Yahoo 2008 Annual Report Download - page 87

Download and view the complete annual report

Please find page 87 of the 2008 Yahoo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

Yahoo! Inc.
Notes to Consolidated Financial Statements—(Continued)
The following table presents Yahoo! Japan’s financial information, as derived from the Yahoo! Japan financial
statements for the twelve months ended September 30, 2006, 2007, and 2008 and as of September 30, 2007 and
2008 (in thousands):
Twelve Months Ended September 30,
2006 2007 2008
Operating data(*):
Revenues .............................................. $1,671,154 $1,933,114 $2,697,518
Gross profit ............................................ $1,584,433 $1,836,169 $2,298,364
Income from operations .................................. $ 806,718 $ 983,844 $1,217,895
Net income ............................................ $ 451,377 $ 507,850 $ 653,132
September 30,
2007 2008
Balance sheet data:
Current assets ..................................................... $1,131,234 $1,202,164
Long-term assets ................................................... $1,783,430 $1,923,195
Current liabilities ................................................... $ 692,337 $ 778,110
Long-term liabilities ................................................ $ 347,995 $ 189,719
Minority interests .................................................. $ 17,927 $ 25,665
(*) The Company records its share of the results of Yahoo! Japan one quarter in arrears within earnings in equity
interests in the consolidated statements of income.
The differences between U.S. GAAP and accounting principles generally accepted in Japan, the standards by
which Yahoo! Japan’s financial statements are prepared, did not materially impact the amounts reflected in the
Company’s consolidated financial statements.
Since acquiring its equity interest in Yahoo! Japan, the Company has recorded cumulative earnings in equity
interests, net of dividends received and related taxes, of $589 million and $801 million as of December 31, 2007
and 2008, respectively.
During the year ended December 31, 2007, the Company completed the sale of Overture Japan to Yahoo! Japan
for cash consideration of approximately $19 million. The transaction was accounted for as a sale of assets. In
connection with the transaction, the Company recorded a pre-tax gain of $6 million in other income, net.
On September 1, 2007, the Company commenced a new commercial arrangement with Yahoo! Japan in which
the Company provides search marketing services to Yahoo! Japan for a service fee and exited the pre-existing
commercial arrangement. Previously, the Company earned marketing services revenues from advertisers and
paid TAC to Yahoo! Japan. The Company no longer recognizes marketing services revenues and TAC for the
delivery of sponsored search results and payments to Affiliates in Japan as Yahoo! Japan is responsible for the
fulfillment of all advertiser and Affiliate services. Under this new arrangement, the Company records 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. In addition to
marketing services revenues, the Company continues to record revenues from license fees from Yahoo! Japan.
The prior commercial arrangement resulted in net costs of approximately $246 million and $135 million for the
years ended December 31, 2006 and 2007, respectively. The new arrangement resulted in revenues of
approximately $296 million for the year ended December 31, 2008. As of December 31, 2007 and 2008, the
Company had net receivable balances from Yahoo! Japan of approximately $62 million and $39 million,
respectively.
81