Yahoo 1998 Annual Report Download - page 26

The total purchase price of the acquisition was $48.6 million including acquisition
expenses of $1.8 million. Of the purchase price, $15.0 million was assigned to in-
process research and development and expensed upon the consummation of the
acquisition. The purchase price was allocated to the assets acquired and liabilities
assumed based on their estimated fair values as determined by the Company and
pursuant to discussions with the Staff of the Securities and Exchange Commission
(the “Staff”).
Among the factors considered in discussions with the Staff in determining the
amount of the allocation of the purchase price to in-process research and develop-
ment were various factors such as estimating the stage of development of each
in-process research and development project at the date of acquisition, estimating
cash flows resulting from the expected revenues generated from such projects, and
discounting the net cash flows, in addition to other assumptions. The remaining
identified intangibles, including the value of purchased technology and other
intangibles will be amortized on a straight-line basis over three and seven years,
respectively. Amortization expense of purchased technology and other intangible
assets was $2.9 million and $2.0 million, respectively, for the year ended December
31, 1998. In addition, other factors were considered in discussions with the Staff in
determining the value assigned to purchased in-process technology such as
research projects in areas supporting the online store technology (including signifi-
cant enhancement to the ability of the product to support multiple users and
multiple servers), developing functionality to support the ability to process credit
card orders, and enhancing the product’s user interface by developing functional-
ity that would allow the product to be used outside of the United States. If none of
these projects is successfully developed, the Company’s sales and profitability may
be adversely affected in future periods. Additionally, the failure of any particular
individual project in process could impair the value of other intangible assets
acquired. The Company began to benefit from the purchased in-process technology
in late 1998.
On July 17, 1998, the Company completed the acquisition of WebCal Corporation
(“WebCal”), a privately-held developer and marketer of Web-based calendaring and
scheduling products, and publisher of EventCal, a comprehensive database of
world-wide public events. Under the terms of the acquisition, which was accounted
for as a pooling of interests, the Company exchanged 541,908 shares of Yahoo!
Common Stock for all of WebCal’s outstanding shares. The historical operations
of WebCal are not material to the Company’s financial position or results of
operations, therefore, prior period financial statements have not been restated for
this acquisition.
On October 20, 1998, the Company acquired Yoyodyne Entertainment, Inc.
(“Yoyodyne”), a privately-held, direct marketing services company. Under the terms
of the acquisition, which was accounted for as a pooling of interests, the Company
exchanged 561,244 shares of Yahoo! Common Stock and options and warrants to
purchase Yahoo! Common Stock for all of Yoyodyne’s outstanding shares, options,
and warrants. The consolidated financial statements for the three years ended
December 31, 1998 and the accompanying notes reflect the Company’s financial
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