into a related licensing and support
agreement with Homestead Technologies. The acquisition was accounted for under the purchase method in accordance with SFAS No. 141,
Business Combinations
. The primary reason for the acquisition was to acquire PhotoSite’s software and services to enhance the Company’s
other services and to expand the Company’s subscription offerings.
F- 21
Description
Estimated
Fair
Value
Estimated
Amortizable
Life
Net liabilities assumed:
Cash
$
510
Accounts receivable
51
Accounts payable and accrued liabilities
(8
)
Deferred revenue
(541
)
Deferred income taxes
(545
)
Total net liabilities assumed
(533
)
Intangible assets acquired:
Pay accounts
500
4 years
Free accounts
600
10 years
Advertising contracts and related relationships
29
2 years
Technology
245
5 years
Proprietary rights
134
5 years
Other intangibles
45
5 years
Total intangible assets acquired
1,553
Goodwill
9,092
Total purchase price
$
10,112