Yahoo 2009 Annual Report Download

Download and view the complete annual report

Please find the complete 2009 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 134

  • 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
  • 133
  • 134

Table of contents

  • Page 1

  • Page 2

  • Page 3

  • Page 4

  • Page 5

  • Page 6

  • Page 7

  • Page 8

  • Page 9
    ..., including zip code) Registrant's telephone number, including area code: (408) 349-3300 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered The NASDAQ Stock Market LLC (NASDAQ Global Select Market) Rights to Purchase Series...

  • Page 10
    ... Independence ...Principal Accountant Fees and Services ...PART IV Exhibits, Financial Statement Schedules ...Signatures ... 26 28 30 54 56 111 111 111 ITEM 10 ITEM 11 ITEM 12 ITEM 13 ITEM 14 112 112 112 112 112 ITEM 15 113 114 The trademarks and/or registered trademarks of Yahoo! Inc. and...

  • Page 11
    ...links to an advertiser's Website ("search advertising"), listing-based services, and commerce-based transactions. Additionally, although many of the services we provide to users are free, we charge fees for a number of premium services. Our offerings to users on Yahoo! Properties currently fall into...

  • Page 12
    ... Yahoo! Toolbar, Yahoo! Local, and Connected TV-all are entry points to the Yahoo! experience, whether via the Web, mobile or TV. These offerings are generally provided to users free of charge. We generate revenues from these offerings primarily from search and display advertising. Yahoo! Home Page...

  • Page 13
    ... users and small businesses across a variety of devices and through our broadband Internet access partners. We offer some services free of charge to our users and also provide some services on a fee or subscription basis. We generate display advertising and fees revenues from these offerings. Yahoo...

  • Page 14
    ... and fee-based fantasy games, up-to-the-minute sports news, real-time statistics, scores and game updates, broadcast programming, integrated shopping, and an online sports community. Yahoo! Sports offers mobile applications for specific areas of interest to our users, such as Yahoo! Fantasy Football...

  • Page 15
    .... We generate revenues by providing marketing services to advertisers across a majority of Yahoo! Properties and Affiliate sites. The majority of our marketing services revenue is from sales of search and display advertising. DEVELOPERS AND PLATFORM OFFERINGS We provide several software and platform...

  • Page 16
    ... search web services platform that enables developers, start-ups, and large Internet companies to build web-scale search products by utilizing the entire Yahoo! Search index. SearchMonkey is a leading open search platform that allows developers and Website owners to use structured data to make Yahoo...

  • Page 17
    ... companies to obtain agreements with software publishers, Internet access providers, mobile carriers, device manufacturers and others to promote or distribute our services to their users. We compete with advertising networks, such as Google AdSense, AOL's Ad.com, and Microsoft Media Network, as well...

  • Page 18
    ... in multiple Yahoo! Products. These elements include the user data base and login, video and social connection platforms. Our engineering and production teams are primarily located in our Sunnyvale, California headquarters and in Bangalore, India and Burbank, California. Product development expenses...

  • Page 19
    ... products and services that directly compete for users with our offerings, including consumer e-mail, desktop search, local search, instant messaging, photos, maps, video sharing, content channels, mobile applications, and shopping. Similarly, the advertising networks operated by Google, Microsoft...

  • Page 20
    ... advertising management platforms by advertisers, Website publishers, and online advertising networks; • continuing to innovate and improve users' search experiences; • maintaining and expanding our Affiliate program for search and display marketing services; and • deriving better demographic...

  • Page 21
    ... and innovate to improve our users' search experience. We also generate advertising revenue through other online services, such as Yahoo! Mail. If we are unable to provide innovative search and other services which generate significant traffic to our Websites, our business could be harmed, causing...

  • Page 22
    ... of search results triggered by search terms that include trademark terms. Currently, we are engaged in lawsuits regarding such trademark issues. As we expand our business and develop new technologies, products and services, we may become increasingly subject to intellectual property infringement...

  • Page 23
    ... such as user privacy and data protection, defamation, pricing, advertising, taxation, gambling, sweepstakes, promotions, billing, real estate, consumer protection, accessibility, content regulation, quality of services, telecommunications, mobile, television, and intellectual property ownership and...

  • Page 24
    ... for online services. We host a wide variety of services and technology products that enable individuals and businesses to exchange information, generate content, advertise products and services, conduct business, and engage in various online activities on a domestic and an international basis...

