Yahoo 2010 Annual Report Download

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Annual Report 2010

Table of contents

  • Page 1
    Annual Report 2010

  • Page 2

  • Page 3
    ... defined by Rule 12b-2 of the Exchange Act). Yes ' No Í As of June 30, 2010, the aggregate market value of voting stock held by non-affiliates of the Registrant, based upon the closing sales price for the Registrant's common stock, as reported on the NASDAQ Global Select Market, was $16,919,544,171...

  • Page 4
    ....icio.us, Flickr, Right Media, omg, Shine, Sportacular, Prime Time in No Time, Behind Enemy Lines, Ready Set Dance, Yahoo! Search BOSS, Wretch, Meme, Citizen Sports, Associated Content and their respective logos. Other names are trademarks and/or registered trademarks of their respective owners. 2

  • Page 5
    ...! Properties and on Affiliate sites in the United States ("U.S.") and Canada to Microsoft Corporation ("Microsoft"), and completed the transition from Yahoo!'s search marketing platform to Microsoft's search advertising platform (adCenter) in those markets. • Acquired Associated Content, an online...

  • Page 6
    ...chat feature over 3G or Wi-Fi by a major provider. Yahoo! Entertainment allows users to explore entertainment content, television listings, videos, news, and more. Yahoo! Sportacular HD is a game day companion, enabling users to check status of games or start times and get TV programming information...

  • Page 7
    ... both networks. • Announced an extended partnership with Sprint to provide Sprint Android mobile phone customers with a Yahoo! ID pack of services, including 1-click access to 12 different Yahoo! applications. • Announced a partnership with T-Mobile to integrate Yahoo! Mail and Yahoo! Messenger...

  • Page 8
    ... to connect and share experiences on a real-time basis. Yahoo! currently offers mobile applications for Yahoo! Messenger. Yahoo! Groups provides members with shared access to information such as message archives, photo albums, event calendars, and polls. Yahoo! Answers is a service where anyone...

  • Page 9
    ... news coverage with video, text, photos, and audio. Yahoo! Sports offers free fantasy games, original editorial content, real-time statistics, scores and game updates, broadcast programming, integrated shopping, and online sports communities. Yahoo! Sports offers mobile applications for specific...

  • Page 10
    ... insights for optimized program performance. We help advertisers develop lasting engagement with consumers through interactivity. Our premium digital canvasses-pioneering ad formats like the Yahoo! Mail Login Page and branded video content options-showcase their message in a quality context that...

  • Page 11
    ... developers can access and shape data across the Internet with one simple syntax, eliminating the need to learn how to call different APIs and making it possible for applications to run faster with fewer lines of code and a smaller network footprint. Yahoo! Search BOSS is an open search Web services...

  • Page 12
    ... advertising services to additional regional and small business advertisers. In the U.S., we employ sales professionals in multiple locations, including Atlanta, Boston, Chicago, Dallas, Detroit, Hillsboro, Los Angeles, Miami, New York, Omaha, San Francisco, and Sunnyvale. In international markets...

  • Page 13
    ... and paid search services provider on Yahoo! Properties and non-exclusive provider of such services on Affiliate sites in transitioned markets. However, Microsoft will still continue to compete with us on its own sites and on its partners' sites for users, advertisers, publishers, developers, and...

  • Page 14
    ... 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, Bangalore, India and Burbank, California. Product development expenses for 2008, 2009, and 2010 totaled approximately...

  • Page 15
    ... e-mail, local search, instant messaging, photos, maps, video sharing, content channels, mobile applications, and shopping. Similarly, the advertising networks operated by our competitors offer services that directly compete with our offerings for advertisers, including advertising exchanges, ad...

  • Page 16
    ... services provider on Yahoo! Properties and non-exclusive provider of such services on Affiliate sites for the transitioned markets. The parties commenced implementation of the Search Agreement on February 23, 2010. The global transition of our algorithmic and paid search platforms to Microsoft...

  • Page 17
    ... transitioned to Microsoft's platform. Even after we complete the transition to Microsoft's platform in all markets, we will need to continue to invest and innovate to improve our users' search experience. We also generate revenue through other online services, such as Yahoo! Mail. If we are unable...

  • Page 18
    ... malfunctions; data privacy and security issues; exploitation of our trademarks by others without permission; and poor presentation or integration of our search marketing offerings by Affiliates on their sites or in their software and services. Further, while we attempt to ensure that the quality of...

  • Page 19
    ... 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 20
    ...use, sharing or security of personal information, or other privacy, data-retention or data-protection matters could result in a loss of user confidence in us, damage to the Yahoo! brands, and ultimately in a loss of users, advertising partners, or Affiliates which could adversely affect our business...

  • Page 21
    ... e-mail, lost or misdirected messages, illegal or fraudulent use of e-mail, alleged violations of policies or privacy protections, or interruptions or delays in e-mail service. We may also face purported consumer class actions or state actions relating to our online services, including our fee-based...

  • Page 22
    ... of transactions, to accurately bill users and advertisers, or to accurately compensate Affiliates could adversely affect the viability of our business model. Any failure to scale and adapt our existing technology architecture to manage expansion of user-facing services and to respond to rapid...

