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Investments | 12 Months Ended
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Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract] |
Investments | 4. INVESTMENTS Short-term Investments As of December 31, 2015, all of the short-term held-to-maturity investments were time deposits in commercial banks with a maturity of less than one year. The short-term available-for-sale investments are debt securities with a maturity of less than one year purchased from commercial banks and other financial institutions, and equity securities of a publicly listed company. During the years ended December 31, 2013, 2014 and 2015, the Company recorded interest income from its short-term investments of RMB1.07 billion, RMB1.81 billion and RMB2.20 billion (US$339.20 million) in the consolidated statements of comprehensive income, respectively. Long-term Investments The Company’s long-term investments consist of cost method investments, equity method investments, held-to-maturity investments with original and remaining maturities of greater than 12 months and available-for-sale investments. Cost method investments The carrying amount of cost method investments was RMB1.74 billion and RMB7.30 billion (US$1.13 billion) as of December 31, 2014 and 2015, respectively. The increase is primarily due to additional equity investments in the form of preferred shares in 2015. The Company’s investments in preferred shares of the investees are not considered in-substance common stock since these preferred shares contain terms such as dividend and liquidation preferences over ordinary shares. In addition, the preferred shares do not have readily determinable fair values. As a result, these investments in preferred shares are accounted for under the cost method. Equity method investments Equity Investment in Ctrip. On October 26, 2015, the Company completed a share exchange transaction with Ctrip (“Ctrip transaction”), a company engaged in the online travelling business. The Company exchanged its beneficially owned 178,702,519 Class A ordinary shares and 11,450,000 Class B ordinary shares of its majority-owned subsidiary Qunar in exchange for 11,488,381 newly-issued ordinary shares of Ctrip. Subsequent to the transaction, the Company lost control over Qunar and owned 24.39% equity interests in Ctrip when combined with the Ctrip ADS previously acquired in the open market in 2013. The Company accounts for the investment in Ctrip as an equity method investment in accordance with ASC 323 due to its significant influence over the entity. The Company recorded the investment in Ctrip at the fair value of the shares acquired on the closing date of the Ctrip transaction. The Company recognized a total gain of RMB24.42 billion (US$3.77 billion) from the Ctrip transaction in “Other income, net” in the consolidated statements of comprehensive income for the year ended December 31, 2015. The deconsolidation of Qunar did not meet the definition of a discontinued operation in accordance with ASC subtopic 205-20 (“ASC 205-20”), Presentation of Financial Statements – Discontinued Operations, as the disposal of Qunar did not represent a shift in the Company’s strategy. Through this transaction, the Company strengthened its position in the online travelling business of the online to offline marketplace. The carrying amount of the Ctrip investment in excess of the Company’s proportionate interest in Ctrip is recognized as equity method goodwill, intangible assets and related deferred income tax expenses.
|  | RMB |  |  | US$ |
|  | (In thousands) |
Carrying value of investment in Ctrip |  |  | 26,662,337 |  |  |  | 4,115,956 |
Proportionate share of net assets of Ctrip |  |  | (8,550,531 | ) |  |  | (1,319,975 | )
Excess of carrying value of investment over proportionate share of net assets |  |  | 18,111,806 |  |  |  | 2,795,981 |
The excess carrying value has been primarily assigned to: |  |  |  |  |  |  |  |
Goodwill |  |  | 15,563,126 |  |  |  | 2,402,533 |
Intangible assets |  |  | 2,845,081 |  |  |  | 439,205 |
Deferred income taxes |  |  | (283,187 | ) |  |  | (43,716 | )
Property, plant and equipment |  |  | 52,323 |  |  |  | 8,077 |
Land use rights |  |  | 13,487 |  |  |  | 2,082 |
Equity investments |  |  | (79,024 | ) |  |  | (12,200 | )
Total |  |  | 18,111,806 |  |  |  | 2,795,981 |
As the financial statements of Ctrip may not be available in timely manner for the Company to apply the equity method, the Company elects to record its share of the profits or losses of Ctrip on a quarter lag basis. When reporting its proportionate share of profits or losses of Ctrip, the Company will adjust for its basis difference related to the amortization of intangible assets and deferred income taxes discussed above. The following tables set forth the summarized financial information of Ctrip:
