Yahoo 2006 Annual Report Download - page 55

International revenues accounted for approximately 32 percent of total revenues during 2006 as compared to
30 percent during 2005 and 26 percent during 2004. The strong performance of our international operations has
increased our exposure to foreign currency fluctuations. Revenues and related expenses generated from our
international subsidiaries are generally denominated in the currencies of the local countries. Primary currencies
include Euros, British Pounds, Japanese Yen, Korean Won, and Australian Dollars. The statements of income of our
international operations are translated into United States dollars at the average exchange rates in each applicable
period. To the extent the United States dollar strengthens against foreign currencies, the translation of these foreign
currency denominated transactions results in reduced revenues, operating expenses and net income for our
International segment. Similarly, our revenues, operating expenses and net income will increase for our Inter-
national segment if the United States dollar weakens against foreign currencies. The application of our 2005
average foreign currency exchange rates to our international revenues and segment operating income before
depreciation, amortization and stock-based compensation expense in 2006 would have had an immaterial impact on
our reported results. Using the average foreign currency exchange rates in the year ended December 31, 2004, our
international revenues for 2005 would have been lower than we reported by approximately $42 million and our
international segment operating income before depreciation, amortization and stock-based compensation expense
would have been lower than we reported by $8 million.
Transactions
Significant acquisitions and strategic investments completed in the last three years include the following:
•January 2004 — 3721, a Hong Kong-based software development company focused on keyword search tech-
nology for a total purchase price of $95 million. In October 2005, we subsequently divested 3721 as part of
Yahoo! China which was partial consideration for our investment in Alibaba;
•April 2004 — Kelkoo, a European online comparison shopping service for a total purchase price of $571 million;
•October 2004 — Musicmatch, a provider of personalized music software and services for a total purchase price
of $158 million;
•February 2005 — Verdisoft, a software development company for a purchase price of $58 million and issuance of
restricted stock valued at $35 million;
•October 2005 — Strategic investment of approximately 46 percent (40 percent on a fully diluted basis) in the
outstanding common stock of Alibaba, an e-commerce company based in China in exchange for $1.0 billion 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! 7 to which we contributed our Australian Internet business Yahoo! Australia and New Zealand
(“Yahoo! Australia”), and Seven contributed its online assets, television and magazine content and cash of
$7 million;
•June 2006 — Investment of approximately 10 percent interest in Gmarket Inc., a retail e-commerce provider in
South Korea, for a total purchase price of $61 million; and
•October 2006 — Investment of approximately 20 percent interest in Right Media Inc., an online advertising
exchange.
See Note 3 — “Acquisitions” and Note 4 — “Investments in Equity Interests” in the consolidated financial
statements for additional information relating to these and other acquisitions.
We expect to continue to evaluate possible acquisitions of, or strategic investments in, businesses, products, and
technologies that are complementary to our business, which may require the use of cash.
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