  • Page 23
    ... to develop and implement, may take time to test and deploy, may cause us to incur substantial costs or data loss, and may cause delays or interruptions in service. These changes, delays, or interruptions in our service may cause our users, Affiliates and other advertising platform participants...

  • Page 24
    ...-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 25
    ...in developing compelling products that attract and retain users or advertisers, then our revenue could decline. In the future, as new methods for accessing the Internet and our services become available, including through alternative devices, we may need to enter into amended distribution agreements...

  • Page 26
    ... and co-location of a significant portion of our data servers, as well as for our payment processing capabilities and key components or features of our search, e-mail and VOIP services, news, stock quote and other content delivery, chat services, mapping, streaming, geo-targeting, music, games, and...

  • Page 27
    ...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 28
    ... an equity investment, including Yahoo Japan Corporation ("Yahoo Japan") and Alibaba Group Holding Limited ("Alibaba Group"); and news reports or rumors relating to us, trends in our markets, or general economic conditions. In addition, the stock market in general, and the market prices for Internet...

  • Page 29
    ... lease offices in various locations, including Atlanta, Boston, Champaign, Chicago, Dallas, Denver, Detroit, Hillsboro, the Los Angeles Area, Miami, New York, Omaha, Orlando, the San Diego Area, the San Francisco Bay Area, Brentwood and Franklin, Tennessee, and Washington, D.C. Our data centers are...

  • Page 30
    ..., Related Stockholder 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...

  • Page 31
    ... deemed to be incorporated 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, 2010, the cumulative total stockholder return for Yahoo!'s common stock, the NASDAQ 100...

  • Page 32
    ... and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this Annual Report on Form 10-K. The consolidated statements of income data and the consolidated balance sheets data for the years ended, and as of, December 31, 2006, 2007, 2008, 2009, and 2010 are derived from...

  • Page 33
    Consolidated Balance Sheets Data: 2006 2007(1) December 31, 2008(2) (In thousands) 2009 2010 Cash and cash equivalents ...Marketable debt securities ...Working capital ...Total assets ...Long-term liabilities ...Total Yahoo! Inc. stockholders' equity ...(1) $ 1,569,871 $ 1,967,414 $ 2,276,148 $11,...

  • Page 34
    ... "Affiliate sites"). We believe that our marketing services enable advertisers to deliver highly relevant marketing messages to their target audiences. Our offerings to users on Yahoo! Properties currently fall into three categories: Communications and Communities; Search and Marketplaces; and Media...

  • Page 35
    ... costs are deducted. In the transitioned markets, for search revenue generated from Microsoft's services on Yahoo! Properties and Affiliate sites, we report as revenue the 88 percent revenue share, as we are not the primary obligor in the arrangement with the advertisers. As a result of the required...

  • Page 36
    ... on Yahoo! Properties and Affiliate sites. Search advertising revenue is recognized based on "click-throughs". A "click-through" occurs when a user clicks on an advertiser's search result listing. Under the Search Agreement with Microsoft described above, in the transitioned markets, we report as...

  • Page 37
    ... the sale. Summary In the following Management's Discussion and Analysis, we provide information regarding to the following areas of our financial results: • Results of Operations; • Business Segment Results; • Transactions; • Liquidity and Capital Resources; • Critical Accounting Policies...

  • Page 38
    ... quarter of 2010 to reflect the revenue share with Microsoft for transitioned markets and the impact of discontinuing our paid inclusion search product in the fourth quarter of 2009 as part of our advertising quality initiatives. The decreases were offset, in part, by the impact of foreign exchange...

  • Page 39
    ... broadband access partnerships, our shift from a fee-paying user structure to other fee structures, and to the divestiture of certain business lines during the year ended December 31, 2010. In addition, revenue from other premium services declined year-over-year as we continue to outsource various...

  • Page 40
    ... the consolidated 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 third-party entities that have integrated our advertising offerings into their Websites or other...

  • Page 41
    ... of 2010 due to the Search Agreement with Microsoft as we no longer incur TAC for transitioned markets. We now receive an 88 percent revenue share in the transitioned markets as Microsoft is the primary obligor to the advertisers. The decrease was offset by increases in TAC due to a new Affiliate in...

  • Page 42
    ... and consulting projects related to our cost initiatives in 2009. Content costs, included in costs of revenue and driven by our rich media offerings, decreased due to lower content costs for various properties as we transition out of and/or outsource certain business lines. We currently expect...

  • Page 43
    ...obligations at the estimated amounts, is dependent upon the commercial real estate market conditions in certain geographies at the time we negotiate the lease termination and sublease arrangements with third parties. These amounts represent our best estimate of the obligations we expect to incur and...

  • Page 44
    ...to this workforce reduction in the fourth quarter of 2010. The pre-tax cash charges were offset by a $4 million credit related to non-cash stock-based compensation expense reversals for unvested stock awards that were forfeited. We expect the impact of this restructuring plan to reduce future annual...

  • Page 45
    ...follows (dollars in thousands): Years Ended December 31, 2008(2) (1) 2009 (1) 2010 (1) Income tax at the U.S. federal statutory rate of 35 percent ...State income taxes, net of federal benefit ...Change in valuation allowance ...Stock-based compensation expense ...Research tax credits ...Effect...

