Yahoo 2006 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
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  • Page 3
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  • Page 4
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  • Page 5
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  • Page 6
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  • Page 7
    ... on the Internet. We are already a major ad network through our search marketing affiliate relationships. We intend to build on this strong base by creating a network in display and listing advertising. We took strong steps in this direction in 2006 and early 2007 through the agreements we struck...

  • Page 8
    ... the #1 personalized start page on the Web, continued to lead their categories. Through a landmark agreement with Microsoft, interoperability between Yahoo! Messenger and Windows Live Messenger formed the largest instant messenger community, approaching 350 million user Yahoo! Answers, Flickr, del...

  • Page 9
    GOV]]/\aeS`aPSQO[S]\S]TbVS[]ab acQQSaaTcZ^`]^S`bWSa]\bVS7\bS`\Sb´ Xcab]dS`OgSO`OTbS`WbZOc\QVSR7b\]e Obb`OQbaO^^`]fW[ObSZg'[WZZW]\c\W_cS []\bVZgcaS`ae]`ZReWRSEWbVbVS Q]\bW\cSRacQQSaa]T/\aeS`a7PSZWSdS GOV]]VOaO`SOZ]^^]`bc\Wbgb]QVO\US bVSUO[SW\aSO`...

  • Page 10
    ]TESPZW\YaGOV]]]\SASO`QVWa\]e OdOWZOPZS]\&&^S`QS\b]T[]PWZS^V]\Sa W\bVSCAO\ReWZZX]W\GOV]];OWZOaO YSgTSObc`S]\/^^ZS¸aW>V]\S Sd]ZdW\UObO`O^WR^OQSeWbV&[WZZW]\ []`ScaS`aSf^SQbSRb]Q][S]\ZW\SPg O\R]\ZW\SORdS`bWaW\U^`SRWQbSRb] U`]eT`][!PWZZW...

  • Page 11
    ...the aggregate market value of voting stock held by non-affiliates of the Registrant, based upon the closing sales price for the Registrant's common stock, as reported in the NASDAQ Stock Market, was $41,812,571,856. Shares of common stock held by each officer and director and by each person who owns...

  • Page 12
    ...Issuer Purchases of Equity Securities ...ITEM 6 Selected Financial Data ...ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations . . ITEM 7A Quantitative and Qualitative Disclosures about Market Risk ...ITEM 8 Financial Statements and Supplementary Data ...ITEM...

  • Page 13
    ...our key accomplishments during 2006 directed at furthering our objective of providing essential and relevant Internet services to users and advertisers: Established new alliances and partnerships: • Formed a strategic partnership with Seven Network Limited, a leading media company in Australia, to...

  • Page 14
    ... Yahoo! Mail, Yahoo! Search and Yahoo! Photos, plus quick access to their personalized Internet content. • Launched our enhanced Maps product, with an improved user interface, which provides users an interactive look and feel with new features such as multi-point driving directions, local content...

  • Page 15
    ...Web Hosting, Yahoo! Business Mail and our e-commerce platform called Yahoo! Merchant Solutions. By integrating one of the leading hosting solutions with business critical services and information, Yahoo! enables customers to easily get online, sell online, and market and promote online. Yahoo! Local...

  • Page 16
    ... for users, advertisers and developers and to enrich people's lives by enabling them to find, use, share and expand all human knowledge. In the newly emerging areas of social search and media, our goal is to create the world's most valued communities, large and small, to enable people to connect and...

  • Page 17
    ... for Internet Explorer which allows users to more easily customize their toolbar and make customized buttons for one click access to any website. Yahoo! Search on Mobile enables users to access web, image and local search on their wireless devices. In 2006, we launched paid mobile advertising, thus...

  • Page 18
    ...comparison shopping. Autos Yahoo! Autos enables users to research, price and compare cars online. Information and services available free of charge to our users include vehicle pricing, specification and option information, used car listings, expert reviews, user reviews and ratings, car comparisons...

  • Page 19
    ...," community news video content provided by users. Yahoo! Finance provides a comprehensive set of financial resources that range from investment and company information to personal financial management tools. Free tools are provided to help users manage their personal finances as well as gather data...

