Microsoft 2013 Annual Report Download - page 62

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NOTE 9 — BUSINESS COMBINATIONS
Yammer
On July 18, 2012, we acquired Yammer, Inc. (“Yammer”), a leading provider of enterprise social networks, for $1.1 billion
in cash. Yammer will continue to develop its standalone service and will add an enterprise social networking service to
Microsoft’s portfolio of complementary cloud-based services. The major classes of assets to which we allocated the
purchase price were goodwill of $937 million and identifiable intangible assets of $178 million. We assigned the goodwill
to the Microsoft Business Division. Yammer was consolidated into our results of operations starting on the acquisition
date.
Skype
On October 13, 2011, we acquired all of the issued and outstanding shares of Skype Global S.á r.l. (“Skype”), a leading
global provider of software applications and related Internet communications products based in Luxembourg, for $8.6
billion, primarily in cash. The major classes of assets and liabilities to which we allocated the purchase price were goodwill
of $7.1 billion, identifiable intangible assets of $1.6 billion, and unearned revenue of $222 million. The goodwill recognized
in connection with the acquisition is primarily attributable to our expectation of extending Skype’s brand and the reach of
its networked platform, while enhancing Microsoft’s existing portfolio of real-time communications products and services.
We assigned the goodwill to the following segments: $4.2 billion to Entertainment and Devices Division, $2.8 billion to
Microsoft Business Division, and $54 million to Online Services Division. Skype was consolidated into our results of
operations starting on the acquisition date.
Following are the details of the purchase price allocated to the intangible assets acquired:
(In millions)
Weighted
Average Life
Marketing-related (trade names)
$ 1,249
15 years
Technology-based
275
5 years
Customer-related
114
5 years
Contract-based
10
4 years
Total
$ 1,648
13 years
Other
During fiscal year 2013, we completed 11 additional acquisitions for total consideration of $437 million, all of which was
paid in cash. These entities have been included in our consolidated results of operations since their respective acquisition
dates.
Pro forma results of operations have not been presented because the effects of the business combinations described in
this Note, individually and in aggregate, were not material to our consolidated results of operations.
NOTE 10 — GOODWILL
Changes in the carrying amount of goodwill were as follows:
(In millions)
Balance as
of June 30,
2011
Acquisitions
Other
Balance as
of June 30,
2012
Acquisitions
Other
Balance as
of June 30,
2013
Windows Division
$ 89
$ 0
$ 0
$ 89
$ 12
$ 0
$ 101
Server and Tools
1,139
7
(2)
1,144
217
(3)
1,358
Online Services Division
6,373
54
(6,204)
223
0
(5)
218
Microsoft Business
Division
4,167
2,843
(117)
6,893
987
(11)
7,869
Entertainment and
Devices Division
813
4,294
(4)
5,103
27
(21)
5,109
Total
$ 12,581
$ 7,198
$ (6,327)
$ 13,452
$ 1,243
$ (40)
$ 14,655