Yahoo 2008 Annual Report Download - page 79

Yahoo! Inc.
Notes to Consolidated Financial Statements—(Continued)
combinations, the Company also issued stock-based awards valued at $24 million which is being recognized as
compensation expense over a period of three years. 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 the year ended December 31, 2006, the Company also completed immaterial asset acquisitions that did
not qualify as business combinations.
Transactions completed in 2007
Right Media. On July 11, 2007, the Company acquired Right Media Inc. (“Right Media”), an online advertising
exchange. The Company believes the acquisition of Right Media is an integral piece of the Company’s strategy
to build the industry’s leading advertising and publishing network and is a key step in executing the Company’s
long-term strategy to change how online advertisers and publishers connect to their audiences in one open
advertising community. The purchase price exceeded the fair value of net tangible and intangible assets acquired
from Right Media and as a result, the Company recorded goodwill in connection with this transaction. Under the
terms of the agreement, the Company acquired all of the remaining equity interests (including all outstanding
options and restricted stock units) in Right Media. Right Media stockholders were paid in approximately equal
parts cash and shares of Yahoo! common stock (approximately 8 million shares) and outstanding Right Media
options and restricted stock units were assumed. Assumed Right Media options and restricted stock units are
exercisable for, or will settle in, shares of Yahoo! common stock. The acquisition followed the Company’s 20
percent investment in Right Media in October 2006.
The total purchase price of $524 million consisted of $245 million in cash consideration, $236 million in equity
consideration, $40 million for the initial 20 percent investment, and $3 million of direct transaction costs. The
$245 million of total cash consideration less cash acquired of $16 million resulted in a net cash outlay of $229
million. In connection with the acquisition, the Company issued stock-based awards valued at $177 million
which is being recognized as stock-based compensation expense as the awards vest over a period of up to four
years.
The allocation of the purchase price of the assets acquired and liabilities assumed based on their fair values was
as follows (in thousands):
Cash acquired ...................................................................... $ 15,508
Other tangible assets acquired ......................................................... 25,542
Deferred tax assets .................................................................. 8,422
Amortizable intangible assets:
Customer contracts and related relationships .......................................... 42,300
Developed technology and patents .................................................. 42,400
Trade name, trademark, and domain name ........................................... 19,200
Goodwill .......................................................................... 440,095
Total assets acquired ............................................................ 593,467
Liabilities assumed .................................................................. (27,700)
Deferred income taxes ............................................................... (41,560)
Total ......................................................................... $524,207
The amortizable intangible assets have useful lives not exceeding seven years and a weighted average useful life
of six years. No amounts have been allocated to in-process research and development and $440 million has been
allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible
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