Yahoo 2007 Annual Report Download - page 83

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September 30,
2006
June 30,
2007
Balance sheet data:
(*)
Current assets .......................................... $ 525,176 $ 625,392
Long-term assets . . ..................................... $1,838,053 $1,912,392
Current liabilities . . ..................................... $ 246,309 $ 368,489
Long-term liabilities ..................................... $ 18,261 $ 14,423
(*)
The Company records its share of the results of Alibaba one quarter in arrears within earnings in equity interests in the consolidated
statements of income. Accordingly, the Company has recorded its share of Alibaba’s results through September 30, 2007. As
described below, Alibaba Group’s business-to-business e-commerce subsidiary, Alibaba.com Limited (“Alibaba.com”), issued
securities in November 2007 on the Hong Kong Stock Exchange (the “Exchange”). Under the Exchange’s reporting requirements,
Alibaba.com has to-date publicly reported their financial results through June 30, 2007. Accordingly, the Company is only able to
include the results of Alibaba in the above table for the nine month period ended June 30, 2007 in order to avoid premature disclosure of
Alibaba.com’s financial performance.
Relating to its investment in Alibaba, as of December 31, 2006 and 2007, the Company has recorded $34 million
and $60 million, respectively, as its share of losses since acquiring its equity interest, net of tax, in retained earnings.
The Company also has commercial arrangements with Alibaba to provide technical, development, and advertising
services. For the years ended December 31, 2006 and 2007, respectively, these transactions were not material.
See Note 17 — “Subsequent Events” for additional information related to the Company’s investment in the Alibaba
Group.
Equity Investment in Alibaba.com Limited. As part of the November 6, 2007 initial public offering on the Hong
Kong Stock Exchange of the Alibaba.com, the Company purchased 57,481,000 shares, or approximately 1 percent,
of Alibaba.com for the total purchase price of approximately $101 million, including $1 million of transaction
costs. Due to the Company’s investment in Alibaba Group, which has a controlling interest in Alibaba.com, the
investment in Alibaba.com is being accounted for using the equity method and the total investment is classified as
part of the investment in equity interests balance in the consolidated balance sheet. The Company will record its
share of the results of Alibaba.com one quarter in arrears within earnings in equity interests in the consolidated
statements of income commencing in the first quarter of 2008. The fair value of the Company’s approximate
1 percent ownership in Alibaba.com, based on the quoted stock price, was approximately $104 million as of
December 31, 2007.
Equity Investment in Yahoo! Japan. During April 1996, the Company signed a joint venture agreement with
SOFTBANK, which 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, 2006 and 2007, the Company received cash dividends from Yahoo! Japan in the amounts of
$13 million and $15 million, respectively, which were recorded as reductions in the Company’s investment in
Yahoo! Japan. The Company also has commercial arrangements with Yahoo! Japan, consisting of services,
including algorithmic search services and sponsored search services and the related TAC (until the Company
completed the sale of Overture Japan in September 2007) and license fees. The net cost of these arrangements was
approximately $171 million, $246 million, and $135 million for the years ended December 31, 2005, 2006 and
2007, respectively. As of December 31, 2006 and 2007, the Company has a net payable balance to Yahoo! Japan of
approximately $10 million and a net receivable balance from Yahoo! Japan of approximately $62 million,
respectively.
The investment in Yahoo! Japan is being accounted for using the equity method and the total investment is classified
as part of the investments in equity interests balance on the consolidated balance sheets. The fair value of the
Company’s approximate 34 percent ownership in Yahoo! Japan’s common stock, based on the quoted stock price,
was approximately $9.0 billion as of December 31, 2007.
81
Yahoo! Inc.
Notes to Consolidated Financial Statements — (Continued)