  • Page 20
    ... original talent on the Internet and to bring original, high quality user generated video content to our users. Yahoo! Games offers free classic board, card, arcade and word games along with downloadable games, game strategy guides, shopping guides, gaming news, tournaments, leagues and reviews...

  • Page 21
    ... custom plug-ins, which are free mini applications that users can add to their IM to make it more personalized and interactive. Communities Yahoo! Communities helps users build and manage identity and relationships, and includes properties such as Groups, 360â„¢, Message Boards and Photos. Yahoo...

  • Page 22
    ... Internet content to enhance the television viewing experience. Yahoo! PC Desktop - Yahoo! PC Desktop services makes it easy for users to keep up-to-date on and to interact with their Yahoo! services and other Internet based information on PC desktop without using an Internet browser application...

  • Page 23
    ...compete for customers, users and advertisers with many other providers of online services, including web businesses where expertise in a particular market segment may provide a competitive advantage and with social media and networking competitors. Internationally, we compete with local portals that...

  • Page 24
    ...of developers have used and built upon technology from Yahoo! services, including Yahoo! Search, Yahoo! Photos and Yahoo! Maps, to further increase the relevance of Yahoo! products and services for individual users and the greater community. Our engineering and production teams are primarily located...

  • Page 25
    ...which are key to our business and operating results. Additionally, Google offers many other services that directly compete with our services, including a consumer e-mail service, desktop search, local search, instant messaging, photos, maps, shopping services and advertising solutions. Microsoft has...

  • Page 26
    ..., services and content to end users or increase our costs of doing so, our revenues could decline. We also compete for customers, users and advertisers with many other providers of online services, including destination websites and social media and networking sites. Some of these competitors may...

  • Page 27
    ... financial, technical, marketing or other resources. As a result of these and other competitive factors, the Internet access providers with which we have formed alliances may not be able to attract, grow or retain their customer bases, which would negatively impact our ability to sell customized...

  • Page 28
    ...shorter-term purchases, or that market prices for online advertising will not decrease due to competitive or other factors. In addition, there can be no assurance that the volume of searches conducted, the amounts bid by advertisers for search marketing listings or the number of advertisers that bid...

  • Page 29
    ... our success. In addition, as new methods for accessing the Internet become available, including through alternative devices, we may need to enter into amended content agreements with existing third-party content providers to cover the new devices. Also, to the extent that Yahoo! develops content of...

  • Page 30
    ... of Internet, mobile, and Voice over Internet Protocol services both domestically and internationally. The application of existing domestic and international laws and regulations to Yahoo! relating to issues such as user privacy and data protection, defamation, pricing, advertising, taxation...

  • Page 31
    ... to the collection, use, sharing or security of personal information or other privacy-related matters could result in a loss of user confidence in us, damage to the Yahoo! brands, and ultimately in a loss of users, partners or advertisers, which could adversely affect our business. A large number of...

  • Page 32
    ... considerable resources to provide a variety of premium services, which may not prove to be successful in generating significant revenue for us. We offer fee-based enhancements to many of our free services, including e-mail, personals, finance, games, music and sports. The development cycles...

  • Page 33
    ... both advertisers and premium service subscribers. We plan to expand operations in international markets in which we may have limited experience or rely on business partners. We plan to expand Yahoo! branded online properties and search offerings in international markets. We have currently developed...

  • Page 34
    ... our brand, business, operating results and financial condition. We may be subject to legal liability for online services. We host a wide variety of services that enable individuals and businesses to exchange information, generate content, advertise products and services, conduct business and engage...

  • Page 35
    ...store user data and track user preferences, together with the associated costs and potential loss of traffic, could harm our operating results, cash flows from operations and financial condition. Our business depends on the continued growth and maintenance of the Internet infrastructure. The success...

  • Page 36
    ... or other factors, in the Internet or network access or co-location services provided by these third-party providers or any failure of these third-party providers to handle current or higher volumes of use could significantly harm our business, operating results and financial condition. We have...

  • Page 37
    ... may begin charging users for copies of their player software or otherwise change their business model in a manner that slows the widespread acceptance of these products. In order for our rich media services to be successful, there must be a large base of users of these rich media products. We have...

  • Page 38
    ...Preferred Stock for $250 per unit. Under certain circumstances, if a person or group acquires 15 percent or more of our outstanding common stock, holders of the rights (other than the person or group triggering their exercise) will be able to purchase, in exchange for the $250 exercise price, shares...

