Yahoo 2015 Annual Report Download - page 124

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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 gain on sales of patents in the consolidated statements of operations.
The amounts allocated to the license of the Existing Patents are being recorded as revenue over the
four-year payment period under the license when payments are due. The amounts allocated to the
Capture Period Patents are being recorded as revenue over the five-year capture period. The
Company recognized $43 million and $86 million in revenue related to the Existing Patents and the
Capture Period Patents during the years ended December 31, 2014 and 2015, respectively.
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 gain on sales of patents in the consolidated statements of operations.
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 gain on sales of patents in the consolidated
statements of operations.
During 2015, the Company sold certain patents and recorded a gain on sales of patents of
approximately $11 million.
Note 5 Goodwill
The changes in the carrying amount of goodwill for the years ended December 31, 2014 and 2015
were as follows (in thousands):
Americas(1) EMEA(2) Asia Pacific(3) Total
Net balance as of January 1, 2014
$ 3,802,334 $ 546,856 $330,458 $ 4,679,648
Acquisitions and related adjustments
522,156 110,857 (607) 632,406
Goodwill impairment charge
— (79,135) (9,279) (88,414)
Foreign currency translation adjustments
(2,271) (46,109) (22,690) (71,070)
Net balance as of December 31, 2014
$ 4,322,219 $ 532,469 $297,882 $ 5,152,570
Acquisitions and related adjustments
130,450 21,606 — 152,056
Goodwill impairment charge
(3,929,576) (531,261) — (4,460,837)
Foreign currency translation adjustments
(4,207) (22,814) (8,654) (35,675)
Net balance as of December 31, 2015
$ 518,886 $ — $289,228 $ 808,114
(1) Gross goodwill balances for the Americas segment were $3.8 billion as of January 1, 2014 and
$4.4 billion as of December 31, 2015. The Americas segment includes accumulated impairment
losses of $3.9 billion as of December 31, 2015.
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