Yahoo 2014 Annual Report Download - page 115

Transactions completed in 2012
All Acquisitions—Business Combinations. During the year ended December 31, 2012, the Company
acquired two companies, which were accounted for as business combinations. The total purchase
price for these acquisitions was $7 million. The total cash consideration of $7 million less cash
acquired of $1 million resulted in a net cash outlay of $6 million. Of the total purchase price, $5 million
was allocated to goodwill, $1 million to tangible assets and $1 million to cash acquired. 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 2013
Tumblr. On June 19, 2013, the Company completed the acquisition of Tumblr, Inc. (“Tumblr”), a
blog-hosting Website that allows users to post their own content as well as follow or re-blog posts
made by other users. The acquisition of Tumblr brought a community of new users to the Yahoo
Network.
The purchase price exceeded the fair value of the net tangible and identifiable intangible assets
acquired 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 equity interests (including all
outstanding vested options) in Tumblr. Tumblr stockholders and vested optionholders were paid in
cash, outstanding Tumblr unvested options and restricted stock units were assumed and converted
into equivalent awards covering Yahoo common stock and a portion of the Tumblr shares held by its
founder were exchanged for Yahoo common stock.
The total purchase price of approximately $990 million consisted mainly of cash consideration. The
allocation of the purchase price of the assets acquired and liabilities assumed based on their fair
values was as follows (in thousands):
Cash and marketable securities acquired $ 16,587
Other tangible assets acquired 76,566
Amortizable intangible assets:
Developed technology 23,700
Customer contracts and related relationships 182,400
Trade name 56,500
Goodwill 748,979
Total assets acquired 1,104,732
Liabilities assumed (114,521)
Total $ 990,211
In connection with the acquisition, the Company is recognizing stock-based compensation expense
of $70 million over a period of up to four years. This amount is comprised of assumed unvested stock
options and restricted stock units (which had an aggregate fair value of $29 million at the acquisition
date), and Yahoo common stock issued to Tumblr’s founder (which had a fair value of $41 million at
the acquisition date). The Yahoo common stock issued to Tumblr’s founder is subject to holdback
and will be released over four years provided he remains an employee of the Company. In addition,
the transaction resulted in cash consideration of $40 million to be paid to Tumblr’s founder over four
years, also provided that he remains an employee of the Company. Such cash payments are being
recognized as compensation expense over the four-year service period.
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