Yahoo 2008 Annual Report Download - page 98

Yahoo! Inc.
Notes to Consolidated Financial Statements—(Continued)
The total unrecognized tax benefits as of December 31, 2007 and 2008 include approximately $442 million and
$452 million, respectively, of unrecognized tax benefits that have been netted against the related deferred tax assets.
The remaining balances are recorded on the Company’s consolidated balance sheets as follows (in thousands):
December 31,
2007 2008
Total unrecognized tax benefits balance ...................................... $685,672 $ 798,057
Amounts netted against related deferred tax assets .............................. (442,205) (451,790)
Unrecognized tax benefits recorded on consolidated balance sheets ................. $243,467 $ 346,267
Amounts classified as accrued expenses and other current liabilities ................ $ 1,351 $ 5,519
Amounts classified as deferred and other long-term tax liabilities, net ............... 242,116 340,748
Unrecognized tax benefits recorded on consolidated balance sheets ................. $243,467 $ 346,267
The total unrecognized tax benefits of $798 million at December 31, 2008 included $613 million that, if
recognized, would reduce the effective income tax rate in future periods.
The Company recognizes interest and/or penalties related to uncertain tax positions in income tax expense. To
the extent accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and
reflected as a reduction of the overall income tax provision in the period that such determination is made. During
2007 and 2008, interest and penalties recorded in the consolidated statements of income were $1 million and $6
million, respectively. The amounts of accrued interest and penalties recorded on the consolidated balance sheets
as of December 31, 2007 and 2008 were approximately $3 million and $12 million, respectively.
The Company files income tax returns in the U.S. federal jurisdiction and in many U.S. states and foreign
jurisdictions. The tax years 1995 to 2008 remain open to examination by the major taxing jurisdictions in which
the Company is subject to tax. The examination of the Company’s federal income tax returns for the years ended
December 31, 2003 and December 31, 2004 was completed in 2008 and resulted in no material adjustments.
The Company’s federal and California income tax returns for the years ended December 31, 2005 and 2006 are
under examination by the Internal Revenue Service and the California Franchise Tax Board.
Note 11 S TOCKHOLDERS ’E QUITY
Stockholder Rights Plan. The Company adopted a stockholder rights plan and initially declared a dividend
distribution of one right for each outstanding share of common stock to stockholders of record as of March 20,
2001. As a result of the Company’s two-for-one stock split effective May 11, 2004, each share of common stock
is now associated with one-half of one right. Each right entitles the holder to purchase one unit consisting of one
one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock for $250 per unit.
Under certain circumstances, if a person or group acquires 15 percent or more of the Company’s outstanding
common stock, holders of the rights (other than the person or group triggering their exercise) will be able to
purchase, in exchange for the $250 exercise price, shares of its common stock or of any company into which the
Company is merged having a value of $500. The rights expire on March 1, 2011, unless extended by the
Company’s Board of Directors (the “Board”). Because the rights may substantially dilute the stock ownership of
a person or group attempting to take over the Company without the approval of the Board, the Company’s rights
plan could make it more difficult for a third-party to acquire the Company (or a significant percentage of its
outstanding capital stock) without first negotiating with the Board regarding that acquisition.
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