Yahoo 2007 Annual Report Download - page 75

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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 is being recognized as expense
over three years since acquisition 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 three 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 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 $1 million of direct
transaction costs.
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 four 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 $4 million of direct transaction costs. The total cash consideration of $72 million less cash acquired
73
Yahoo! Inc.
Notes to Consolidated Financial Statements — (Continued)