Yahoo 2009 Annual Report Download - page 85

Yahoo! Inc.
Notes to Consolidated Financial Statements—(Continued)
allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible
and identifiable intangible assets acquired and is not deductible for tax purposes. The goodwill recorded in
connection with this acquisition is included in the International segment.
Other Acquisitions—Business Combinations. During the year ended December 31, 2009, the Company acquired
two other companies, which were accounted for as business combinations. The total purchase price for these
acquisitions was $30 million. The total cash consideration of $30 million less cash acquired of $2 million
resulted in a net cash outlay of $28 million. Of the purchase price, $16 million was allocated to goodwill, $16
million to amortizable intangible assets, $2 million to tangible assets, $2 million to cash acquired, and $6 million
to net assumed liabilities. 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.
The Company’s business combinations completed in 2009 did not have a material impact on the Company’s
results of operations, and therefore pro forma disclosures have not been presented.
Note 4 I NVESTMENTS IN E QUITY I NTERESTS
As of December 31, investments in equity interests consisted of the following (dollars in thousands):
2008 2009
Percent
Ownership
of
Common
Stock
Alibaba Group ............................................... $2,216,659 $2,167,007 44%
Alibaba.com ................................................. 51,999 — 0%
Yahoo Japan ................................................. 905,672 1,329,281 35%
Other ....................................................... 3,115 —
Total ................................................... $3,177,445 $3,496,288
Equity Investment in Alibaba Group. On October 23, 2005, the Company acquired approximately 46 percent of
the outstanding common stock of Alibaba Group, which represented approximately 40 percent on a fully diluted
basis, in exchange for $1.0 billion in cash, the contribution of the Company’s China-based businesses, including
3721 Network Software Company Limited (“Yahoo! China”), and direct transaction costs of $8 million. Pursuant
to the terms of a shareholder agreement, the Company has an approximate 35 percent voting interest in Alibaba
Group, with the remainder of its voting rights subject to a voting agreement with Alibaba Group management.
Other investors in Alibaba Group include SOFTBANK. Alibaba Group is a privately-held company. Through its
investment in Alibaba Group, the Company has combined its search capabilities with Alibaba Group’s leading
online marketplace and online payment system and Alibaba Group’s strong local presence, expertise, and vision
in the China market. These factors contributed to a purchase price in excess of the Company’s share of the fair
value of Alibaba Group’s net tangible and intangible assets acquired resulting in goodwill.
The investment in Alibaba Group is being accounted for using the equity method, and the total investment,
including net tangible assets, identifiable intangible assets and goodwill, is classified as part of investments in
equity interests on the Company’s consolidated balance sheets. The Company records its share of the results of
Alibaba Group and any related amortization expense, one quarter in arrears, within earnings in equity interests in
the consolidated statements of income.
The Company’s initial purchase price was based on acquiring a 40 percent equity interest in Alibaba Group on a
fully diluted basis; however, the Company acquired a 46 percent interest based on outstanding shares. In
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