Yahoo 2006 Annual Report Download - page 83

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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
The amortizable intangible assets have useful lives not exceeding five years and a weighted average life of
approximately 4 years. No amount has been allocated to in-process research and development and $388 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.
Other Acquisitions — Business Combinations. During the year ended December 31, 2005, the Company acquired
four other companies which were accounted for as business combinations. The total purchase price for these four
acquisitions was $79 million and consisted of $72 million in cash consideration, $3 million related to stock options
exchanged and $3 million of direct transaction costs. The total cash consideration of $72 million less cash acquired
of $3 million resulted in net cash outlay of $69 million. Of the purchase price, $58 million was allocated to
goodwill, $32 million to amortizable intangible assets and $11 million to net assumed liabilities. Approximately
$1 million was allocated to in-process research and development and expensed in the consolidated statements of
income. 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.
During 2005, the Company also made a strategic investment in Alibaba.com Corporation (“Alibaba”) — see
Note 4 — “Investments in Equity Interests.”
Transactions completed in 2006
Seven. On January 29, 2006, the Company and Seven Network Limited (“Seven”), a leading Australian media
company, completed a strategic partnership in which the Company contributed its Australian Internet business,
Yahoo! Australia and New Zealand (“Yahoo! Australia”), and Seven contributed its online assets, television and
magazine content, an option to purchase its 33 percent ownership interest in mobile solutions provider m.Net
Corporation Ltd, and cash of $7 million. The Company believes this strategic partnership and the contribution of
the respective businesses with their rich media and entertainment content will create a comprehensive and engaging
online experience for local users and advertisers. The Company obtained a 50 percent equity ownership interest in
the newly formed entity, which operates as “Yahoo! 7.” Pursuant to a shareholders agreement and a power of
attorney granted by Seven to vote certain of its shares, the Company has the right to vote 50.1 percent of the
outstanding voting interests in Yahoo! 7 and control over the day-to-day operations and therefore consolidates
Yahoo! 7, which includes the operations of Yahoo! Australia. For accounting purposes, the Company is considered
to have acquired the assets contributed by Seven in exchange for 50 percent of the ownership of Yahoo! Australia.
Accordingly, the Company accounted for this transaction in accordance with SFAS No. 141 “Business Combi-
nations.” The total estimated purchase price was $35 million including direct transaction costs of $2 million.
73
Yahoo! Inc.
Notes to Consolidated Financial Statements — (Continued)