SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2011

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

13.  SUBSEQUENT EVENTS

Purchase of MediaMind

On July 26, 2011, pursuant to a tender offer and subsequent merger, we completed the previously announced acquisition of all of the issued and outstanding shares of MediaMind Technologies, Inc. (“MediaMind”) (NASDAQ: MDMD) for approximately $498 million in cash, which includes approximately $70 million paid to the holders of vested stock options that were “in-the-money.”  In addition, in connection with the acquisition, we incurred costs of approximately $13 million. Approximately $3 million of such costs were incurred during our second fiscal quarter and are included in general and administrative expense, and the remaining $10 million will be expensed during our third fiscal quarter. Following the completion of the acquisition, MediaMind is no longer listed on the NASDAQ and is no longer required to comply with the SEC rules relating to publicly-held companies. We acquired MediaMind to expand our product offerings and global footprint to better serve the advertising community.

MediaMind is a leading global provider of digital advertising campaign management solutions to advertising agencies and advertisers.  MediaMind provides its customers with an integrated campaign management platform that helps advertisers and agencies simplify the complexities of managing their advertising budgets across multiple digital media channels and formats, including online, mobile, rich media, in-stream video, display and search.  MediaMind provides its customers with the ability to plan, create, deliver, measure, track and optimize digital media campaigns.  MediaMind markets its services in several countries including the United States, Israel, the United Kingdom, France, Germany, Australia, Spain, Hong Kong, Japan, China, Mexico and Brazil.  For 2010, about 72% of MediaMind’s revenues were from jurisdictions outside the United States.

MediaMind’s operating results for the year ended December 31, 2010 are summarized as follows (in thousands):

	2010
Revenues	$	80,846
Cost of revenues	4,289
Operating expenses	63,339
Operating income	13,218
Other income	577
Income before income taxes	13,795
Provision for income taxes	3,843
Net income	$	9,952

MediaMind’s balance sheet data as of March 31, 2011 is summarized as follows (in thousands):

	March 31, 2011
Total current assets	$	132,117
Total assets		147,042
Current liabilities	$	10,847
Long-term liabilities	4,768
Stockholders’ equity	131,427
Total liabilities and stockholders’ equity		147,042

We are in the process of allocating the purchase price to the net assets acquired.  We do not expect the goodwill or other intangible assets created in the acquisition to be deductible for income tax purposes.  MediaMind generated revenues of $44.7 million and $37.2 million for the six months ended June 30, 2011 and 2010, respectively.  MediaMind’s management provided the information related to its performance for the six months ended June 30, 2011, which we used in this disclosure.  MediaMind’s management has indicated that this information has been subject to its system of internal control over financial reporting.  However, it has not been subject to our system of internal control over financial reporting, since it relates to the time period prior to the acquisition.

Had we acquired MediaMind, MIJO and Match Point (see Note 4) on January 1, 2010, pro forma revenues for the six months ended June 30, 2011 and 2010 would have been $181.2 million and $165.4 million, respectively.  Since the purchase price allocation is incomplete, it is not practicable for us to estimate the pro forma earnings for the combined entity at this time.

In connection with the acquisition, we borrowed $490 million from our amended credit facility, as discussed below.

Amended Credit Facility

On July 26, 2011, we entered into an amended and restated credit agreement (the “Amended Credit Facility”) whereby we expanded the facility to include $490 million of term loans (“Term Loans”) and reduced the revolving credit facility from $150 million to $120 million (“Revolving Loans”).  The Term Loans mature in 2018, bear interest at the greater of (i) LIBOR plus 4.5% or (ii) 5.75% per annum payable not less frequently than each quarter, and require scheduled quarterly principal payments of $1.225 million ($4.9 million per year).  Beginning in 2012, the Term Loans require mandatory prepayments equal to 50% of our excess cash flow, as defined in the Amended Credit Facility.  The Revolving Loans mature in 2016, bear interest at the alternative base rate or LIBOR, plus the applicable margin for each that fluctuates with the consolidated leverage ratio (as defined).

The Amended Credit Facility contains financial covenants pertaining to the maximum consolidated leverage ratio and the minimum fixed charge coverage ratio.  The Amended Credit Facility also contains a variety of customary restrictive covenants, such as limitations on borrowings and investments, and provides for customary events of default.  The Amended Credit Facility prohibits the payment of cash dividends and limits share redemptions and repurchases.  There are no restrictions in our Amended Credit Facility with respect to transfers of cash or other assets from our subsidiaries to us.  The Amended Credit Facility is guaranteed by all of our domestic subsidiaries and is collateralized by a first priority lien on substantially all of our assets.