  • Page 25
    ...of the businesses we acquired or in which we invested; • the difficulty of integrating acquired technology and rights into our services and unanticipated expenses related to such integration; • the failure to successfully further develop acquired technology resulting in the impairment of amounts...

  • Page 26
    ... architecture to manage expansion and respond to rapid technological change could adversely affect our business. As some of the most visited sites on the Internet, Yahoo! Properties deliver a significant number of products, services, Page Views and advertising impressions to users around the...

  • Page 27
    ...other businesses. If we are unable to license or acquire compelling content at reasonable prices, if other companies distribute content or services that are similar to or the same as that provided by Yahoo!, or if we do not develop compelling editorial content or personalization services, the number...

  • Page 28
    ...-party Websites, online networks, software companies, electronics companies, computer manufacturers and others to promote or supply our services to their users. For example: • We maintain search and display advertising relationships with Affiliate sites, which integrate our advertising offerings...

  • Page 29
    ...as our competitors design mobile devices and mobile device operating systems), we face an increased risk that our users will favor the services or properties of that competitor. The manufacturer or access provider might promote a competitor's services or might impair users' access to our services by...

  • Page 30
    ...Most of our revenues are derived from fees paid to us by advertisers in connection with the display of advertisements or clicks on search marketing listings on Web pages. As a result, advertisement-blocking technology could reduce the number and relevancy of advertisements and search results that we...

  • Page 31
    ...pay a fee every time a user clicks on their advertising. This pricing model can be vulnerable to so-called "click fraud," which occurs when clicks are submitted on ads by a user who is motivated by reasons other than genuine interest in the subject of the ad. On Yahoo! Properties and Affiliate sites...

  • Page 32
    .... Our stock price may fluctuate in response to a number of events and factors, such as variations in quarterly operating results, announcements and implementations of technological innovations or new services by us or our competitors; changes in financial estimates and recommendations by securities...

  • Page 33
    .... Item 2. Properties Our headquarters is located in Sunnyvale, California and consists of owned and leased space aggregating approximately 1.4 million square feet. We also lease office space in Argentina, Australia, Belgium, Brazil, Canada, China, Egypt, France, Germany, Hong Kong, India, Indonesia...

  • Page 34
    ... Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Yahoo! Inc. common stock is quoted on the NASDAQ Global Select Market under the symbol "YHOO." The following table sets forth the range of high and low per share sales prices as reported for each period...

  • Page 35
    ... by reference into any filing of Yahoo! Inc. under the Securities Act of 1933, as amended, or the Exchange Act. The following graph compares, for the five-year period ended December 31, 2009, the cumulative total stockholder return for the Company's common stock, the NASDAQ 100 Index, the Standard...

  • Page 36
    ... of Yahoo! China in connection with the strategic investment with Alibaba Group; and a tax benefit of $248 million related to a subsidiary restructuring transaction. In the aggregate, these items had an impact of $1.0 billion on net income attributable to Yahoo! Inc., or $0.74 per basic share...

  • Page 37
    ...-term deferred revenues. Amounts reflect the adoption of new authoritative guidance for convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement. Refer to Note 9-"Debt" in the Notes to the consolidated financial statements for additional information...

  • Page 38
    ... marketing messages to their target audiences. We generate revenues by providing marketing services to advertisers across a majority of Yahoo! Properties and Affiliate sites. Additionally, although many of the services we provide to users are free, we do charge fees for a number of premium services...

  • Page 39
    ... advertising such as Yahoo! Autos, Yahoo! Real Estate, and other services. We recognize listings revenues when the services are performed. Transaction revenues are generated from facilitating commercial transactions through Yahoo! Properties, principally from Small Business, Yahoo! Travel, and Yahoo...

  • Page 40
    ...to terminate our sales exclusivity for premium search advertisers. If Microsoft exercises its option, the Revenue Share Rate will increase to 93% for the remainder of the term of the Search Agreement, unless Yahoo! exercises its option to retain its sales exclusivity, in which case the Revenue Share...

  • Page 41
    ... generate marketing services revenues principally from display advertising on Owned and Operated sites and from search advertising. "Searches" is defined as online search queries that may yield Internet search results ranked and sorted based on relevance to the user's search query. "Sponsored search...

