Business Acquisition

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

Business Acquisition

Business Acquisitions

The Company completed the following acquisitions during the first nine months of fiscal 2014, paying the purchase price in cash in each transaction: (a) share purchase of City Numbers®, a UK-based provider of inbound DIDs in over 80 countries; (b) share and asset purchase of Securstore®, an Iceland-based provider of cloud backup and recovery services; (c) share purchase of Livedrive®, a UK-based provider of online backup with added file synchronization features; (d) asset purchase of Faxmate, an Australia-based provider of Internet fax services; (e) share purchase of Critical Software Ltd., a UK-based email security and management company operating under the brand name iCritical^TM; (f) share and asset purchase of Online Backup Company Norway AS and a subsidiary, a Nordic-based provider of online backup services; (g) share and asset purchase of emedia Communications LLC, a US and UK-based provider of research to information technology (IT) buyers and leads to IT vendors; (h) asset purchase of Contactology, Inc., a North Carolina-based provider of email marketing services; (i) asset purchase of Back Up My Info!, a NY-based provider of online backup services; (j) asset purchase of Web24, an Australia-based provider of domain name, web hosting, dedicated or shared servers and related services; (k) equity purchase of Excel Micro, LLC, a Philadelphia-based provider of cloud email security and archiving solutions; and (l) other smaller share and asset acquisitions in the Business Cloud Services segment.

The condensed consolidated statement of income, since the date of each acquisition, and balance sheet, as of September 30, 2014, reflect the results of operations of all 2014 acquisitions. For the nine months ended September 30, 2014, these acquisitions contributed $32 million to the Company's revenues. Net income contributed by these acquisitions was not separately identifiable due to the Company's integration activities. Total consideration for these transactions was $176.3 million, net of cash acquired and including $34.9 million of assumed liabilities consisting primarily of deferred revenues, trade accounts payable, and other accrued liabilities.

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

Asset	Valuation
Accounts Receivable	$	11,291
Property and Equipment	8,686
Other Assets	3,339
Deferred Tax Asset	1,877
Software	2,474
Trade Names	2,387
Customer Relationships	65,153
Other Intangibles	1,477
Goodwill	79,600
Total	$	176,284

The initial accounting for these acquisitions is incomplete and subject to change, which may be significant. j2 Global has recorded provisional amounts which may be based upon past acquisitions with similar attributes for certain intangible assets (including trade names, software and customer relationships), preliminary working capital and related tax items. 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, 2014 is $79.6 million, of which $20.9 million is expected to be deductible for income tax purposes.

Pro Forma Financial Information for 2014 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, 2013 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 2014 acquisitions as if each acquisition had occurred on January 1, 2013 (in thousands, except per share amounts):

	Nine Months Ended September 30, 2014		Nine Months Ended September 30, 2013
	(unaudited)		(unaudited)
Revenues	$	474,749	$	440,030
Net Income	$	96,031	$	89,043
EPS - Basic	$	2.01	$	1.93
EPS - Diluted	$	2.00	$	1.90