Yahoo 2005 Annual Report Download - page 84

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78
of $11 million which was recorded as a reduction in the Company’s investment in Yahoo! Japan. As of
December 31, 2004 and 2005, the Company had a net payable balance to Yahoo! Japan of approximately
$30 million and $7 million, respectively.
The investment in Yahoo! Japan is being accounted for using the equity method. The fair value of the
Company’s approximate 34 percent ownership in Yahoo! Japan, based on the quoted stock price, was
approximately $15 billion as of December 31, 2005.
Prior to and during 2001, Yahoo! Japan acquired the Company’s equity interests in certain entities in
Japan for total consideration of approximately $65 million, paid partially in shares of Yahoo! Japan
common stock and partially in cash. As a result of the acquisition, the Company increased its investment
in Yahoo! Japan, which resulted in approximately $41 million of goodwill to be amortized over seven years.
The amortization ceased upon the adoption of SFAS 142 on January 1, 2002. The carrying amount of the
Company’s investment in Yahoo! Japan differs from the amount of the underlying equity in net assets of
Yahoo! Japan primarily as a result of this goodwill.
As of December 31, 2005 and 2004, the Company had $304 million and $176 million, respectively, included
in retained earnings relating to its investment in Yahoo! Japan.
The Company records its share of the results of Yahoo! Japan one quarter in arrears within earnings in
equity interests. The following table presents Yahoo! Japan’s condensed financial information, as derived
from the Yahoo! Japan financial statements for the 12 months ended September 30, 2003, 2004, and 2005
and as of September 30, 2004 and 2005 (in thousands):
Twelve Months Ended September 30,
2003 2004 2005
Operating data:
Revenues $ 500,091 $ 868,281 $ 1,367,247
Gross profit $ 462,352 $ 810,114 $ 1,251,599
Income from operations $ 262,393 $ 470,681 $ 656,167
Net income $ 145,720 $ 290,576 $ 382,287
September 30,
2004 2005
Balance sheet data:
Current assets $ 622,794 $ 900,149
Long-term assets $ 291,566 $ 469,077
Current liabilities $ 192,761 $ 306,441
Long-term liabilities $ 22,803 $ 19,663
The differences between United States and Japanese generally accepted accounting principles did not
materially impact the amounts reflected in the Company’s financial statements.