Microsoft 2014 Annual Report Download - page 62

61
These pro forma results were based on estimates and assumptions, which we believe are reasonable. They are not the
results that would have been realized had we been a combined company during the periods presented and are not
necessarily indicative of our consolidated results of operations in future periods. The pro forma results include
adjustments primarily related to purchase accounting adjustments and the elimination of related party transactions
between Microsoft and NDS. Acquisition costs and other non-recurring charges incurred are included in the earliest period
presented.
During the fourth quarter of fiscal year 2014, we incurred $21 million of acquisition costs associated with the purchase of
NDS. Acquisition costs are primarily comprised of transaction fees and direct acquisition costs, including legal, finance,
consulting, and other professional fees. These costs are included in Integration and restructuring costs on our
consolidated income statement for fiscal year 2014.
Certain concurrent transactions were recognized separately from the Acquisition. Prior to the Acquisition, we had joint
strategic initiatives with Nokia; this contractual relationship was terminated in conjunction with the Acquisition. No gain or
loss was recorded upon termination of this agreement, as it was determined to be at market value. In addition, we agreed
to license Nokia’s mapping services and will pay Nokia separately for the services provided under a four-year license as
they are rendered.
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 Commercial Other under our current segment structure. Yammer was consolidated into our results of operations
starting on the acquisition date.
Skype
On October 13, 2011, we acquired 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 under our current segment structure: $5.6 billion to Commercial Licensing, $1.4 billion to Computing and
Gaming Hardware, and $54 million to D&C Other. 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 2014, we completed five additional acquisitions for total consideration of $140 million, all of which was
paid in cash. These entities have been included in our consolidated results of operations since their respective acquisition
dates.
With the exception of NDS, 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.