  • Page 42
    ... in user activity levels on Yahoo! Properties, which contributed to a higher volume of search queries, Page Views, and ad impression displays. The transition of and changes in certain of our broadband access partnerships from being fee-paying user based to an advertising revenue sharing model...

  • Page 43
    ... 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. The sale of Overture Japan to Yahoo Japan negatively impacted Affiliate revenues during...

  • Page 44
    ... access partnerships, from being fee-paying user based to an advertising revenue sharing model, as well as the outsourcing of the voice over internet protocol, or VOIP, subscription music businesses, and other business lines. Due to these factors and the renewed focus on our display and search...

  • Page 45
    ... financial statements, as well as our Critical Accounting Policies and Estimates, for additional information about stock-based compensation expense. TAC. TAC consist of payments made to Affiliates and payments made to companies that direct consumer and business traffic to Yahoo! Properties...

  • Page 46
    ... and higher base salaries across all functions. Product development headcount increased for the maintenance and development of and minor enhancements to existing offerings and services on Yahoo! Properties as well as the maintenance of Yahoo!'s technology platforms and infrastructure. For 2008, the...

  • Page 47
    ... 2008, compared to 2007. The decrease in 2008 was primarily due to the sale of Overture Japan to Yahoo Japan. The decrease in TAC was slightly offset by a small increase in average TAC rates and partner mix changes. Other Expenses. Other expenses decreased $708 million for the year ended December 31...

  • Page 48
    ..., and, where applicable, by referring to amounts in negotiation. Our ability to generate the estimated amounts of sublease income, as well as to terminate lease obligations at the estimated amounts, is dependent upon the commercial real estate market conditions in certain geographies at the time we...

  • Page 49
    ... to the consolidated financial statements for additional information. Goodwill Impairment Charge. We conduct our annual goodwill impairment test as of October 31 each year. Goodwill is potentially impaired if the carrying value of the reporting unit that contains the goodwill exceeds its estimated...

  • Page 50
    ... 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. Other Income, Net. Other income, net was as follows (in thousands): Years...

  • Page 51
    ... tax liabilities in connection with changes to our worldwide entity structure in 2007. Our U.S. federal and California income tax returns for the years ended December 31, 2005 and 2006 are currently under examination by the Internal Revenue Service ("IRS") and the California Franchise Tax Board...

  • Page 52
    ... of measurement and decision-making are the U.S. and International. Management relies on an internal management reporting process that provides revenues and segment operating income before depreciation, amortization, and stock-based compensation expense for making financial decisions and allocating...

  • Page 53
    ...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...

  • Page 54
    ... an online global advertising network company, for a total purchase price of $255 million; • November 2007-Purchased approximately 1 percent of Alibaba.com for a total purchase price of approximately $101 million in the IPO on the Hong Kong Stock Exchange of Alibaba.com; • February 2008-Acquired...

  • Page 55
    ... money market funds, and time deposits that are liquid, highly rated, and the majority of which have effective maturities of less than one year. Our marketable debt and equity securities are classified as available-for-sale and are reported at fair value, with unrealized gains and losses, net of tax...

  • Page 56
    ..., amortization of intangible assets, stock-based compensation expense net of stock-based restructuring expense reversals, non-cash restructuring charges, goodwill impairment, tax benefits from stock-based awards, and excess tax benefits from stock-based awards. Cash provided by operating activities...

  • Page 57
    ... extent such deductions reduce income taxes payable in the current year, they are reported as financing activities in the consolidated statements of cash flows. See Note 12-"Employee Benefits" in the Notes to the consolidated financial statements for additional information. Financing In April 2003...

  • Page 58
    ...search and/or display advertising services to our Affiliates, which represent TAC. We are obligated to make payments under various arrangements with vendors and other business partners, principally for marketing, bandwidth, and content arrangements. As of December 31, 2009, unrecognized tax benefits...

  • Page 59
    ... of text-based links to advertisers' Websites, listings-based services, and commerce-based transactions. Fees revenues include revenues from a variety of consumer and business fee-based services. While the majority of our revenue transactions contain standard business terms and conditions, there are...

  • Page 60
    ..., estimated future cash flows, and discount rates. These components are discussed below: • Market comparables We select comparable companies in the specific regions in which our reporting units operate based on similarity of type of business, primarily those involved in online advertising, and...