  • Page 39
    ... claims alleging defamation or invasion of privacy, arising in connection with our e-mail, message boards, auction sites, shopping services and other communications and community features. On May 24, 2001, Arista Records, Inc., Bad Boy Records, BMG Music d/b/a The RCA Records Label, Capitol Records...

  • Page 40
    ... Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Yahoo! Inc. common stock is quoted on the Nasdaq Global Select Market under the symbol "YHOO." The following table sets forth the range of high and low per share sales prices as reported for each...

  • Page 41
    ... or registration under the Securities Act of 1933, as amended. Issuer Purchases of Equity Securities Stock repurchase activity during the three months ended December 31, 2006 was as follows: Total Number of Shares Purchased as Part of a Publicly Announced Program Approximate Dollar Value of Shares...

  • Page 42
    ... under that Section and shall not be deemed to be incorporated by reference into any filing of Yahoo! under the Securities Act of 1933, as amended or the Exchange Act. The following graph compares, for the five year period ended December 31, 2006, the cumulative total stockholder return for the...

  • Page 43
    ... or $0.22 per diluted share. Our net income for 2005 included gains related to sales of an investment of $580 million, net of tax; a gain related to the divestiture of Yahoo! China in connection with the Alibaba transaction of $205 million, net of tax; and a tax benefit of $248 million related to...

  • Page 44
    ... integrated our search and/or display advertising offerings into their websites. We offer a broad range of innovative and high quality Internet products and services that are designed to provide our users with the power to connect, communicate, create, access, and share information online. We seek...

  • Page 45
    ... example, when travel arrangements are booked through Yahoo! Travel. Fees Revenue. Fees revenue consists of revenues generated from a variety of consumer and business fee-based services, including Internet broadband services, premium mail, music and personals offerings, as well as services for small...

  • Page 46
    ... for acquisitions, including the strategic investments in Right Media Inc., an online advertising exchange, and Gmarket Inc., a retail e-commerce provider in South Korea. Cash used in financing activities in 2006 reflected our net cash used for direct and structured stock repurchases of $2.0 billion...

  • Page 47
    ...our relationship with Microsoft Corporation ("Microsoft"), which completed the transition of its United States search business in-house during 2006. Marketing services revenue for the year ended December 31, 2005 increased by approximately $1,467 million, or 47 percent, as compared to 2004. The year...

  • Page 48
    .... Our fee-based services include Internet broadband services, sports, music, games, personals, and premium mail offerings, as well as our services for small businesses. Average monthly revenue per paying user decreased to approximately $3.50 for the year ended December 31, 2006, compared to...

  • Page 49
    ..., number of searches, or other metrics are expensed based on the volume of the underlying activity or revenue multiplied by the agreed-upon price or rate. Other Cost of Revenues. Other cost of revenues consists of fees paid to third parties for content, Internet connection charges, data center costs...

  • Page 50
    ... of developed technology and intellectual property rights acquired resulted from our continued investments in, and acquisitions of, businesses and technology. Increased Internet connection charges and data center costs supported our growing audience of users, traffic, and new offerings on Yahoo...

  • Page 51
    ... and 22 percent in 2005 and 2004, respectively. We currently believe that sales and marketing expenses will increase in absolute dollars in 2007 compared to 2006, as we continue to grow and expand our reach to advertisers and users. Product Development. Product development expenses consist primarily...

  • Page 52
    ..., compared to a non-cash gain of $338 million recorded from the divesture of Yahoo! China in connection with the Alibaba transaction in the prior year. In the year ended December 31, 2006 there was an increase in interest and investment income over the prior period as higher average interest rates...

  • Page 53
    ...In 2005, we purchased the remaining outstanding shares of Yahoo! Europe and Yahoo! Korea from our partner in these ventures, and accordingly, these entities became our wholly owned subsidiaries. See Note 3 - "Acquisitions" in the consolidated financial statements for additional information. Business...

  • Page 54
    ... for the year ended December 31, 2005 increased approximately $1,014 million, or 38 percent, as compared to 2004. The year over year increases in 2006 and 2005 were a result of growth in advertising across the Yahoo! Properties, as well as growth from our fee-based services. Approximately 82 percent...

