Yahoo 1997 Annual Report Download - page 24

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Incom e Tax e s. In com e taxes are computed using the a s s e t a n d lia b ilit y m e t h od . Un d e r t h e a s s e t a n d lia b ili-
ty method, deferred income tax asse t s a n d lia b ilit ie s a re d e t e rm in e d b a s e d on t h e d iffe re n ce s b e t w e e n t h e
financial report in g a nd tax bases of assets and liabilitie s a n d a re m e a s u re d u s in g t h e cu rre n t ly e n a ct e d t a x
rates and law s.
Stock-Bas e d Com pe n sation . The Company accounts for stock-based employee com p e n s a t ion a rra n g e m e n t s
in accordance w ith t h e provisions of Accounting Prin cip le s Board Opinion (“APB”) No. 25, “Accounting for
Stock Issued to Employees,” and complies w ith the disclosure provisions of SFAS 123, “Accou n t in g for St ock-
Based Compensation.” Under APB 25, compensation cost is recognize d ove r t h e ve s t in g p e riod b a s e d on t h e
difference, if any, on t h e d a t e of g ra n t b e t w e e n t h e fa ir va lu e of t h e Com p a n y’s s t ock a n d t h e a m ou n t a n
employee must pay to acquire the stock.
Fore ig n Curre n cy an d In te rn ation al Ope ration s. Th e fu n ct ion a l cu rre n cy of t h e Com p a n y’s s u b s id ia rie s in
the United Kin g d om , Ge rm a n y, Fra n ce , Sw e d e n , De n m a rk, Norw a y, Australia, Singapore, and Kore a is t h e
local currency. Th e fin a n cia l s t a t e m e n t s of t h e s e s u b s id ia rie s a re t ra n s la t e d t o Un it e d States dollars using
year-e n d ra t e s of e xch a n g e for a ssets and liabilities, and ave ra g e ra t e s for t h e ye a r for re ve n u e s , cos t s , a n d
expenses. Translation losse s , w hich are defe rre d a n d a ccu m u la t e d a s a com p on e n t of s h a re h old e rs ’ equity,
w ere $380,000 a n d $63,000 for t h e years ended December 31, 1997 a n d 1996, re s p e ct ive ly. Ne t g a in s a n d
losses resulting from foreign exchange transa ct ion s a re in clu d e d in t h e con s olid a t e d s t a t e m e n t s of op e ra t ion s
and w ere n ot s ig n ifica nt during the periods presented. Internationa l re ve n u e s h a ve a ccou n t e d for le s s t h a n
10% of net revenues in the years e n d e d De ce m b e r 31, 1997, 1996, a n d 1995. In t e rn a t ion a l a s s e t s w e re
n ot s ig n ifica n t a t De ce m b e r 31, 1997 or 1996.
Bas ic an d Dilute d Ne t Los s pe r Share . The Compa n y a d op t e d SFAS 128, “Ea rn in g s p e r Sh a re ” d u rin g t h e ye a r
ended December 31, 1997 and retroa ct ive ly re s t a t e d a ll p rior p e riod s . As a re s u lt of a d op t in g SFAS 128, t h e n e t
loss per share of $0.02 reported for the year ended De ce m b e r 31, 1995 in cre a s e d t o a b a s ic a n d d ilu t e d n e t los s
of $0.03. Basic earnings per share is computed using the w eighted ave ra g e n u m b e r of com m on s h a re s ou t -
standing during the period. Diluted earnings per sha re is com p u t e d u s in g t h e w e ig h t e d a ve ra g e n u m b e r of
common and common equivalent shares outstanding during the p e riod . Com m on e q u iva le n t s h a re s con s is t of
the incremental common shares issuable u p on con ve rs ion of t h e con ve rtible p re fe rre d s t ock (u s in g t h e if-
convert e d m e t h od ) a nd shares issuable upon the exercise of s t ock op t ion s a n d w arrants (using the t re a s u ry
stock method). Common equivalent shares are e xclu d e d from t h e com p u t a t ion if t h e ir e ffe ct is a n t i-d ilu t ive .
Use of Es tim ate s . The pre p a ra t ion of fin a n cia l s t a t e m e n t s in con form it y w it h g e n e ra lly a cce p t e d a ccou n t in g
principles requires management to ma ke e s t im a t e s a n d a s s u m p t ion s t h a t a ffe ct t h e re p orted a m ou n t s of
assets and liabilities, disclosure of contingent a s s e t s a n d lia b ilit ie s a t t h e d a t e of t h e fin a n cia l s t a t e m e n t s , a n d
the report e d a mounts of revenues and expenses during the re p orted pe riod . Act u a l re s u lt s cou ld d iffe r from
those estimates.
Rece nt Accoun tin g Pron oun ce ments . In J u n e 1997, t h e Fin a n cia l Accou n t in g St a n d a rd s Boa rd (“FASB” )
issued SFAS 130, “Re p orting Compre h e n s ive In com e .” SFAS 130 e s t a b lis h e s s t a n d a rd s for re p orting com p re -
hensive income and its components in a financia l s t a t e m e n t . Com p re h e n s ive in com e a s d e fin e d in clu d e s a ll
changes in equity (net assets) during a pe riod from n on -ow ner sources. Example s of it e m s t o b e in clu d e d in
comprehensive income, w hich are excluded from net income, include fore ig n cu rre n cy t ra n s la t ion a d ju s t m e n t s
and unrealized gains/losses on ava ila b le -for-sale securities. The disclosure p re s crib e d b y SFAS 130 m u s t b e
made beginning w ith t h e first quart e r of 1998. Ad d it ion a lly in J u n e 1997, the FASB is s u e d SFAS 131,
“Disclosures about Segments of an Enterprise a n d Re la t e d In form a t ion .” Th is s t a t e m e n t e s t a b lis h e s
standards for t h e w ay companie s re p ort information a b ou t op e ra t in g s e g m e n t s in a n n u a l fin a n cia l s t a t e m e n t s .
It also establishes standards for rela t e d d is clos u re s a b ou t p rod u ct s a n d s e rvice s , g e og ra p h ic a re a s , a n d
major customers. The Company has not yet determine d t h e im p a ct , if a n y, of a d op t in g t h is n e w s t a n d a rd .
The disclosures prescribed by SFAS 131 w ill b e e ffe ct ive for t h e ye a r e n d in g De ce m b e r 31, 1998 con s olid a t e d
financial statements.
NOTE 2 Balan ce She e t Com pon e nts
Decemb er 31,
1997 1996
Prop e rt y a n d e q u ip m e n t :
Com p u t e rs and equipment $ 6,815,000 $ 2,228,000
Fu rn it u re and fixtures 2,316,000 888,000
Leasehold improvements 855,000 290,000
9,986,000 3,406,000
Less: accumulated depreciation (2,951,000) (617,000)
$ 7,035,000 $ 2,789,000
Other Assets:
Investment in GeoCities $ 5,100,000 $ –
Investment in AudioNet 1,350,000 –
Other 1,680,000 –
$ 8,130,000 $ –
Accrued expenses and other current lia b ilit ie s :
Accrued vacation, w ages, and other employee bene fit s $ 2,838,000 $ 1,069,000
Accrued content and connect costs 2,909,000 754,000
Accrued sales and marketing rela t e d 2,144,000 250,000
Accrued professional service expense s 1,730,000 801,000
Other 2,860,000 1,844,000
$12,481,000 $ 4,718,000