  • Page 61
    • Discount rates We employ a Weighted Average Cost of Capital ("WACC") approach to determine the discount rates used in our cash flow projections. The determination of the discount rates for each reporting unit includes factors such as the risk-free rate of return and the return an outside ...

  • Page 62
    ... cash in money market funds, time deposits, and liquid debt instruments of the U.S. and foreign governments and their agencies, U.S. municipalities, and high-credit corporate issuers which are classified as marketable debt securities and cash equivalents. Investments in fixed rate and floating rate...

  • Page 63
    ... 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...

  • Page 64
    ... Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm ...Consolidated Statements of Income for each of the three years in the period ended December 31, 2009 ...Consolidated Balance Sheets as of December 31, 2008 and 2009 ...Consolidated Statements of Cash Flows...

  • Page 65
    ... on accounting for convertible debt instruments that may be settled in cash upon conversion. A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for...

  • Page 66
    ...Yahoo! Inc. common stockholders per share-diluted ...Shares used in per share calculation-basic ...Shares used in per share calculation-diluted ...Stock-based compensation expense by function: Cost of revenues ...Sales and marketing ...Product development... these consolidated financial statements. 58

  • Page 67
    Yahoo! Inc. Consolidated Balance Sheets December 31, 2008 2009 (In thousands, except par values) ASSETS Current assets: Cash and cash equivalents ...Short-term marketable debt securities ...Accounts receivable, net of allowance of $51,600 and $41,003 as of December 31, 2008 and 2009, respectively ...

  • Page 68
    ... tax benefits from stock-based awards ...Tax withholdings related to net share settlements of restricted stock awards and restricted stock units ...Other financing activities, net ...Net cash (used in) provided by financing activities ...Effect of exchange rate changes on cash and cash equivalents...

  • Page 69
    ... compensation expense ...Tax benefits from stock-based awards ...Tax withholdings related to net share settlements of restricted stock units ...Debt conversions ...Retirement of treasury stock ...Adoption of new authoritative guidance relating to convertible debt instruments ...Other ...Balance, end...

  • Page 70
    ... securities, net of tax ...Foreign currency translation adjustment, net of tax ...stock Balance, beginning of year ...Common stock and restricted stock issued ...Repurchases of common stock ...Debt conversions ...Tax withholdings related to net share settlements of restricted stock awards ...Balance...

  • Page 71
    ... of marketing services designed to reach and connect with users of its Owned and Operated sites, as well as with Internet users beyond Yahoo! Properties, through a distribution network of third-party entities ("Affiliates") that have integrated its advertising offerings into their Websites, referred...

  • Page 72
    ... and classified advertising such as Yahoo! Autos, Yahoo! Real Estate, and other services. The Company recognizes listings revenues when the services are performed. Transaction revenues are generated from facilitating commercial transactions through Yahoo! Properties, principally from Small Business...

  • Page 73
    ... over the term the fixed payment covers. Agreements based on a percentage of revenue, number of searches, or other metrics are expensed based on the volume of the underlying activity or revenue multiplied by the agreed-upon price or rate. Product Development. Product development expenses consist...

  • Page 74
    ...of stock-based awards on other tax attributes, such as the research tax credit, through the statement of income. Operating and Capital Leases. The Company leases office space and data centers under operating leases and certain data center equipment under a capital lease agreement with original lease...

  • Page 75
    ... cash in money market funds, time deposits, and liquid debt instruments of the U.S. and foreign governments and their agencies, U.S. municipalities, and high-credit corporate issuers which are classified as marketable debt securities and cash equivalents. All investments with an original maturity...

  • Page 76
    ... investment policy addresses the level of credit exposure by limiting the concentration in any one corporate issuer or sector and establishing a minimum allowable credit rating. To manage the risk exposure, the Company maintains its portfolio of cash and cash equivalents and short-term and long-term...

  • Page 77
    ...cash flows, and other company and industry specific information. Foreign Currency. The functional currency of the Company's international subsidiaries is evaluated on a case-by-case basis and is often the local currency. The financial statements of these subsidiaries are translated into U.S. dollars...

  • Page 78
    ..., and shares to be purchased under the employee stock purchase plan. In addition, potential common shares issuable upon an assumed conversion of the outstanding Notes prior to their maturity and conversion on April 1, 2008 were calculated using the "as if" converted method. These potential common...

