Yahoo 2003 Annual Report Download - page 43

A preliminary estimate of approximately $354 million has year ended December 31, 2003 and approximately one
been allocated to amortizable intangible assets consisting percent of revenues for the years ended December 31,
of existing technology, patents, affiliate and advertiser con- 2002 and 2001. We believe contracted prices are compa-
tracts and related relationships, trade names, trademarks rable to those with our other similarly situated customers.
and domain names with useful lives not exceeding five
The Company and other third parties are limited partners
years.
in Softbank Capital Partners LP (‘‘Softbank Capital’’), a
Other tangible assets acquired of approximately $218 mil- venture capital fund for which a SOFTBANK affiliate is
lion includes long-term prepaid traffic acquisition costs the General Partner. The Company initially committed to
paid by Overture to Yahoo! of approximately $30 million. a total investment of $30 million in the fund, and subse-
Liabilities assumed of approximately $241 million includes quently committed to invest an additional $6 million. To
a current liability for traffic acquisition costs owed by date, the total investment by the Company in Softbank
Overture to Yahoo! of approximately $28 million. Capital is approximately $34 million. Pursuant to the
Partnership Agreement, the Company invested on the
A preliminary estimate of $1.2 billion has been allocated same terms and on the same basis as all other limited
to goodwill. Goodwill represents the excess of the pur- partners.
chase price over the fair value of the net tangible and
amortizable intangible assets acquired, and is not deducti- See Item 13 of this Form 10-K ‘‘Certain Relationships
ble for tax purposes. Goodwill will not be amortized and and Related Transactions,’’ Note 7 – ‘‘Related Party Trans-
will be tested for impairment, at least annually. The pre- actions’’ and Note 8 – ‘‘Joint Ventures’’ in the Financial
liminary purchase price allocation for Overture is subject Statements for further information related to transactions
to revision as more detailed analysis is completed and with related parties.
additional information on the fair value of Overture’s Critical Accounting Estimates
assets and liabilities becomes available. Any change in the
fair value of the net assets of Overture will change the Our discussion and analysis of our financial condition and
amount of the purchase price allocable to goodwill. results of operations is based upon our consolidated finan-
cial statements, which have been prepared in accordance
Liabilities assumed included approximately $26 million of with accounting principles generally accepted in the
restructuring costs associated with the acquisition, approxi- United States. The preparation of these financial state-
mately $18 million of which related to workforce reduc- ments requires us to make estimates and judgments that
tion and approximately $8 million related to excess affect the reported amounts of assets, liabilities, revenues
facilities. As of December 31, 2003, approximately and expenses, and related disclosure of contingent assets
$6 million remains related to remaining severance costs and liabilities. On an on-going basis, we evaluate our esti-
and approximately $7 million related to excess facilities. mates, including those related to uncollectible receivables,
investment values, intangible assets, income taxes, restruc-
See Note 6 – ‘‘Acquisitions’’ in the Financial Statements turing costs and contingencies. We base our estimates on
for further discussion of acquisitions that we have made in historical experience and on various other assumptions
2003, 2002, and 2001. that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments
Related Party Transactions about the carrying values of assets and liabilities that are
SOFTBANK Corp., including its consolidated affiliates not readily apparent from other sources. Actual results
(‘‘SOFTBANK’’), was approximately a four percent stock- may differ from these estimates under different assump-
holder at December 31, 2003. We have joint ventures tions or conditions.
with SOFTBANK in France, Germany, Japan, Korea and
the United Kingdom to establish and manage versions of We believe the following critical accounting estimates are
the Yahoo! Internet Guide for those countries. A Manag- affected by more significant judgments used in the prepa-
ing Partner of a SOFTBANK affiliate is also a member of ration of our consolidated financial statements: revenue
our Board of Directors. Revenues from SOFTBANK recognition; valuation allowances, specifically the allow-
accounted for less than one percent of revenues for the ance for doubtful accounts and deferred tax assets;
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