  • Page 55
    ...in cash and the contribution of Yahoo! China; • November 2005 - Purchase of the remaining outstanding shares of Yahoo! Europe and Yahoo! Korea for a total purchase price of $501 million; • January 2006 - Strategic partnership with Seven Network Limited, an Australian media company, to form Yahoo...

  • Page 56
    ... 31, 2005. During the year ended December 31, 2006, we invested $2.0 billion in direct and structured stock repurchases, $689 million in net capital expenditures, including $112 million for purchase of land in Santa Clara, California, and a net $142 million in acquisitions. The cash used for these...

  • Page 57
    ..., and $246 million in 2006, 2005, and 2004, respectively. Our capital expenditures have been primarily used for purchases and internal development of information technology assets and real estate to support our expanding offerings, our increased number of users and our international growth. Our...

  • Page 58
    ...financial statements for additional information. In October 2006, our Board of Directors authorized a new stock repurchase program for us to repurchase up to $3.0 billion of our outstanding shares of common stock from time to time over the next five years, depending on market conditions, share price...

  • Page 59
    ...contracts to provide sponsored search and/or display advertising services to our affiliates, which represent traffic acquisition costs. We are obligated to make payments under various arrangements with vendors and other business partners, principally for marketing, bandwidth and content arrangements...

  • Page 60
    ...financial statements. Revenue Recognition. Our revenues are generated from marketing services and fees. Marketing services revenue is generated from several offerings including: the display of textual, rich media advertisements, display of text based links to the advertiser's websites, listing based...

  • Page 61
    ... intangible assets based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our business model. Our estimates of future cash flows attributable to our other intangible assets require significant judgment based on...

  • Page 62
    ...159 on our financial position, cash flows, and results of operations. Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to the impact of interest rate changes, foreign currency fluctuations, and changes in the market values of our investments. Interest Rate Risk. Our...

  • Page 63
    ... and stock-based compensation expense would have been lower than we reported by $8 million. We are also exposed to foreign exchange rate fluctuations as we convert the financial statements of our foreign subsidiaries and our investments in equity interests into United States dollars in consolidation...

  • Page 64
    ... Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm ...Consolidated Statements of Income for each of the three years in the period ended December 31, 2006 ...Consolidated Balance Sheets as of December 31, 2005 and 2006 ...Consolidated Statements of Cash Flows...

  • Page 65
    ... changed its method of accounting for stock-based compensation in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment". Internal control over financial reporting Also, in our opinion, management's assessment, included in Management's Report on...

  • Page 66
    ... with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its...

  • Page 67
    ...with Statement of Financial Accounting Standards ("SFAS") No. 123R (revised 2004), "Share-Based Payment" ("SFAS 123R"), which the Company adopted on January 1, 2006. See Note 1 - "The Company and Summary of Significant Accounting Policies" and Note 12 - "Employee Benefits" for additional information...

  • Page 68
    Yahoo! Inc. Consolidated Balance Sheets December 31, 2005 2006 (In thousands, except par values) ASSETS Current assets: Cash and cash equivalents ...Marketable debt securities ...Accounts receivable, net of allowance of $41,857 Prepaid expenses and other current assets ...Total current assets ......

  • Page 69
    ... marketable equity securities ...Other investing activities, net ... Net cash used in investing activities ...CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock, net ...Repurchases of common stock ...Structured stock repurchases, net ...Excess tax benefits from stock-based...

  • Page 70
    ... stock, respectively, in connection with acquisitions. See Note 3 - "Acquisitions" for additional information. During the year ended December 31, 2005, the Company contributed its China based businesses ("Yahoo! China") as partial consideration for its investment in Alibaba.com Corporation ("Alibaba...

  • Page 71
    ......Gain in connection with business contribution ...Tax benefits from stock-based awards ...Structured stock repurchases, net ...Balance, end of year ...Deferred stock-based compensation Balance, beginning of year ...Common stock and stock-based awards issued and assumed ...Stock-based compensation...

  • Page 72
    Yahoo! Inc. Consolidated Statements of Stockholders' Equity - (Continued) Number of Outstanding Shares (in thousands) Common stock Balance, beginning of year ...Common stock and restricted stock issued...Repurchases of common stock ...Balance, end of year ... ... 1,321,408 62,176 - 1,383,584 1,383...