  • Page 79
    ... in executing the Company's long-term strategy to change how online advertisers and publishers connect to their audiences in one open advertising community. The purchase price exceeded the fair value of net tangible and identifiable intangible assets acquired from Right Media and as a result, the...

  • Page 80
    ...in Web mail and expanded the Company's presence in universities, small and medium businesses, and service provider partners. The purchase price exceeded the fair value of net tangible and identifiable intangible assets acquired from Zimbra and as a result, the Company recorded goodwill in connection...

  • Page 81
    ... fair values was as follows (in thousands): Cash acquired ...Other tangible assets acquired ...Amortizable intangible assets: Customer contracts and related relationships ...Developed technology and patents ...Trade name, trademark, and domain name ...Goodwill ...Total assets acquired ...Liabilities...

  • Page 82
    ... assumed based on their fair values was as follows (in thousands): Cash acquired ...Other tangible assets acquired ...Amortizable intangible assets: Customer contracts and related relationships ...Developed technology and patents ...Trade name, trademark, and domain name ...In-process research and...

  • Page 83
    ... on Yahoo! and the Company's network of video publishers across the Web. The purchase price exceeded the fair value of the net tangible and identifiable intangible assets acquired from Maven and as a result, the Company recorded goodwill in connection with this transaction. Under the terms of...

  • Page 84
    ... team with Yahoo!'s scalable technology and products. The purchase price exceeded the fair value of the net tangible and identifiable intangible assets acquired from Maktoob and as a result, the Company recorded goodwill in connection with this transaction. Under the terms of the agreement...

  • Page 85
    ... and online payment system and Alibaba Group's strong local presence, expertise, and vision in the China market. These factors contributed to a purchase price in excess of the Company's share of the fair value of Alibaba Group's net tangible and intangible assets acquired resulting in goodwill. The...

  • Page 86
    ... and development. Goodwill is not deductible for tax purposes. The following table presents Alibaba Group's U.S. GAAP financial information, as derived from the Alibaba Group financial statements (in thousands): Twelve Months Ended September 30, 2007 2008 2009 Operating data: Revenues ...$290...

  • Page 87
    ...1997, whereby Yahoo Japan Corporation ("Yahoo Japan") was formed. Yahoo Japan was formed to establish and manage a local version of Yahoo! in Japan. The fair value of the Company's approximate 35 percent ownership in the common stock of Yahoo Japan, based on the quoted stock price, was approximately...

  • Page 88
    ... 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...

  • Page 89
    ... and estimated future cash flows, and decreases in revenues and earnings multiples of comparable companies in that region. The 2009 impairment test indicated that the fair value of the reporting units substantially exceeded their carrying values; therefore goodwill in the reporting units was not...

  • Page 90
    Yahoo! Inc. Notes to Consolidated Financial Statements-(Continued) December 31, 2009 Gross Carrying Accumulated Amount Amortization(*) Net Customer, affiliate, and advertiser related relationships ...Developed technology and patents ...Trade names, trademarks, and domain names ...Total intangible ...

  • Page 91
    ..., the Company sold its direct investment in Alibaba.com for net proceeds of $145 million. The Company recorded a pre-tax gain of $98 million ($60 million after tax) in connection with the Company's sale of its Alibaba.com shares. Other consists primarily of foreign exchange gains and losses due to...

  • Page 92
    Yahoo! Inc. Notes to Consolidated Financial Statements-(Continued) Other long-term assets As of December 31, other long-term assets consisted of the following (in thousands): 2008 2009 Deferred income taxes...for-sale securities, net of tax ...Foreign currency translation, net of tax ...Accumulated ...

  • Page 93
    ... Gmarket, which was included as part of other long-term assets in the consolidated balance sheet. The Company sold all of its Gmarket shares in May 2009. Available-for-sale securities included in cash and cash equivalents on the consolidated balance sheets are not included in the table above as the...

  • Page 94
    ..., municipal, corporate debt securities, money market funds, and term deposits with financial institutions. Investments in both fixed rate and floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted...

  • Page 95
    ... sheet. The corporate equity securities are classified as part of other long-term assets in the consolidated balance sheet. (2) The amount of cash and cash equivalents as of December 31, 2008 includes $583 million in cash deposited with commercial banks, of which $151 million are time deposits...

