Yahoo 2009 Annual Report Download - page 86

Download and view the complete annual report

Please find page 86 of the 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

Yahoo! Inc.
Notes to Consolidated Financial Statements—(Continued)
allocating the initial excess of the carrying value of the investment in Alibaba Group over its proportionate share
of the net assets of Alibaba Group, the Company allocated a portion of the excess to goodwill to account for the
estimated reductions in the carrying value of the investment in Alibaba that may occur as the Company’s equity
interest is diluted to 40 percent. As of December 31, 2008 and 2009, the Company’s ownership interest in
Alibaba Group was approximately 44 percent.
In the initial public offering (“IPO”) of Alibaba.com on November 6, 2007, Alibaba Group sold an approximate
27 percent interest in Alibaba.com through the issuance of new Alibaba.com shares, the sale of previously held
shares in Alibaba.com, and the exchange of certain Alibaba Group shares previously held by Alibaba Group
employees for shares in Alibaba.com, resulting in a gain on disposal of interests in Alibaba.com. Accordingly, in
the first quarter of 2008, the Company recorded a non-cash gain of $401 million, net of tax, within earnings in
equity interests representing the Company’s share of Alibaba Group’s gain, and the Company’s ownership
interest in Alibaba Group increased approximately 1 percent from 43 percent to 44 percent.
The Company also recognizes non-cash gains when dilution to its ownership interest in Alibaba Group occurs as
these reductions in ownership interest are treated as incremental sales of additional equity interests in Yahoo!
China. The Company previously recorded a non-cash gain of approximately $8 million during the year ended
December 31, 2007 as a result of the exercise of Alibaba Group’s employee stock options described above. This
gain was recorded in other income; net, to account for an approximate 1 percent reduction in the Company’s
ownership interest in Alibaba Group from 44 percent in 2006 to 43 percent in 2007. Non-cash gains were not
recognized in 2008 and 2009 as the Company’s ownership interest in Alibaba did not decrease from the
Company’s 2007 ownership level.
As of December 31, 2009 the difference between the Company’s carrying value of its investment in Alibaba
Group and its proportionate share of the net assets of Alibaba Group is summarized as follows (in thousands):
Carrying value of investment in Alibaba Group .......................................... $2,167,007
Proportionate share of Alibaba Group stockholders’ equity ................................. 1,649,710
Excess of carrying value of investment over proportionate share of Alibaba Group’s
stockholders’ equity ......................................................... $ 517,297
The excess carrying value has been primarily assigned to:
Goodwill .................................................................... $ 497,186
Amortizable intangible assets .................................................... 20,213
Deferred income taxes .......................................................... (102)
Total ................................................................... $ 517,297
The amortizable intangible assets have useful lives not exceeding seven years and a weighted average useful life
of approximately five years. No amount has been allocated to in-process research 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 ................................................. $290,193 $ 456,808 $730,336
Gross profit ............................................... $208,476 $ 317,139 $537,974
Loss from operations(1) ...................................... $(59,582) $ (236,017) $ (39,460)
Net (loss) income(2) ......................................... $(58,860) $1,909,009 $ (19,932)
Net (loss) income attributable to Alibaba Group(2) ................. $(58,860) $1,870,093 $ (57,346)
78