Yahoo 2001 Annual Report Download - page 19

Other income (loss), net was $77.1 million, $(33.7) million, and $37.7 million for 2001, 2000, and 1999.
The increase from 2000 to 2001 was primarily the result of the smaller net investment loss of $26.6 mil-
lion (which includes a gain of $5.2 million related to the sale of certain equity instruments) in 2001 com-
pared to $118.9 million (which includes a gain of $40.8 million related to the exchange of certain equity
investments) in 2000, $9.0 million of income related to a contract termination fee in 2001, and inter-
est income on our larger average investment balance in 2001. The amounts were partially offset by
declining interest rates and foreign exchange losses. The decrease from 1999 to 2000 was primarily the
result of net investment losses of $118.9 million, partially offset by interest income from a higher aver-
age investment balance.
Other income (loss), net in future periods may fluctuate as a result of changes in our average invest-
ment balances held, changes in market rates or the sale of investments, and investment impairments.
Minority Interests in Operations of Consolidated Subsidiaries. Minority interests in operations of consolidated
subsidiaries represents the minority partners’ percentage share of income or losses from such subsidiaries.
Minority interests in income from operations of consolidated subsidiaries was $0.7 million, $5.3 mil-
lion, and $2.5 million for 2001, 2000, and 1999. The change from 2000 to 2001 was due to lower prof-
its within the consolidated affiliates which was attributable to weaker economic climates in Europe and
Korea. The change from 1999 to 2000 was attributable to the increased profits in the joint ventures.
Income Taxes. The provision for income taxes for 2001, 2000, and 1999 differs from the amount com-
puted by applying the statutory federal rate principally due to a change in valuation allowance related to
nondeductible impairment write-downs of certain of our equity investments, foreign losses not benefited,
non-deductible costs related to acquisitions, nondeductible amortization charges related to acquisitions,
nondeductible stock-based compensation charges, nontaxable re-organizational gains resulting from
exchanges of certain equity investments, and a change in income tax regulations resulting in the recog-
nition of certain acquired loss carryforward benefits.
Business Segment Results
We conduct business globally and manage it geographically. Our segments for financial reporting purposes
are the United States and International. Management relies on an internal management reporting process
that provides segment EBITDA information for making financial decisions and allocating resources.
Segment EBITDA information includes income from operations before certain unallocated operating costs
and expenses, including stock compensation expense, amortization of intangibles, depreciation, restruc-
turing costs, and acquisition-related costs. We believe that segment EBITDA is an appropriate measure
of evaluating the operating performance of our segments. However, segment EBITDA should be consid-
ered in addition to, not as a substitute for or superior to, operating income, cash flows or other measures
of financial performance prepared in accordance with generally accepted accounting principles.
Revenue is attributed to individual countries according to the international online property that gen-
erated the revenue. No single foreign country accounted for more than 10% of net revenues in 2001, 2000,
and 1999.
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Summarized information by segment for 2001, 2000, and 1999, as excerpted from the internal
management reports, is as follows (dollars in thousands):
Years Ended December 31, 2001 (2) 2000 (2) 1999 (2)
Net revenues:
United States $594,332 83% $ 941,266 85% $532,731 90%
International 123,090 17% 168,912 15% 59,055 10%
Total net revenues $717,422 $1,110,178 $591,786
Segment EBITDA(1):(3) (3) (3)
United States $ 72,186 12% $ 401,485 43% $186,125 35%
International (28,564) (23%) 9,120 5% 3,461 6%
Total segment EBITDA $ 43,622 6% $ 410,605 37% $189,586 32%
(1) Segment EBITDA includes income from operations before certain unallocated operating costs and expenses, including stock com-
pensation expense, amortization of intangibles, depreciation, restructuring costs, and acquisition-related costs.
(2) Percent of Total net revenues.
(3) Segment EBITDA margin.
United States. United States revenues in 2001 decreased $346.9 million, or 37%, in absolute dollars as
well as decreased as a percentage of net revenues primarily due to the overall softening of the global econ-
omy, which significantly impacted many of our customers’ marketing budgets. United States revenues in
2000 increased in absolute dollars by $408.5 million, or 77%, yet decreased as a percentage of revenues.
The absolute dollar growth was attributable to the increased number of advertisers and size of advertis-
ing contracts purchased on our site during 2000, while the decrease as a percentage of revenue was attrib-
utable to the expansion of our international markets. United States segment EBITDA decreased $329.3
million, or 82%, in absolute dollars from 2000 to 2001, primarily as a result of decreased net revenues
due to the softening of the online advertising market. The United States segment EBITDA decreased in
absolute dollars less than revenues in 2001 due to cost savings obtained through a reduction in discre-
tionary spending and the 2001 Restructuring programs. United States segment EBITDA increased $215.4
million, or 116%, in absolute dollars from 1999 to 2000, due to the increase in revenues as a result of
stronger economic conditions and capital markets during that period, partially offset by investment in our
employees, brand building and infrastructure costs.
International. International revenues in 2001 decreased $45.8 million, or 27%, in absolute dollars prima-
rily due to the decline in international advertising which occurred across all international markets during
2001. International revenues in 2000 increased in absolute dollars by $109.9 million, or 186%, due to
extending our reach and product offerings in international markets and expanding into additional coun-
tries during 1999 and 2000, to cover most major advertising regions. International segment EBITDA
decreased $37.7 million, or 413%, in absolute dollars from 2000 to 2001, primarily as a result of the
decline in advertising revenues, offset partially by reduced discretionary spending. International segment
EBITDA increased $5.7 million, or 164%, in absolute dollars from 1999 to 2000 which was considerably
less than our growth in revenues as we invested in our international operations.
Acquisitions
In January 2001, we completed the acquisition of Kimo.com, a Taiwanese Internet communications and
media company, for a total purchase price of $157.4 million. During 2001, we also acquired other compa-
nies, for an aggregate purchase price of $31.9 million, that were not significant to our financial position