Business Acquisitions

The Company paid cash for the following acquisitions closed during 2012: (a) substantially all of the assets of Offsite Backup Solutions, LLC, a Phoenix-based provider of online backup solutions; (b) Landslide Technologies, Inc., a Boston-based provider of online customer relationship management solutions designed for small to mid-sized businesses; (c) Zimo Communications Ltd., a UK provider of cloud-based voice services; and (d) the Australian and New Zealand businesses of Zintel Communications, a cloud voice service provider. In addition, the Company paid cash to acquire substantially all of the outstanding capital stock of Ziff Davis, Inc. ("Ziff Davis"), a leading media company in the technology market, for a purchase price of approximately $163.1 million, net of cash acquired and subject to certain post-closing adjustments.

Ziff Davis

The Company acquired substantially all of the outstanding capital stock of Ziff Davis on November 9, 2012 for a cash purchase price of approximately $163.1 million, net of cash acquired and assumed liabilities of $28.8 million and subject to certain post-closing adjustments. Other minority shareholders acquired the balance of the outstanding capital stock of Ziff Davis for approximately $8.6 million.

The consolidated statement of income, since the date of the acquisition, and balance sheet as of December 31, 2012 reflect the results of operations of Ziff Davis. For the year ended December 31, 2012, Ziff Davis contributed $9.7 million to the Company's revenues and $1.6 million to its net income.

The following table summarizes the allocation of the purchase consideration (including the portion allocable to the minority interest) as follows (in thousands):



Asset	Valuation

Accounts Receivable	$	14,450
Property and Equipment		842
Software		4,780
Other Assets		1,283
Deferred Tax Asset		1,139
Trade Name		37,730
Customer Relationship		5,380
Advertiser Relationship		14,500
Licensing Relationship		4,910
Other Intangibles		2,540
Goodwill		112,882
Total	$	200,436

The initial accounting for the acquisition of Ziff Davis is substantially complete but is subject to change, which may be significant. j2 Global has recorded provisional amounts for certain intangible assets, software and preliminary working capital. Actual amounts recorded upon the finalization of these items may differ materially from the information presented in this Annual Report on Form 10-K.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized associated with the acquisition of Ziff Davis during the year ended December 31, 2012 is $112.9 million, of which $12.9 million is expected to be deductible for income tax purposes.

Other 2012 Acquisitions

The consolidated statement of income, since the date of the applicable acquisitions, and balance sheet as of December 31, 2012 reflect the results of operations of all six 2012 acquisitions, including Ziff Davis as noted above. For the year ended December 31, 2012, the five acquisitions other than Ziff Davis (the "other acquisitions") contributed $16.9 million to the Company's revenues. Net income contributed by the other acquisitions was not separately identifiable due to j2 Global's integration activities. Total consideration for the other acquisitions was $32.9 million, net of cash acquired. The financial impact to j2 Global for each of the other acquisitions, individually and in the aggregate, is immaterial as of the date of each acquisition.

Pro Forma Financial Information for 2012 Acquisitions

The following unaudited pro forma supplemental information is based on estimates and assumptions, which j2 Global believes are reasonable. However, this information is not necessarily indicative of the Company's consolidated financial position or results of income in future periods or the results that actually would have been realized had j2 Global and the acquired businesses been combined companies during the period presented. These pro forma results exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1 for the year ended December 31, 2011 and do not take into consideration the exiting of any acquired lines of business. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the acquisitions, net of the related tax effects.

The supplemental information on an unaudited pro forma financial basis presents the combined results of j2 Global and its 2012 acquisitions as if each acquisition had occurred on January 1, 2011 (in thousands, except per share amounts):



	Year ended
	December 31, 2012		December 31, 2011
	(unaudited)		(unaudited)
Revenues	$	417,250	$	385,974
Net Income	$	120,210	$	114,889
EPS - Basic	$	2.60	$	2.47
EPS - Diluted	$	2.58	$	2.44

2011

In July 2011, the Company purchased for cash Data Haven Limited, an Ireland-based provider of online data backup services for businesses, and certain assets of the virtual PBX business of Buzz Networks Limited, a UK-based provider of voice services. In October 2011, the Company purchased for cash C Infinity, an Ireland-based provider of online data backup and hosting services for businesses. The financial impact to j2 Global for these transactions is immaterial as of the date of each acquisition. The consolidated statement of income, since the date of the applicable acquisition, and balance sheet as of December 31, 2011 reflect the results of operations of the acquisitions closed in 2011. Total consideration for these 2011 transactions was $3.8 million, net of cash acquired.

2010

During 2010, j2 Global acquired eight businesses: (1) the voice assets of Reality Telecom Ltd; (2) the fax assets of Comodo Communications, Inc.; (3) the unified messaging and communications assets of mBox Pty, Ltd.; (4) the assets associated with the email hosting and email marketing businesses of FuseMail, LLC; (5) the assets of Alban Telecom Limited, a UK enhanced voice services provider; (6) Venali, Inc., a Miami-based provider of enterprise Internet fax messaging solutions ("Venali"); (7) keepITsafe Data Solutions Ltd., an Ireland-based provider of online backup services; and (8) Protus IP Solutions, Inc. (now known as j2 Global Canada, Inc.), a Canadian provider of cloud communication and messaging services (“Protus”).

