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Acquisitions
12 Months Ended
Jun. 30, 2011
Business Combinations [Abstract]  
Acquisitions [Text Block]
Acquisitions


In fiscal 2011, the Company paid $40.1 million primarily for the acquisitions of The Hyperfactory Limited International (Hyperfactory) and Real Girls Media Network (RGM) and for contingent purchase price payments related to prior years' acquisitions. In fiscal 2010, the Company paid $27.5 million primarily for contingent purchase price payments related to prior years' acquisitions and a minority investment in The Hyperfactory. In fiscal 2009, the Company paid $6.2 million primarily for a minority investment in Real Girls Media Network, contingent purchase price payments related to prior years' acquisitions, and the purchase of Internet domain names.


Effective July 1, 2010, Meredith acquired the remaining 80.01 percent of the outstanding common shares of Hyperfactory. The results of Hyperfactory operations have been included in the consolidated financial statements since that date. Hyperfactory is an international mobile marketing company with operations in the United States, New Zealand, and India. The acquisition-date fair value of the consideration transferred totaled $16.3 million, which consisted of $9.2 million of cash and $7.1 million of contingent consideration.


Under accounting rules for business combinations effective for the Company at the beginning of fiscal 2010, obligations that are contingently payable to sellers based upon the occurrence of one or more future events are to be recorded as a discounted liability on the Company's Consolidated Balance Sheet. The contingent consideration arrangement with Hyperfactory requires the Company to pay contingent payments should the acquired operations achieve certain financial targets generally based on earnings before interest and taxes, as defined in the acquisition agreement. None of the contingent consideration is dependent on the continued employment of the sellers. We estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in Note 15. During the year ended June 30, 2011, the Company recognized a non-cash credit to operations of $6.3 million, reducing the estimated contingent consideration payable. As of June 30, 2011, the Company estimates that future aggregate contingent payments will range from approximately $0.0 million to $4.0 million in the next year with the amount accrued being approximately $1.0 million. The maximum amount of contingent payments the sellers may receive over the next year is $26.0 million.


As a result of the acquisition, the assets and liabilities of Hyperfactory, consisting primarily of accounts receivable, identifiable intangible assets, accounts payable, contingent consideration, and other accrued expenses, are now reflected in the Company's Consolidated Balance Sheet. The consolidated financial statements reflect the allocation of the purchase price to the assets acquired and liabilities assumed, based on their respective fair values.
Trade names, an indefinite-lived asset, have been assigned a value of $0.4 million. Definite-lived intangible assets include technology of $1.0 million (7 year useful life) and customer lists of $2.1 million (5 year useful life). Goodwill, with an assigned value of $14.0 million, is attributable to expected synergies and the assembled workforce of Hyperfactory. During fiscal 2011, the Company recognized a non-cash charge to reduce the value of the identifiable intangible assets of Hyperfactory by $0.9 million.
Prior to the July 1, 2010, acquisition date, the Company owned 19.99 percent of Hyperfactory and accounted for its interest as a cost-method investment. The acquisition-date fair value of the previous equity interest was $4.5 million, and is included in the measurement of consideration transferred. The Company did not recognize a gain or loss as a result of remeasuring its prior equity interest in Hyperfactory held before the business combination.
In December 2010, Meredith acquired the assets of Real Girls Media Network (RGM) for approximately $4.0 million. RGM is a social content hub which includes DivineCaroline.com as well as a premium network of branded sites for women. As a result of the acquisition, assets consisting primarily of accounts receivable, prepaid assets, identifiable intangible assets, and goodwill are now reflected in the Company's consolidated balance sheet.


The impact of the acquisitions is not material to the Company's results of operations; therefore, pro forma financial information has not been provided. Acquisition related costs were expensed by the Company in the period in which they were incurred. Acquisition related costs were not material to the Company's results of operations.