  • Page 73
    ... Internet destinations worldwide. Yahoo!'s mission is to connect people to their passions, their communities, and the world's knowledge. Stock Split. On April 7, 2004, the Yahoo! Board of Directors approved a two-for-one split of the Company's shares of common stock effected in the form of a stock...

  • Page 74
    ... for example, when travel arrangements are booked through Yahoo! Travel. Fees revenue consists of revenues generated from a variety of consumer and business fee-based services, including Internet broadband services, premium mail, music and personals offerings as well as services for small businesses...

  • Page 75
    ... method, the recorded stock-based compensation expense was related to the amortization of the intrinsic value of Yahoo! stock options and other stock-based awards issued by the Company and assumed in connection with business combinations. Options granted with exercise prices equal to the grant date...

  • Page 76
    ...-for-sale, as well as the Company's share of its equity investees foreign currency translation adjustments and unrealized gains and losses on marketable securities categorized as available-for sale. Cash and Cash Equivalents, Short and Long-Term Investments. The Company invests its excess cash in...

  • Page 77
    ...and records reductions in carrying values when necessary. The fair value of privately held investments is estimated using the best available information as of the valuation date, including current earnings trends, undiscounted cash flows, quoted stock prices of comparable public companies, and other...

  • Page 78
    ...convertible notes (using the if-converted method). For 2004, 2005, and 2006, approximately 50 million, 55 million, and 108 million options to purchase common stock, respectively, were excluded from the calculation, as the exercise prices were greater than the average market price of the common stock...

  • Page 79
    ...during the three years ended December 31, 2006 (in millions): Purchase Price Goodwill Amortizable Intangibles 2004 3721 ...Kelkoo ...Musicmatch ...Other acquisitions ...2005 Verdisoft ...Yahoo! Europe(*) and Yahoo! Korea...Other acquisitions ...Alibaba (see Note 4 - "Investments in Equity Interests...

  • Page 80
    ... of the purchase price to the assets acquired and liabilities assumed based on the fair values was as follows (in thousands): Cash acquired ...Other tangible assets acquired ...Amortizable intangible assets: Customer and advertiser related relationships ...Developed technology and patents ...Trade...

  • Page 81
    ... Financial Statements - (Continued) The allocation of the purchase price to the assets acquired and liabilities assumed based on the fair values was as follows (in thousands): Cash acquired ...Other tangible assets acquired ...Amortizable intangible assets: Customer, affiliate and advertiser...

  • Page 82
    .... The purchase price was $58 million and consisted of $54 million in cash consideration, $3 million related to stock options exchanged and $1 million of direct transaction costs. In connection with the acquisition, the Company also issued approximately 1 million shares of restricted stock valued at...

  • Page 83
    ... its Australian Internet business, Yahoo! Australia and New Zealand ("Yahoo! Australia"), and Seven contributed its online assets, television and magazine content, an option to purchase its 33 percent ownership interest in mobile solutions provider m.Net Corporation Ltd, and cash of $7 million...

  • Page 84
    ... Financial Statements - (Continued) The allocation of the purchase price of the Company's share of the assets acquired and liabilities assumed based on their fair values was as follows (in thousands): Cash acquired ...Other tangible assets acquired...Amortizable intangible assets: Customer...

  • Page 85
    ... its leading search capabilities with Alibaba's leading online marketplace and online payment system and Alibaba's strong local presence, expertise and vision in the China market. These factors contributed to a purchase price in excess of the Company's share of the fair value of Alibaba's net...

  • Page 86
    ... was amended in September 1997, whereby Yahoo! Japan Corporation ("Yahoo! Japan") was formed. Yahoo! Japan was formed to establish and manage a local version of Yahoo! in Japan. During the years ended December 31, 2005 and 2006, the Company received cash dividends from Yahoo! Japan in the amounts of...

  • Page 87
    .... Notes to Consolidated Financial Statements - (Continued) share of the results of Yahoo! Japan one quarter in arrears within earnings in equity interests. The fair value of the Company's approximate 34 percent ownership in Yahoo! Japan, based on the quoted stock price, was approximately $8 billion...

