Business Acquisition

9 Months Ended

Sep. 30, 2013

Business Combinations [Abstract]

Business Acquisition

Business Acquisitions

The Company has completed the following acquisitions during the first nine months of fiscal 2013, paying the purchase price in cash for each transaction: (a) share purchase of IGN Entertainment, Inc. ("IGN"), an online publisher of video games, entertainment and men's lifestyle content; (b) share purchase of MetroFax, Inc., a provider of online faxing services and advanced features; (c) share purchase of Backup Connect BV, an online backup provider based in the Netherlands; (d) share purchase of NetShelter, the largest community of technology publishers dedicated to consumer electronics, computing and mobile communications; (e) share purchase of Email Protection Agency Limited, a UK-based provider of email security, email management and network security services; and (f) other immaterial share and asset acquisitions of online data backup businesses.

The condensed consolidated statement of income, since the date of each acquisition, and balance sheet, as of September 30, 2013, reflect the results of operations of all 2013 acquisitions. For the nine months ended September 30, 2013, these acquisitions contributed $50.3 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 $114.0 million, net of cash acquired and including $15.2 million in assumed liabilities consisting primarily of deferred revenues, trade accounts payable, other accrued liabilities and net deferred tax liabilities.

The following table summarizes the allocation of the purchase consideration for these acquisitions (in thousands):

Asset	Valuation
Accounts Receivable	$	23,034
Property and Equipment	2,536
Other Assets	2,617
Deferred Tax Asset	2,058
Software	3,016
Content	2,460
Trade Names	16,626
Customer Relationships	18,498
Advertiser Relationships	11,770
Goodwill	31,420
Total	$	114,035

The initial accounting for these acquisitions is incomplete and subject to change, which may be significant. j2 Global has recorded provisional amounts for certain property and equipment, intangible assets (including trade names and software), preliminary working capital and related tax items. During the second quarter 2013, the Company recorded an adjustment to initial working capital related to the acquisition of IGN, which increased acquired accounts receivable and reduced assumed liabilities with a corresponding reduction to goodwill in the amount of $3.8 million. During the third quarter of 2013, the Company recorded an additional adjustment to initial working capital related to the acquisition of IGN, which decreased acquired accounts receivable and increased assumed liabilities with a corresponding increase to goodwill in the amount of $1.8 million. Also during the third quarter of 2013, the Company recorded an adjustment to initial working capital related to the acquisition of Ziff Davis, Inc., which increased assumed liabilities with a corresponding increase to goodwill in the amount of $1.7 million. Actual amounts recorded upon finalization of the purchase accounting may differ materially from the information presented in this Quarterly Report on Form 10-Q.

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 these acquisitions during the nine months ended September 30, 2013 is $31.4 million, of which $15.7 million is expected to be deductible for income tax purposes.

Pro Forma Financial Information for 2013 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 periods presented. These pro forma results exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2012 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 2013 acquisitions as if each acquisition had occurred on January 1, 2012 (in thousands, except per share amounts):

	Nine Months Ended September 30, 2013		Nine Months Ended September 30, 2012
	(unaudited)		(unaudited)
Revenues	$	398,953	$	357,571
Net Income	$	86,442	$	91,925
EPS - Basic	$	1.87	$	2.02
EPS - Diluted	$	1.84	$	2.00