Classmates.com 2007 Annual Report Download - page 104

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UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. ACQUISITIONS (Continued)
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, an online digital photo sharing service for approximately
$10.1 million in cash, including acquisition costs, and entered into a related licensing and support agreement with the seller. The acquisition was
accounted for under the purchase method in accordance with SFAS No. 141. 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. This factor contributed to a
purchase price in excess of the fair value of PhotoSite's net liabilities assumed and intangible assets acquired, and, as a result, the Company has
recorded goodwill in connection with this transaction.
F-22
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 intangible assets
45
5 years
Total intangible assets acquired
1,553
Goodwill
9,092
Total purchase price
$
10,112