Yahoo 2008 Annual Report Download - page 46

value and recorded a goodwill impairment charge of approximately $488 million. The fair values of our other
reporting units exceeded their carrying values by a significant margin and therefore goodwill in those reporting
units was not impaired. The goodwill impairment in our European reporting unit resulted from a combination of
factors, including the current global economic downturn, a persistent decline in business conditions in the region,
reductions in our projected operating results and estimated future cash flows, and decreases in revenue and
earnings multiples of comparable companies in the region.
Significant changes in the economic environment and our operating results may result in future impairment of
our reporting units. See Note 5—“Goodwill” in the Notes to the consolidated financial statements for additional
information. We had no goodwill impairment charges in the years ended December 31, 2007 or 2006.
Other Income, Net. Other income, net was as follows (in thousands):
Years Ended December 31, 2006-2007
Dollar Change
2007-2008
Dollar Change2006 2007 2008
Interest and investment income ............. $143,310 $129,541 $ 86,056 $(13,769) $(43,485)
Investment gains (losses), net ............... (3,527) 1,730 (351) 5,257 (2,081)
Gain on divestiture of Yahoo! China ......... 15,158 8,066 — (7,092) (8,066)
Gain on sale of Overture Japan .............. — 6,175 — 6,175 (6,175)
Gain on sale of Kelkoo SAS ................ — — 25,149 — 25,149
Other .................................. 2,093 8,499 (28,016) 6,406 (36,515)
Total other income, net ................ $157,034 $154,011 $ 82,838 $ (3,023) $(71,173)
Other income, net was $83 million for the year ended December 31, 2008, a decrease of $71 million, as
compared to 2007. Interest and investment income for the year ended December 31, 2008 decreased $43 million
due to lower average interest rates, compared to 2007. In the year ended December 31, 2008, higher average
invested balances for 2008, as compared to 2007, were offset by lower average interest rates of 2.8 percent in
2008, compared to 4.3 percent in 2007. Other decreased by $37 million for the year ended December 31, 2008, as
compared to 2007, primarily due to foreign exchange re-measurement of assets and liabilities denominated in
non-functional currencies. Other income, net for the year ended December 31, 2007 included a $6 million gain
from the sale of Overture Japan and an $8 million non-cash gain arising from the reduction in our ownership in
Alibaba Group, which was treated as an incremental sale of additional equity interests in Yahoo! China. Other
income, net for the year ended December 31, 2008 included a $25 million gain from the sale of Kelkoo SAS.
Other income, net was $154 million for the year ended December 31, 2007, a decrease of $3 million, as
compared to 2006. In the year ended December 31, 2007, there was an increase in interest offset by a decrease in
investment income, as compared to 2006 as higher average interest rates were more than offset by lower average
invested balances. The average interest rate was approximately 4.3 percent in 2007, compared to 3.9 percent in
2006. Our foreign currency transaction gains, net also increased $7 million for the year ended December 31,
2007. Additionally, our recorded non-cash gain arising from the reduction in our ownership in Alibaba Group,
which was treated as an incremental sale of additional equity interests in Yahoo! China, was $8 million for the
year ended December 31, 2007, compared to non-cash gains of $15 million for this item in 2006 as a result of a
reduction in our ownership in Alibaba Group from approximately 46 percent to 44 percent in 2006 and from 44
percent to 43 percent in 2007.
Other income, net may fluctuate in future periods due to changes in our average investment balances, changes in
interest and foreign exchange rates, realized gains and losses on investments, and impairments of investments.
Income Taxes. The provision for income taxes for the year ended December 31, 2008 differs from the amount
computed by applying the federal statutory income tax rate primarily due to state taxes, the effect of
non-U.S. operations, non-deductible stock-based compensation expense, increase in valuation allowance, and a
non-deductible goodwill impairment charge.
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