  • Page 88
    ... includes certain purchase price adjustments that affect existing goodwill. In the year ended December 31, 2005, this also includes a reduction of $59 million of goodwill related to the divestiture of Yahoo! China. See Note 4 - "Investments in Equity Interests" for additional information. In the...

  • Page 89
    Yahoo! Inc. Notes to Consolidated Financial Statements - (Continued) The intangible assets are all amortizable and have original estimated useful lives as follows: • Customer, affiliate and advertiser related relationships - three to seven years; • Developed technology and patents - two to five ...

  • Page 90
    ... (in thousands): 2005 2006 Accrued content, connection, traffic acquisition and other costs ...Deferred income taxes (Note 10)...Accrued compensation and related expenses ...Accrued taxes payable ...Accrued professional service expenses ...Accrued sales and marketing related expenses ...Accrued...

  • Page 91
    ... income (loss) were as follows (in thousands): 2004 2005 2006 Unrealized gains and losses on available-for-sale securities, net of tax ...Foreign currency translation, net of tax ...Accumulated other comprehensive income (loss) ...Note 8 INVESTMENTS $475,314 60,422 $535,736 $(16,218) (19...

  • Page 92
    ... Financial Statements - (Continued) December 31, 2005 2006 Reported as: Marketable debt securities ...Long-term marketable debt securities ...Other assets(*) ...Total ... $1,131,141 1,439,014 30,007 $2,600,162 $1,031,528 935,886 114,220(*) $2,081,634 Available-for-sale securities included in cash...

  • Page 93
    ... market price condition for convertibility of the Notes was satisfied with respect to the fiscal quarter beginning January 1, 2007 and ending on March 31, 2007. During this period holders of the Notes will be able to convert their Notes into shares of Yahoo! common stock at the rate of 48.78 shares...

  • Page 94
    ... to Consolidated Financial Statements - (Continued) stock for each Note. The Notes will also be convertible into shares of Yahoo! common stock in subsequent fiscal quarters, if any, with respect to which the market price condition for convertibility is met. As of December 31, 2006, the fair value of...

  • Page 95
    ... for financial reporting purposes and the amounts used for income tax purposes. The components of deferred income tax assets and liabilities are as follows (in thousands): December 31, 2005 2006 Deferred income tax assets: Net operating loss and tax credit carryforwards ...$ 1,277,269 Stock-based...

  • Page 96
    ..., the Company's Board of Directors authorized the repurchase of up to $3.0 billion of its outstanding shares of common stock over the next five years, dependent on market conditions, share price and other factors. Under this program, during the year ended December 31, 2005, the Company repurchased...

  • Page 97
    ..., and $13 million to its other benefit plans outside of the United States for 2004, 2005, and 2006, respectively. Stock-Based Compensation. Prior to January 1, 2006, the Company accounted for employee stock-based compensation using the intrinsic value method supplemented by pro forma disclosures in...

  • Page 98
    ... employment through the vesting period. Restricted stock award grants are generally measured at fair value on the date of grant based on the number of shares granted and the quoted price of the Company's common stock. Such value is recognized as an expense over the corresponding service period...

  • Page 99
    ...Internal Revenue Code limitations. The price of common stock purchased under the Purchase Plan is equal to 85 percent of the lower of the fair market value of the common stock on the commencement date of each 24-month offering period or the specified purchase date. The Purchase Plan provides for the...

  • Page 100
    Yahoo! Inc. Notes to Consolidated Financial Statements - (Continued) Stock option activity under the Company's Plans and Directors' Plan is summarized as follows (in thousands, except years and per share amounts): Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Life ...

  • Page 101
    ... statements of cash flows. The fair value of option grants is determined using the Black-Scholes option pricing model with the following weighted average assumptions: Stock Options Years Ended December 31, 2004 2005 2006 Purchase Plans(5) Years Ended December 31, 2004 2005 2006 Expected Risk-free...

  • Page 102
    Yahoo! Inc. Notes to Consolidated Financial Statements - (Continued) Restricted stock awards activity for the year ended December 31, 2006 is summarized as follows (in thousands, except per share amounts): Weighted Average Grant Date Fair Value Shares Awarded and unvested at December 31, 2003 ......

