Yahoo 2005 Annual Report Download - page 81

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Other Acquisitions — Business Combinations. 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, $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, $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.
Acquisitions completed in 2005
Verdisoft Corporation. On February 11, 2005 the Company acquired Verdisoft Corporation (“Verdisoft”),
a software development company. The acquisition of Verdisoft enhanced the Company’s platform for
delivering content and services to mobile devices as part of the Company’s strategy to provide users with
seamless access to its network. The transaction was treated as an asset acquisition for accounting purposes
and therefore no goodwill was recorded. The estimated purchase price was approximately $58 million and
consisted of $54 million in cash consideration, $3 million related to stock options exchanged and $1 million
of direct transaction costs. In connection with the acquisition, the Company also issued approximately
1 million shares of restricted stock valued at $35 million that will be recognized as expense over three
years. For accounting purposes, approximately $93 million was allocated to amortizable intangible assets,
$37 million to liabilities, primarily deferred income tax liabilities, and $2 million to deferred stock-based
compensation. The amortizable intangible assets have useful lives not exceeding four years and a weighted
average useful life of approximately 3 years.
Yahoo! Europe and Yahoo! Korea. In November 1996, the Company entered into joint ventures with
SOFTBANK Corp., including its consolidated affiliates (“SOFTBANK”) whereby separate companies
were formed in the United Kingdom, France and Germany, (collectively “Yahoo! Europe”) which
established and managed local versions of Yahoo! in those countries. In August 1997, the Company
entered into a similar joint venture with SOFTBANK in Korea. Prior to November 2005, the Company
had a majority share of approximately 70 percent in each of the Yahoo! Europe entities and 67 percent in
Yahoo! Korea and therefore the results of these entities were included in the Company’s consolidated
financial statements, with minority interests separately presented on the consolidated statements of
operations and consolidated balance sheets. On November 23, 2005, the Company purchased
SOFTBANK’s remaining shares in the joint ventures giving the Company 100 percent ownership in these
entities.
The total purchase price of $501 million consisted of $500 million in cash consideration and direct
transaction costs of $1 million.
The allocation of the purchase price to the assets acquired and liabilities assumed based on the fair values
was as follows (in thousands):
Net tangible assets acquired $ 52,484
Amortizable intangible assets:
Customer contracts and related relationships 30,561
Developed technology and patents 6,570
Trade name, trademark and domain name 50,121
Goodwill 387,771
Total assets acquired 527,507
Deferred income taxes (26,633)
Total $ 500,874