  • Page 96
    ... the consolidated balance sheet. (2) The amount of cash and cash equivalents as of December 31, 2009 includes $658 million in cash deposited with commercial banks, of which $205 million are time deposits. The fair value of the Company's Level 1 financial assets is based on quoted market prices of...

  • Page 97
    ...! Inc. Notes to Consolidated Financial Statements-(Continued) Upon the adoption of the FASB's new authoritative guidance, the Company recorded the change in accounting principle as a cumulative effect adjustment to the opening balance of retained earnings as of January 1, 2007 totaling $69 million...

  • Page 98
    ...percent ...State income taxes, net of federal benefit ...Change in valuation allowance ...Stock-based compensation expense ...Research tax credits ...Effect of non-U.S. operations ...Meals and entertainment ...Settlement with tax authorities ...Goodwill impairment charge ...Tax restructuring, net of...

  • Page 99
    ... employee stock options are accounted for as a credit to additional paid-in-capital if and when realized through a reduction in income taxes payable. During 2008, the Company recorded a deferred tax liability of $276 million in connection with the non-cash gain recorded related to the IPO of Alibaba...

  • Page 100
    ... 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...

  • Page 101
    ... rights plan was not adopted in response to any effort to acquire control of the Company. The Company repurchases its common stock from time to time in part to reduce the dilutive effects of our stock options, awards, and employee stock purchase plan. Stock Repurchases. In October 2006, the Board...

  • Page 102
    ... of grant based on the number of shares granted and the quoted price of the Company's common stock. Such value is recognized as an expense over the corresponding service period. During 2009, the Board adopted an amended and restated version of the Yahoo! Inc. 1995 Stock Plan (the "Restated 1995 Plan...

  • Page 103
    ... of up to 15 percent of their annual compensation subject to certain Internal Revenue Code limitations. The price of common stock purchased under the plan is equal to 85 percent of the lower of the fair market value of the common stock on the commencement date of each 24-month offering period or the...

  • Page 104
    ...04 The Company currently has no history or expectation of paying cash dividends on its common stock. The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected term of the awards in effect at the time of grant. The Company estimates the volatility of its...

  • Page 105
    ... acquired net operating losses first or should not have been recognized at all because the underlying tax amounts should not have been offset by tax benefits from stock-based awards. As a result, in the 2007 statement of cash flows, the Company reduced by $92 million, excess tax benefits from stock...

  • Page 106
    Yahoo! Inc. Notes to Consolidated Financial Statements-(Continued) awards recorded in cash flows from operating activities with an equivalent reduction to the amount of excess tax benefits recorded in cash flows from financing activities. This reclassification had no impact on overall cash flows. ...

  • Page 107
    ... at the end of the initial lease term: (i) renewal of the lease for a defined number of years at the then fair market rental rate or at a slight discount to the fair market rental rate; (ii) purchase of the property at the then fair market value; or (iii) right of first offer to lease additional...

  • Page 108
    ...Sales Agreement and License Agreement with Microsoft, under which Microsoft will become Yahoo!'s exclusive platform technology provider for algorithmic and paid search services and Yahoo! will become the exclusive worldwide relationship sales force for both companies' premium search advertisers. The...

  • Page 109
    ... intellectual property rights, claims related to employment matters, and a variety of other claims, including claims alleging defamation, invasion of privacy, or similar claims arising in connection with the Company's e-mail, message boards, photo and video sites, auction sites, shopping services...

  • Page 110
    ... of measurement and decision-making are the U.S. and International. Management relies on an internal management reporting process that provides revenues and segment operating income before depreciation, amortization, and stock-based compensation expense for making financial decisions and allocating...

  • Page 111
    ... to the international online property that generated the revenues. No single foreign country accounted for more than 10 percent of revenues in 2007, 2008, and 2009, respectively. See also Note 5-"Goodwill" and Note 16-"Restructuring Charges, Net" for additional information regarding segments...

  • Page 112
    ... investment, the Company has impaired its entire investment. Pursuant to the Partnership Agreement, the Company invested on the same terms and on the same basis as all other limited partners. Revenues from related parties, excluding Yahoo Japan and Alibaba Group, represented approximately 1 percent...

  • Page 113
    ... where applicable, by referring to amounts in negotiation. The Company's ability to generate the estimated amounts of sublease income, as well as to terminate lease obligations at the estimated amounts, is dependent upon the commercial real estate market conditions in certain geographies at the time...