Protus

The Company acquired Protus on December 3, 2010 for a cash purchase price of approximately $233 million, net of cash acquired and including assumed liabilities of $25.6 million, subject to certain post-closing adjustments.

The consolidated statement of income, since the date of the acquisition, and balance sheet as of December 31, 2010 reflects the results of operations of Protus. For the year ended December 31, 2010, Protus contributed $6.2 million to the Company's total revenues. Net income contributed from Protus was not separately identifiable due to j2 Global's integration activities.

The initial accounting of Protus was completed during the first quarter 2011 but remained subject to change during the measurement period. The Company completed the valuation of certain intangible assets, finalized the working capital and recorded adjustments to the initial purchase price allocation which resulted in a net decrease to goodwill in the amount of approximately $4.9 million in the first quarter 2011. During the second quarter of 2011, the Company recorded an adjustment to the value of certain software due to insufficient licensing prior to the acquisition date. As a result, the Company has recorded an increase in goodwill in the amount of approximately $0.4 million to adjust the fair value of these assets to the correct amount. Management has determined that this adjustment is immaterial to the previously presented financial statements; accordingly, no restatement is necessary.

The following table summarizes the allocation of the Protus purchase consideration as follows (in thousands):



Asset	Valuation
Accounts Receivable	$	2,338
Property and Equipment		3,137
Technology		2,600
Other Assets		1,812
Customer Relationship		29,640
Trade Name		26,982
Non-Compete Agreements		1,576
Goodwill		164,498
Deferred Revenue		(4,928	)
Accounts Payable		(1,219	)
Accrued Liabilities		(5,295	)
Deferred Tax Liability, net		(13,796	)
Total	$	207,345

Management has determined that a trade name of Protus will be used by the Company indefinitely. Accordingly, this asset will have an indefinite life and will be tested annually or more frequently if j2 Global believes indicators of impairment exists.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized associated with the acquisition of Protus during the year ended December 31, 2010 is not expected to be deductible for income tax purposes.

Other 2010 Acquisitions

The consolidated statement of income, since the date of the applicable acquisitions, and balance sheet as of December 31, 2010 reflects the results of operations of all eight 2010 acquisitions, including Protus. For the year ended December 31, 2010, these acquisitions contributed $9.7 million to the Company's revenues. Net income contributed by these acquisitions was not separately identifiable due to j2 Global's integration activities. Total consideration for these transactions was $277.1 million, net of cash acquired and including $29.2 million in assumed liabilities consisting primarily of deferred revenue, trade accounts payable and other accrued liabilities and net deferred tax liabilities.

The following table summarizes the allocation of the purchase consideration as follows (in thousands):



Asset	Valuation
Accounts Receivable	$	3,969
Property and Equipment		4,262
Technology		2,600
Other Assets		2,122
Customer Relationships		35,832
Trade Name		27,741
Non-Compete Agreements		2,588
Goodwill		195,633
Deferred Revenue		(6,683	)
Accounts Payable and Other		(7,743	)
Deferred Tax Liability, net		(12,408	)
Total	$	247,913

The initial accounting for the acquisition of Venali was completed during the fourth quarter 2010; however, this accounting remained subject to change during the measurement period. Based upon an income tax position taken by Venali following the date of acquisition but relating to a period prior to the date acquisition, the Company recorded an adjustment to the purchase price allocation of Venali to reflect certain tax benefits that were greater than previously estimated. The Company recorded an increase in deferred tax assets of approximately $0.6 million with a corresponding decrease to goodwill.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized associated with acquisitions closed during the year ended December 31, 2010 is $195.6 million, of which $15.8 million is expected to be deductible for income tax purposes.

Pro Forma Financial Information for 2010 Acquisitions

The following unaudited pro forma supplemental information is based on estimates and assumptions, which j2 Global believes are reasonable. However; this information is not necessarily indicative of the Company's consolidated financial position or results of income in future periods or the results that actually would have been realized had j2 Global and the acquired businesses been combined companies during the period presented. These pro forma results exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1 for the year ended December 31, 2009 and do not take into consideration the exiting of any acquired lines of business. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the acquisitions, net of the related tax effects.

The supplemental information on an unaudited pro forma financial basis presents the combined results of j2 Global and its 2010 acquisitions as if the acquisitions had occurred on January 1, 2009 (in thousands, except per share amounts):



	Year ended
	December 31, 2010		December 31, 2009
	(unaudited)		(unaudited)
Revenues	$	332,623	$	325,219
Net Income	$	92,659	$	75,951
EPS - Basic	$	2.08	$	1.73
EPS - Diluted	$	2.02	$	1.68