ACQUISITIONS, GOODWILL, AND ACQUIRED INTANGIBLE ASSETS

On September 25, 2014, we acquired Twitch Interactive, Inc. (“Twitch”) for approximately $842 million in cash, as adjusted for the assumption of options and other items. During the nine months ended September 30, 2014, we acquired certain other companies for an aggregate purchase price of $20 million. Acquisition activity for the nine months ended September 30, 2013 was not material. We acquired Twitch because of its community and the live streaming experience it provides. The primary reasons for our other 2014 acquisitions were to acquire technologies and know-how to enable Amazon to serve customers more effectively.

Acquisition-related costs were expensed as incurred and not significant. Due to the limited amount of time since the acquisition of Twitch, the valuation of certain assets and liabilities is preliminary and subject to change. The aggregate purchase price of these acquisitions was allocated as follows (in millions):



Purchase Price
Cash paid, net of cash acquired	$	813
Stock options assumed	44
Indemnification holdback	5
	$	862
Allocation
Goodwill	$	702
Intangible assets (1):
Marketing-related	23
Contract-based	1
Technology-based	33
Customer-related	174
	231
Property and equipment	21
Deferred tax assets	65
Other assets acquired	34
Deferred tax liabilities	(90		)
Other liabilities assumed	(101		)
	$	862

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(1)	Acquired intangible assets have estimated useful lives of between one and five years, with a weighted-average amortization period of five years.

The fair value of assumed stock options of $39 million, estimated using the Black-Scholes model, will be expensed over the remaining service period. We determined the estimated fair value of identifiable intangible assets acquired primarily by using the income approach. These assets are included within “Other assets” on our consolidated balance sheets and are being amortized to operating expenses on a straight-line or accelerated basis over their estimated useful lives.

Pro Forma Financial Information (unaudited)

The acquired companies were consolidated into our financial statements starting on their respective acquisition dates. The aggregate net sales and operating loss of the companies acquired was $12 million and $3 million for the nine months ended September 30, 2014. The following pro forma financial information presents our results as if the current year acquisitions had occurred at the beginning of 2013 (in millions):



	Nine Months Ended September 30,
	2014			2013
Net sales	$	59,712		$	48,900
Net income (loss)	$	(501	)	$	(50	)

Goodwill

The goodwill of the acquired companies is generally not deductible for tax purposes and is primarily related to expected improvements in sales growth from future product and service offerings and new customers, together with certain intangible assets that do not qualify for separate recognition. The following summarizes our goodwill activity in the first nine months of 2014 by segment (in millions):



	North America		International			Consolidated
Goodwill - January 1, 2014	$	2,033	$	622		$	2,655
New acquisitions (1)	544		158			702
Other adjustments (2)	—		(25		)	(25		)
Goodwill - September 30, 2014	$	2,577	$	755		$	3,332

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(1)	Primarily includes the goodwill of Twitch.


(2)	Primarily includes changes in foreign exchange rates.