Classmates.com 2007 Annual Report Download - page 102

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UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, ACCOUNTING POLICIES, AND RECENT ACCOUNTING
PRONOUNCEMENTS (Continued)
calculation of earnings per share will continue to be based on income amounts attributable to the parent. SFAS No. 160 is effective for financial
statements issued for fiscal years beginning after December 15, 2008. Early adoption is prohibited. The Company has not yet determined the
effect on its consolidated financial statements, if any, upon adoption of SFAS No. 160.
2. ACQUISITIONS
MyPoints.com, Inc.
In April 2006, the Company acquired MyPoints.com, Inc. for approximately $56.6 million in cash, including acquisition costs. MyPoints is
a leading provider of online loyalty marketing services. 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 expand the Company's Classmates Media business offerings.
This factor contributed to a purchase price in excess of the fair value of MyPoints' net liabilities assumed and intangible assets acquired, and, as a
result, the Company has recorded goodwill in connection with this transaction. MyPoints' 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):
F-20
Description
Estimated
Fair
Value
Estimated
Amortizable
Life
Net liabilities assumed:
Cash
$
7,137
Accounts receivable
9,667
Other current assets
1,905
Property and equipment
2,833
Other assets
496
Accounts payable and accrued liabilities
(9,376
)
Deferred revenue
(471
)
Member redemption liability
(17,673
)
Total net liabilities assumed
(5,482
)
Intangible assets acquired:
Customer contracts
9,230
5 years
Proprietary rights
3,700
10 years
Total intangible assets acquired
12,930
Goodwill
49,122
Total purchase price
$
56,570