Yahoo 2008 Annual Report Download - page 49

year ended December 31, 2008 includes restructuring charges of $107 million. U.S. operating income before
depreciation, amortization, and stock-based compensation expense for the year ended December 31, 2007
decreased $18 million, or 1 percent, as compared to 2006.
International. International revenues for the year ended December 31, 2008 decreased approximately $224
million, or 10 percent, compared to 2007. More than 95 percent of the international revenues decrease in 2008
came from marketing services revenues. The year-over-year decrease is the result of the sale of Overture Japan to
Yahoo! Japan which negatively impacted revenues by approximately $300 million. Previously, we earned search
marketing revenues from advertisers and paid TAC to Yahoo! Japan. In the third quarter of 2007, we initiated a
new commercial arrangement with Yahoo! Japan in which we now provide search marketing services to Yahoo!
Japan for a service fee. Under this new arrangement, we record marketing services revenues from Yahoo! Japan
for the provision of search marketing services based on a percentage of advertising revenues earned by Yahoo!
Japan for the delivery of sponsored search results. International operating income before depreciation,
amortization, and stock-based compensation expense for the year ended December 31, 2008 decreased $496
million, or 100 percent, as compared to 2007. The decrease in international operating income before
depreciation, amortization, and stock-based compensation year-over-year is primarily due to the $488 million
goodwill impairment charge related to our European reporting unit which is part of our International segment.
See Note 5—“Goodwill” in the Notes to the consolidated financial statements for additional information. In
addition, international operating loss before depreciation, amortization, and stock-based compensation expense
for the year ended December 31, 2008 includes restructuring charges of $30 million.
International revenues for the year ended December 31, 2007 increased approximately $182 million, or 9 percent,
as compared to 2006. More than 95 percent of the international revenues increase in 2007 came from marketing
services revenues. The year-over-year growth in international marketing services revenues can be attributed to
our increased penetration into existing markets, coupled with growth of the global online advertising
marketplace. International operating income before depreciation, amortization, and stock-based compensation
expense for the year ended December 31, 2007 increased $39 million, or 9 percent, as compared to 2006.
International revenues accounted for approximately 28 percent of total revenues during 2008 and 32 percent of
total revenues during both 2007 and 2006, respectively. International revenues in 2008 decreased $224 million,
or 10 percent, as compared to 2007. Our international operations expose us 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 Australian Dollars, British Pounds, Euros, Korean
Won, and Taiwan Dollars. The statements of income of our international operations are translated into U.S.
dollars at exchange rates indicative of market rates during each applicable period. To the extent the U.S. 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 International segment if the U.S. dollar weakens against
foreign currencies. Using the foreign currency exchange rates from 2007, our international revenues for 2008
would have been higher than we reported by approximately $32 million and our International segment operating
loss before depreciation, amortization, and stock-based compensation expense would have been higher than we
reported by $120 million (which includes $96 million related to the goodwill impairment).
Transactions
Significant acquisitions and strategic investments completed in the last three years include the following:
•January 2006—Strategic partnership with Seven Network Limited, an Australian media company, to form
Yahoo! 7;
•June 2006—Investment of approximately 10 percent interest in Gmarket Inc. (“Gmarket”), a retail
e-commerce provider in South Korea, for $61 million. An additional investment was made in 2007 for $8
million;
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