Yahoo 2014 Annual Report Download - page 118

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The amortizable intangible assets have useful lives not exceeding seven years and a weighted
average useful life of five years. No amounts have been allocated to in-process research and
development and $423 million has been preliminarily allocated to goodwill. Goodwill represents the
excess of the purchase price over the estimated fair value of the net tangible and identifiable
intangible assets acquired and is not deductible for tax purposes.
Other Acquisitions—Business Combinations. During the year ended December 31, 2014, the
Company acquired nine other companies, all of which were accounted for as business combinations.
The total purchase price for these acquisitions was $66 million less cash acquired of $4 million, which
resulted in a net cash outlay of $62 million. The preliminary purchase price allocation of the assets
acquired and liabilities assumed based on their estimated fair values was $43 million allocated to
goodwill, $18 million to amortizable intangible assets, $4 million to cash acquired, $9 million to other
tangible assets, and $8 million to assumed liabilities.
The Company’s business combinations completed during the years ended December 2012, 2013, and
2014 did not have a material impact on the Company’s consolidated financial statements, and
therefore actual and pro forma disclosures have not been presented.
Patent Sale and License Agreement
During 2014, the Company entered into a patent sale and license agreement for total cash
consideration of $460 million. The total consideration was allocated based on the estimated relative
fair value of each of the elements of the agreement: $61 million was allocated to the sale of patents
(“Sold Patents”), $135 million to the license to existing patents (“Existing Patents”) and $264 million
to the license of patents developed or acquired in the next five years (“Capture Period Patents”). The
Company recorded $61 million as a gain on the Sold Patents during 2014. The gain on sale of these
patents is recorded as a part of gains on sales of patents in the consolidated statements of income.
The Company recognized $43 million in revenue related to the Existing Patents and the Capture
Period Patents during the year ended December 31, 2014. The amounts allocated to the license of the
Existing Patents is recorded as revenue over the four year period when payments are due. The
amounts allocated to the Capture Period Patents is recorded as revenue over the five year capture
period.
Patent Sale Agreements
During 2013 and 2014, the Company entered into patent sale agreements with a wholly-owned
affiliate of Alibaba Group pursuant to which the Company sold certain patents for aggregate
consideration of $70 million and $23.5 million, respectively. The gains on sales of these patents are
recorded as a part of gains on sales of patents in the consolidated statements of income.
During 2014, the Company entered into a patent sale agreement with Yahoo Japan pursuant to which
the Company sold certain patents for aggregate consideration of $18 million. The gain on sale of
these patents of $12 million is recorded as a part of gains on sales of patents in the consolidated
statements of income.
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