|  | As of September 30,* |
|  | 2014 |  |  | 2015 |  |  | 2015 |
|  | RMB |  |  | RMB |  |  | US$ |
|  | (In thousands) |
Current assets |  |  | 16,194,113 |  |  |  | 25,750,458 |  |  |  | 3,975,186 |
Non-current assets |  |  | 12,073,373 |  |  |  | 23,500,517 |  |  |  | 3,627,855 |
Current liabilities |  |  | 10,253,664 |  |  |  | 18,873,779 |  |  |  | 2,913,609 |
Non-current liabilities |  |  | 8,051,191 |  |  |  | 17,492,002 |  |  |  | 2,700,300 |
Noncontrolling interests |  |  | 536,042 |  |  |  | 1,063,306 |  |  |  | 164,146 |
|  | For the six months ended September 30,* |  |  | For the twelve months ended September 30,* |
|  | 2013 |  |  | 2014 |  |  | 2015 |  |  | 2015 |
|  | RMB |  |  | RMB |  |  | RMB |  |  | US$ |
|  | (In thousands) |
Total revenues |  |  | 2,960,637 |  |  |  | 7,280,123 |  |  |  | 10,484,967 |  |  |  | 1,618,600 |
Gross profit |  |  | 2,097,599 |  |  |  | 4,962,670 |  |  |  | 7,072,995 |  |  |  | 1,091,882 |
Income (loss) from operations |  |  | 495,482 |  |  |  | 433,052 |  |  |  | (115,056 | ) |  |  | (17,762 | )
Net income |  |  | 540,651 |  |  |  | 625,520 |  |  |  | 2,052,526 |  |  |  | 316,855 |
Net income attributable to the investees |  |  | 583,369 |  |  |  | 728,644 |  |  |  | 2,207,503 |  |  |  | 340,780 |
* | The Company adopted an one-quarter lag in reporting its share of equity income in Ctrip
In accordance with ASC 323, when Baidu obtained the ability to exercise significant influence over Ctrip that was previously accounted for at fair value as an available-for-sale equity investment in accordance with ASC 320, the investment and results of operations in prior years were adjusted retrospectively on a step-by-step basis as if the equity method had been in effect during all previous years in which the investment was held. The retrospective effects of applying the equity method of accounting to the consolidated statements of balance sheets and the consolidated statements of comprehensive income are as follows:
|  | As of December 31, 2014 |
|  | As originally reported |  |  | As adjusted for retrospective application |
|  | RMB |  |  | RMB |
|  | (In thousands) |
Short-term investments |  |  | 43,818,037 |  |  |  | 42,698,831 |
Long-term investments, net |  |  | 2,878,922 |  |  |  | 3,544,923 |
Additional paid-in capital |  |  | 3,633,919 |  |  |  | 3,650,601 |
Retained earnings |  |  | 47,659,772 |  |  |  | 47,701,326 |
Accumulated other comprehensive income (loss) |  |  | 231,923 |  |  |  | (279,518 | )
|  | For the year ended December 31, 2013 |  |  | For the year ended December 31, 2014 |
|  | As originally reported |  |  | As adjusted for retrospective application |  |  | As originally reported |  |  | As adjusted for retrospective application |
|  | RMB |  |  | RMB |  |  | RMB |  |  | RMB |
|  | (In thousands) |
Income (loss) from equity method investments |  |  | (5,806 | ) |  |  | 22,578 |  |  |  | (26,952 | ) |  |  | (19,943 | )
Other, net |  |  | 186,023 |  |  |  | 189,330 |  |  |  | 257,704 |  |  |  | 260,558 |
Net income |  |  | 10,356,086 |  |  |  | 10,387,777 |  |  |  | 12,243,371 |  |  |  | 12,253,234 |
As of December 31, 2014 and 2015, the Company holds several other equity method investments besides Ctrip through its subsidiaries or VIEs, all of which were accounted for under the equity method since the Company can exercise significant influence but does not own a majority equity interest in or control them. The carrying amount of all of the equity method investments was RMB869.15 million and RMB28.54 billion (US$4.41 billion) as of December 31, 2014 and 2015, respectively. The Company excluded the summarized information for these other equity method investments, as the other equity investees were insignificant for all the years presented. Long-term held-to-maturity investments were time deposits in commercial banks with original and remaining maturities of greater than one year. The held-to-maturity investments are stated at amortized cost. Long-term available-for-sale equity investments represent investments in the equity securities of publicly listed companies. As the Company does not have significant influence over the investees, the investments were classified as available-for-sale and reported at fair value. The methodology used in the determination of fair values for held-to-maturity investments and available-for-sale investments were summarized in Note 21. The total impairment charges on long-term investments were RMB17.52 million, RMB93.42 million and RMB116.98 million (US$18.06 million) for the years ended December 31, 2013, 2014 and 2015, respectively. The short-term held-to-maturity debt investments as well as the short-term available-for-sale investments will mature within one year; whereas the long-term held-to-maturity debt investments as well as the long-term available-for-sale debt investments will mature after one year through five years.
