4.  Acquisitions and Transfers

Since January 1, 2011, we acquired four businesses in the media services industry. The objective of each transaction was to expand our product offerings, customer base, global digital distribution network, and/or to better serve the advertising community.  We have or expect to realize operating synergies from each of the transactions, or the acquired operation has or will create opportunities for the acquired entity to sell its services to our customers. Both of these factors resulted in a purchase price that contributed to the recognition of goodwill.  A summary of the acquisitions is as follows:

Each of the acquired businesses has been included in our results of operations since the date of closing.  Accordingly, 2012 and 2011 operating results are not entirely comparable due to these acquisitions and related costs.  During the second quarter ended June 30, 2012, we finalized the purchase price allocation of our July 2011 acquisition of MediaMind.  In the final purchase price allocation we increased goodwill by $3.8 million, increased noncurrent deferred income tax liabilities by $1.8 million, increased other noncurrent liabilities by $0.3 million, reduced noncurrent deferred tax assets by $2.6 million and reduced accrued liabilities by $0.9 million.  The consolidated balance sheet at December 31, 2011 has been retrospectively adjusted to reflect the final MediaMind purchase price allocation.  The purchase price allocations for Peer 39 and EyeWonder are preliminary and subject to further review and analysis and a determination of the tax attributes of deferred tax liabilities.

Transfer Majority of Chors Unit

On April 2, 2012, in consideration of $0.1 million, we transferred the majority of the assets, agreements and employees (the “Transferred Assets and Employees”) of Chors GmbH (“Chors”), our German limited liability company that was acquired in the acquisition of EyeWonder in September 2011, to 24/7 Real Media Deutschland GmbH (“24/7 Germany”), a German limited liability company, and an affiliate of WPP plc, an international advertising and media investment management firm.  In addition, 24/7 Germany agreed to refer or transition no less than $5.0 million worth of revenue (as defined) to us within one year of the closing.  For the three months ended March 31, 2012, we reported $1.3 million of revenue and $0.3 million of income before income taxes from Chors.  We did not report a significant gain or loss in connection with the transfer.

Acquisition of Peer 39

On April 30, 2012, we acquired Peer39, Inc. (“Peer 39”), a provider of webpage level data for approximately $15.7 million in cash, shares of our common stock and an installment payment.  Peer 39, based in New York City, is the leading provider of data based on the content and structure of web pages for the purpose of improving the relevance and effectiveness of online display advertising.  Peer 39 analyzes web pages in terms of quality, safety and brand category allowing advertisers to make better buying decisions.  In connection with the transaction, we (i) paid $10.1 million in cash, (ii) issued 357,143 shares of our common stock and (iii) agreed to pay up to $2.3 million in an installment payment within one year of the acquisition. Peer 39’s operating results are included in our online segment.

The purchase price was preliminarily allocated to the assets acquired and liabilities assumed based upon their estimated fair values.  The customer relationships, trade name, developed technology and noncompetition agreements acquired in the transaction are being amortized on a straight-line basis over 10 years, 10 years, 6 years and 4 years, respectively.  The weighted average amortization period is 7.1 years.  The goodwill and intangible assets created in the acquisition are not deductible for income tax purposes.  The acquired assets include $0.8 million of gross receivables which we recognized at their estimated fair value of $0.8 million.  We recognized $0.9 million of revenue and a $0.6 million loss before income taxes from Peer 39 in our consolidated results of operations for the three months ended June 30, 2012.

Preliminary Purchase Price Allocation

The following table summarizes the estimated fair values of the Peer 39 assets acquired and liabilities assumed at the date of acquisition (in millions).

Pro Forma Financial Information

The following pro forma financial information presents our results of operations for the three and six month periods ended June 30, 2012 and 2011 as if the Peer 39, EyeWonder, MediaMind and MIJO acquisitions had occurred on January 1, 2011 (in thousands, except per share amounts).  A table of actual amounts is provided for reference.