Yahoo 2004 Annual Report Download - page 74

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The amortizable intangible assets have useful lives not exceeding 3 years. Based on a preliminary estimate, no amount has
been allocated to in-process research and development, and approximately $172 million has been allocated to goodwill.
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired,
and is not deductible for tax purposes. The preliminary purchase price allocation for Musicmatch is subject to revision as
more detailed analysis is completed and additional information on the fair value of assets and liabilities becomes available.
Any change in the fair value of the net assets of Musicmatch will change the amount of the purchase price allocable to
goodwill.
Other Acquisitions. During the year ended December 31, 2004 the Company acquired three other companies which were
accounted for as business combinations. The total estimated purchase price for these three acquisitions was approximately
$49 million and consisted of $46 million in cash consideration and $2 million related to stock options exchanged and
$1 million direct transaction costs. The total cash consideration of $46 million less cash acquired of approximately
$2 million resulted in a net cash outlay of $44 million. Of the purchase price, approximately $41 million was allocated
to goodwill, $14 million to amortizable intangible assets and $6 million to net assumed liabilities. No amounts have been
allocated to in-process research and development. Goodwill represents the excess of the purchase price over the fair value
of the net tangible and intangible assets acquired, and is not deductible for tax purposes. The purchase price allocations
for these acquisitions are preliminary and subject to revision as more detailed analyses are completed and additional
information on the fair value of assets and liabilities becomes available. Any change in the fair value of the net assets of
the acquired companies will change the amount of the purchase price allocable to goodwill.
The results of operations of each of the acquisitions completed during the year ended December 31, 2004 have been
included in the Company’s consolidated statements of operations since the date that the respective acquisition was
completed. Proforma results of operations have not been presented for the acquisitions completed during the year as the
results of the acquired companies either individually or in aggregate were not material to the Company.
Note 4 GOODWILL
The changes in the carrying amount of goodwill for the years ended December 31, 2003 and 2004 are as follows (in
thousands):
United States International Total
Balance as of January 1, 2003 $ 327,082 $ 88,143 $ 415,225
Acquisitions and other(1) 1,383,916 6,420 1,390,336
Balance as of December 31, 2003 1,710,998 94,563 1,805,561
Acquisitions and other(1) 204,911 540,485 745,396
Reclassification(2) (242,490) 242,490 –
Balance as of December 31, 2004 $ 1,673,419 $877,538 $2,550,957
(1) Other primarily includes certain purchase price adjustments that affect existing goodwill, and foreign currency translation adjustments. Foreign
currency translation adjustments, reflecting movement in the currencies of the underlying entities, totaled approximately $31 million for the year
ended December 31, 2004, and were immaterial for the year ended December 31, 2003. See also Note 3 – ‘‘Acquisitions’’ for additional
information.
(2) Reclassification reflects the allocation of goodwill related to the Overture acquisition to the Company’s financial reporting segments.
Upon adoption of SFAS No. 142, ‘‘Goodwill and Other Intangible Assets,’’ the Company performed a transitional
impairment test of its goodwill and intangible assets as of January 1, 2002. Due to, among other things, the overall
softening of the global economy and the related decline in international advertising, the Company recorded a transitional
goodwill impairment loss of approximately $64 million in the International segment, which was recorded during the first
quarter of 2002 as a cumulative effect of an accounting change in the Company’s consolidated statements of operations.
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