|  | As of December 31, 2014 |
|  | Cost or amortized cost |  |  | Gross unrecognized holding gains |  |  | Gross unrecognized holding losses |  |  | Gross unrealized gains |  |  | Gross unrealized losses |  |  | Fair value |
| RMB |  |  | RMB |  |  | RMB |  |  | RMB |  |  | RMB |  |  | RMB |
|  | (In thousands) |
Short-term investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Held-to-maturity investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed-rate investments |  |  | 38,159,394 |  |  |  | 104,718 |  |  |  | (15,389 | ) |  |  |  |  |  |  |  |  |  |  | 38,248,723 |
Adjustable-rate investments |  |  | 60,290 |  |  |  | — |  |  |  | (771 | ) |  |  |  |  |  |  |  |  |  |  | 59,519 |
Available-for-sale investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed-rate debt investments |  |  | 2,854,682 |  |  |  |  |  |  |  |  |  |  |  | 10,414 |  |  |  |  |  |  |  | 2,865,096 |
Adjustable-rate debt investments |  |  | 1,568,812 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (269 | ) |  |  | 1,568,543 |
Equity investments |  |  | 42,137 |  |  |  |  |  |  |  |  |  |  |  | 3,371 |  |  |  |  |  |  |  | 45,508 |
Long-term investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Held-to-maturity investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed-rate investments |  |  | 545,930 |  |  |  | — |  |  |  | (14,612 | ) |  |  |  |  |  |  |  |  |  |  | 531,318 |
Available-for-sale investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt investment |  |  | 272,680 |  |  |  |  |  |  |  |  |  |  |  | — |  |  |  |  |  |  |  | 272,680 |
Equity investment |  |  | 124,000 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (8,079 | ) |  |  | 115,921 |
|  | As of December 31, 2015 |
|  | Cost or amortized cost |  |  | Gross unrecognized holding gains |  |  | Gross unrecognized holding losses |  |  | Gross unrealized gains |  |  | Gross unrealized losses |  |  | Fair value |  |  | Fair value |
| RMB |  |  | RMB |  |  | RMB |  |  | RMB |  |  | RMB |  |  | RMB |  |  | US$ |
|  | (In thousands) |
Short-term investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Held-to-maturity investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed-rate investments |  |  | 36,942,840 |  |  |  | 197,848 |  |  |  | (6,592 | ) |  |  |  |  |  |  |  |  |  |  | 37,134,096 |  |  |  | 5,732,517 |
Available-for-sale investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed-rate debt investments |  |  | 6,872,077 |  |  |  |  |  |  |  |  |  |  |  | 86,322 |  |  |  |  |  |  |  | 6,958,399 |  |  |  | 1,074,192 |
Adjustable-rate debt investments |  |  | 13,137,500 |  |  |  |  |  |  |  |  |  |  |  | 187,885 |  |  |  |  |  |  |  | 13,325,385 |  |  |  | 2,057,085 |
Equity investment |  |  | 600,543 |  |  |  |  |  |  |  |  |  |  |  | 142,075 |  |  |  |  |  |  |  | 742,618 |  |  |  | 114,640 |
Long-term investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Held-to-maturity investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed-rate investments |  |  | 1,838,953 |  |  |  |  |  |  |  | (32,507 | ) |  |  |  |  |  |  |  |  |  |  | 1,806,446 |  |  |  | 278,867 |
Available-for-sale investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity investments |  |  | 322,269 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (45,304 | ) |  |  | 276,965 |  |  |  | 42,756 |

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