Yahoo 2004 Annual Report Download - page 48

Recent Accounting Pronouncements
In March 2004, the Emergency Issues Task Force (‘‘EITF’’) reached a consensus on EITF Issue No. 03-01, ‘‘The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments’’ (‘‘EITF 03-01’’). EITF
03-01 provides guidance on the meaning of ‘‘other-than-temporary’’ impairment and its application to certain marketable
debt and equity securities accounted for under FASB Statement No. 115 ‘‘Accounting for Certain Investments in Debt
and Equity Securities’’ and non-marketable securities accounted for under the cost method. The EITF developed a basic
three-step model to evaluate whether an investment is other-than-temporarily impaired. In September 2004, the FASB
issued FASB Staff Position EITF 03-01-1, which delays the effective date until additional guidance is issued for the
application of the recognition and measurement provisions of EITF 03-01 to investments in securities that are impaired.
However, the disclosure requirements are effective for annual periods ended after June 15, 2004 and have been reflected
in Note 7 – ‘‘Investments’’ in the Financial Statements. We are currently evaluating the effect of this proposed statement
on our results of operations and financial position.
In December 2004, the FASB issued Statement No. 123R, ‘‘Share-Based Payment,’’ which requires companies to recog-
nize in the statement of operations all share-based payments to employees, including grants of employee stock options,
based on their fair values. Accounting for share-based compensation transactions using the intrinsic method supplemented
by pro forma disclosures will no longer be permissible. The new statement will be effective for public entities in periods
beginning after June 15, 2005. We have not yet completed our analysis of the impact of adopting FASB Statement
No. 123R and therefore we are currently unable to quantify its effect on our results of operations. However, we know
that the adoption of this new statement will have a significant impact on the results of operations and net income per
share as we will be required to expense the fair value of all share based payments.
Liquidity and Capital Resources
As of and for the years ended December 31, (dollars in thousands):
2002 2003 2004
Cash and cash equivalents $ 234,073 $ 415,892 $ 823,723
Marketable debt securities 1,299,965 2,150,323 2,918,539
Total cash, cash equivalents and marketable debt securities $1,534,038 $2,566,215 $3,742,262
Percentage of total assets 55% 43% 41%
Net cash provided by operating activities $ 302,448 $ 428,144 $1,089,821
Net cash used in investing activities (384,007) (1,342,337) (1,292,849)
Net cash provided by (used in) financing activities (21,810) 1,086,326 580,967
The Company’s operating activities for each year in the three years ended December 31, 2004 have generated adequate
cash to meet our operating needs. As of December 31, 2004, we had cash, cash equivalents, and marketable debt
securities totaling $3.7 billion, an increase of $1.1 billion compared to $2.6 billion as of December 31, 2003. The
principal components of the increase were cash generated from operating activities of $1.1 billion, proceeds of $503 mil-
lion from the sale of marketable equity securities and proceeds of $651 million from the exercise of employee stock
options, partially offset by cash used for acquisitions of $756 million, capital expenditures of $246 million and $70 mil-
lion for share repurchase activities. Our investments in marketable equity securities which totaled $816 million as of
December 31, 2004 are not included above.
As of December 31, 2004, approximately $45 million of earnings held by the Company’s foreign subsidiaries are
designated as indefinitely invested outside the United States. If these funds were required for our operations in the
United States, we would be required to accrue and pay additional taxes to repatriate these funds. Currently, we do not
anticipate a need to repatriate these funds to our United States operations.
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