Yahoo 2006 Annual Report Download - page 82

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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.
Transactions completed in 2005
Verdisoft. On February 11, 2005, the Company acquired Verdisoft Corporation (“Verdisoft”), a software devel-
opment 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 purchase price was $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 as the Company’s right to repurchase these shares lapses on the third anniversary of the date of
grant. For accounting purposes, $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 (of which
the outstanding balance on January 1, 2006 was netted against additional paid-in capital upon the adoption of
SFAS 123R). 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. (together with 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 income 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.
72
Yahoo! Inc.
Notes to Consolidated Financial Statements — (Continued)