  • Page 103
    ... can exercise at the end of the initial lease term: (a) renewal of the lease for a defined number of years at the then fair market rental rate or at a slight discount to the fair market rental rate; (b) purchase of the property at the then fair market value; or (c) right of first offer to lease...

  • Page 104
    Yahoo! Inc. Notes to Consolidated Financial Statements - (Continued) Affiliate Commitments. In connection with contracts to provide sponsored search and/or display advertising services to affiliates, the Company is obligated to make payments, which represent traffic acquisition costs, to its ...

  • Page 105
    Yahoo! Inc. Notes to Consolidated Financial Statements - (Continued) claims alleging defamation or invasion of privacy, arising in connection with the Company's e-mail, message boards, auction sites, shopping services and other communications and community features. On May 24, 2001, Arista Records, ...

  • Page 106
    ... held by the Company to purchase Google shares that were received in connection with a June 2000 services agreement. In August 2004, Google issued 2.7 million shares of Class A common stock in settlement of the two disputes. The Company agreed to dismiss the 361 patent lawsuits and granted to Google...

  • Page 107
    ...international online property that generated the revenue. No single foreign country accounted for more than 10 percent of revenues in 2004, 2005, and 2006. The following table presents revenues for groups of similar services (in thousands): 2004 Years Ended December 31, 2005 2006 Marketing services...

  • Page 108
    ..., 2005, and 2006. Management believes that prices on agreements with related parties were comparable to those with other similarly situated customers of the Company. See Note 4 - "Investments in Equity Interests" for additional information related to transactions involving Yahoo! Japan and Alibaba...

  • Page 109
    ...of Expenses Recoveries (In thousands) Balance at End of Year Accounts receivable Allowance for doubtful accounts 2004 ...2005 ...2006 ... $ 31,961 34,215 ...income tax assets arising from unrealized excess tax benefits from stock-based awards and their related valuation allowance, in connection with ...

  • Page 110
    ... and $0.39 per diluted share, related to sales of an investment. The net income for the quarter ended December 31, 2005 includes a gain, net of tax, of $205 million or $0.15 per basic share and $0.14 per diluted share with respect to the divestiture of Yahoo! China and a tax benefit of $248 million...

  • Page 111
    ... affect, the Company's internal control over financial reporting. Item 9B. Other Information None. Part III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item is incorporated by reference to Yahoo!'s Proxy Statement for its 2007 Annual Meeting of...

  • Page 112
    ... to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2006. Item 14. Principal Accountant Fees and Services The information required by this item is incorporated by reference to Yahoo!'s Proxy Statement for its 2007 Annual Meeting of Stockholders to be filed...

  • Page 113
    ...Regulation S-K): Exhibit Number Description Stock Purchase and Contribution Agreement, dated as of August 10, 2005, by and between Yahoo! Inc. and Alibaba.com Corporation (Filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K, filed August 16, 2005 and incorporated herein by reference...

  • Page 114
    ...-K for the year ended December 31, 2002 and incorporated herein by reference.) 10.7 Yahoo! Japan License Agreement dated April 1, 1996 by and between the Registrant and Yahoo! Japan Corporation (Filed as Exhibit 10.43 to Amendment No. 2 to the Registrant's Registration Statement on Form S-3 filed on...

  • Page 115
    ... 10.29 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2004 [the December 31, 2004 10-K] and incorporated herein by reference.) Amendment No. 2 to Yahoo! Japan License Agreement dated January 31, 2005 by and between the Registrant and Yahoo! Japan Corporation (Filed as...

  • Page 116
    ... the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Signature Title Date /s/ TERRY SEMEL Terry Semel Chairman and Chief Executive Officer (Principal Executive Officer) Executive Vice President, Finance and Administration and Chief Financial Officer...

  • Page 117
    Signature Title Date /s/ ARTHUR KERN Arthur Kern Director February 23, 2007 /s/ ROBERT KOTICK Robert Kotick /s/ EDWARD KOZEL Edward Kozel /s/ GARY WILSON Gary Wilson JERRY YANG Jerry Yang Director ...

  • Page 118
    ... to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods...

  • Page 119
    ... to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods...

  • Page 120
    ...Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Annual Report on Form 10-K of Yahoo! (the "Company") for the year ended December 31, 2006 as filed with the Securities and Exchange Commission on the date...

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