  • Page 114
    ... realignment. In connection with the strategic realignment efforts, an executive of one of the Company's acquired businesses departed. The Company incurred $19 million of non-cash stock-based compensation expense for the acceleration of certain of the executive's stock-based awards pursuant to the...

  • Page 115
    ... professional services relating to the restructuring and $1 million in contract termination costs. Q408 Restructuring Plan Q209 Restructuring Plan Q409 Restructuring Charges Total Balance as of January 1, 2009 ...Employee severance pay and related costs ...(Reversals) accelerations of stock-based...

  • Page 116
    ...approximately 13.8 million shares of its common stock under the current stock repurchase program at an average price of $15.20 per share, for a total of $210 million. Microsoft. The Company received regulatory clearance for its Search Agreement with Microsoft from both the U.S. Department of Justice...

  • Page 117
    ... Allowance for doubtful accounts 2007 ...2008 ...2009 ... 38,196 46,521 51,600 Balance at Beginning of Year 23,018 24,937 4,607 (14,693) (19,858) (15,204) 46,521 51,600 41,003 Balance at End of Year Charged (Credited) Charged to to Other Expenses Accounts(*) (In thousands) Deferred tax asset...

  • Page 118
    ...in per share calculation- basic ...1,333,730 1,372,629 Shares used in per share calculation- diluted ...1,...cash gain of $401 million related to Alibaba Group's IPO of Alibaba.com, net of tax. Net loss attributable to Yahoo! Inc. for the quarter ended December 31, 2008 includes a goodwill impairment...

  • Page 119
    ...December 31, 2009, which appears on page 57. Changes in Internal Control Over Financial Reporting There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal...

  • Page 120
    ... of 2009, we decided to close one of our international facilities and began implementation of a workforce realignment at the facility to focus resources on our strategic initiatives. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations-Q409...

  • Page 121
    ... Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm ...Consolidated Statements of Income for each of the three years in the period ended December 31, 2009 ...Consolidated Balance Sheets as of December 31, 2008 and 2009 ...Consolidated Statements of Cash Flows...

  • Page 122
    ... indicated: Signature Title Date /S/ CAROL BARTZ Carol Bartz Chief Executive Officer and Director (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer) VP, Global Controller and Chief Accounting Officer (Principal Accounting Officer) Chairman of the Board February...

  • Page 123
    Signature Title Date /S/ SUSAN JAMES Susan James Director February 26, 2010 /S/ VYOMESH JOSHI Vyomesh Joshi Director February 22, 2010 /S/ ARTHUR KERN Arthur Kern Director February 26, ...

  • Page 124
    ... herein by reference). Shareholders Agreement, dated as of October 24, 2005, among Alibaba.com Corporation, the Registrant, SOFTBANK CORP., the Management Members, and the other shareholders named therein (previously filed as Exhibit 2.5 to the Registrant's Current Report on Form 8-K filed October...

  • Page 125
    ... 10.2(I) to the Registrant's Annual Report on Form 10-K filed February 27, 2009 and incorporated herein by reference). Form of Letter Amendment to Executive Incentive Performance Restricted Stock Unit Award Agreement (OCF version) under the Yahoo! Inc. 1995 Stock Plan. Form of Executive Incentive...

  • Page 126
    .... 2 to Yahoo Japan License Agreement dated January 31, 2005 by and between the Registrant and Yahoo Japan Corporation (previously filed as Exhibit 10.30 to the Registrant's Annual Report on Form 10-K filed March 11, 2005 and incorporated herein by reference). Summary of Compensation Payable to Named...

  • Page 127
    ... the Registrant and Microsoft Corporation. List of Subsidiaries. Consent of Independent Registered Public Accounting Firm. Power of Attorney (see the signature page of this Annual Report on Form 10-K.) Certificate of Chief Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and...

  • Page 128
    ... addition, users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of...

  • Page 129
    ... caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles...

  • Page 130
    ... caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles...

  • Page 131
    ... 906 of the Sarbanes-Oxley Act of 2002 In connection with the Annual Report on Form 10-K of Yahoo! Inc. (the "Company") for the year ended December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Carol Bartz, as Chief Executive Officer of the Company...

  • Page 132
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 133

  • Page 134
    Cert no. SCS-COC-000648