Yahoo 2009 Annual Report Download - page 72

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Yahoo! Inc.
Notes to Consolidated Financial Statements—(Continued)
Cash consideration received in an arrangement with a provider may require consideration of classification of
amounts received as revenue or a reimbursement of costs incurred. Additionally, the Company reports revenue
for which it is the primary obligor in the arrangement and for which it provided a product or service at the gross
amount.
Marketing services revenues are generated from several offerings including the display of graphical
advertisements (“display advertising”), the display of text-based links to an advertiser’s Website (“search
advertising”), listing-based services, and commerce-based transactions.
The Company recognizes revenues from display advertising on Yahoo! Properties as “impressions” are
delivered. An “impression” is delivered when an advertisement appears in pages viewed by users. Arrangements
for these services generally have terms of up to one year and in some cases the terms may be up to three years.
Certain advertising agreements often involve multiple elements (arrangements with more than one deliverable).
The Company also recognizes revenues from search advertising, which are placed on Yahoo! Properties. Search
advertising revenue is recognized as “click-throughs” occur. A “click-through” occurs when a user clicks on an
advertiser’s listing.
Marketing services revenues also includes listings and transaction revenues. Listings revenues are generated from
a variety of consumer and business listings-based services, including access to the Yahoo! HotJobs database 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, Yahoo! Travel and Yahoo!
Shopping. The Company recognizes transaction revenues when there is evidence that qualifying transactions
have occurred (for example, when travel arrangements are booked through Yahoo! Travel).
In addition to delivering search and display advertising on Yahoo! Properties, the Company also generates
revenues from search and/or display advertising offerings on Affiliate sites. The Company pays Affiliates for the
revenues generated from the display of these advertisements on the Affiliates’ Websites. These payments are
called traffic acquisition costs (“TAC”). The revenues derived from these arrangements that involve traffic
supplied by Affiliates are reported gross of the payment to Affiliates. These revenues are reported gross due to
the fact that the Company is the primary obligor to the advertisers who are the customers of the advertising
service.
Fees revenues consist of revenues generated from a variety of consumer and business fee-based services,
including Internet broadband services, royalties received from joint venture partners, premium mail, music and
personals offerings as well as services for small businesses. The Company recognizes fees revenues when the
services are performed.
Current deferred revenue is comprised of contractual billings in excess of recognized revenues and payments
received in advance of revenue recognition. Long-term deferred revenue includes amounts received from
customers for which services will not be delivered within the next 12 months.
Restructuring Charges. The Company has developed and implemented restructuring initiatives to improve
efficiencies across the organization, reduce operating expenses, and better align its resources to market
conditions. As a result of these plans, the Company has recorded restructuring charges comprised principally of
employee severance and associated termination costs related to the reduction of its workforce, office closures,
losses on subleases and contract termination costs. Liabilities for costs associated with an exit or disposal activity
are recognized when the liability is incurred, as opposed to when management commits to an exit plan. In
addition, (i) liabilities associated with exit and disposal activities are measured at fair value; (ii) one-time
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