  • Page 46
    ...in 2010 than in prior years due to a reduction of deferred tax assets associated with an effective tax rate reduction in California starting in 2011. • Stock-based compensation increases our effective tax rate to the extent that stock-based compensation expense recorded in our financial statements...

  • Page 47
    ..., amortization, and stock-based compensation expense. Our management team no longer uses this measure to evaluate the operational performance of our segments. Beginning in the first quarter of 2010, management began to rely on an internal reporting process that provided revenue and direct costs by...

  • Page 48
    ...our search advertising business and our fee-based services, partially offset by an increase in our display advertising business. Search advertising revenue ex-TAC decreased due to the revenue share with Microsoft associated with the Search Agreement and the impact of discontinuing our paid inclusion...

  • Page 49
    ... advertising business and our fee-based services, partially offset by an increase in our display advertising business. Search advertising revenue ex-TAC decreased primarily due to traffic quality initiatives. The decrease in fees revenue is primarily attributed to changes in certain broadband access...

  • Page 50
    ...the exclusive algorithmic and paid search services provider on Yahoo! Properties and non-exclusive provider of such services on Affiliate sites and for Yahoo! to be the exclusive worldwide relationship sales force for Yahoo!'s and Microsoft's premium search advertisers; • February 2010-Sold Zimbra...

  • Page 51
    ..., if any, on available-for-sale securities are reported in other income, net. The fair value for securities is determined based on quoted market prices of the historical underlying security or from readily available pricing sources for the identical underlying securities that may not be actively...

  • Page 52
    ... our strategic investments. Our capital expenditures totaled $714 million in 2010, $434 million in 2009, and $675 million in 2008. Our capital expenditures have been primarily used for purchases and internal development of software to support our offerings and our increased number of users. We...

  • Page 53
    ... earnings. Treasury stock is accounted for under the cost method. Capital expenditures Capital expenditures are generally comprised of purchases of computer hardware, software, server equipment, furniture and fixtures, and real estate. Capital expenditures, net were $714 million in 2010, compared to...

  • Page 54
    ...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, 2010, unrecognized tax benefits...

  • Page 55
    ... graphical advertisements and search revenue is generated from the display of text-based links to an advertiser's Website. Other revenue consists of listings-based services revenue, transaction revenue, and fees revenue. While the majority of our revenue transactions contain standard business terms...

  • Page 56
    ..., 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 relative size of those companies...

  • Page 57
    ...of the beta (a measure of risk) of traded securities of comparable companies. The sum of the fair values of our reporting units is reconciled to our market capitalization adjusted for an estimated control premium. We conducted our annual goodwill impairment test as of October 31, 2010 and determined...

  • Page 58
    ... debt securities as of December 31, 2010 and 2009, respectively. Foreign Currency Risk. Revenue and related expenses generated from our international subsidiaries are generally denominated in the currencies of the local countries. Primary currencies include Australian dollars, British pounds, Euros...

  • Page 59
    ... increase if the U.S. dollar weakens against foreign currencies. Using the foreign currency exchange rates from the year ended December 31, 2009, revenue for the Americas segment for the year ended December 31, 2010 would have been lower than we reported by $13 million, revenue for the EMEA segment...

  • Page 60
    ... and Supplementary Data Page Index to Consolidated Financial Statements 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, 2010 ...Consolidated Balance Sheets as...

  • Page 61
    ... respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established...

  • Page 62
    ...Yahoo! Inc. common stockholders per share-diluted ...$ Shares used in per share calculation-basic ...Shares used in per share calculation... Stock-based compensation expense by function: ...Cost of revenue ...$ 13,813 $ 10,759 $ 3,275 Sales and marketing ...182,826 141,537 71,154 Product development ...

  • Page 63
    Yahoo! Inc. Consolidated Balance Sheets December 31, 2009 2010 (In thousands, except par values) ASSETS Current assets: Cash and cash equivalents ...Short-term marketable debt securities ...Accounts receivable, net of allowance of $41,003 and $22,975 as of December 31, 2009 and 2010, respectively ...

  • Page 64
    ... 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 provided by (used in) financing activities ...Effect of exchange rate changes on cash and cash equivalents...

  • Page 65
    ... year ...Additional paid-in capital Balance, beginning of year ...Common stock and stock-based awards issued ...Stock-based compensation expense ...Tax benefits from stock-based awards ...Tax withholdings related to net share settlements of restricted stock units ...Debt conversions ...Retirement of...

  • Page 66
    ..., net of taxes of $(785), $(10,060), and $116 for 2008, 2009, and 2010, respectively ...Net change in unrealized (losses) gains on available-for-sale securities, net of tax ...Foreign currency translation adjustment, net of tax ...Other comprehensive (loss) income ...Comprehensive income ...Less...

  • Page 67
    ... of marketing services designed to reach and connect with users of its Yahoo! Properties, as well as with Internet users beyond Yahoo! Properties, through a distribution network of third-party entities ("Affiliates") that have integrated Yahoo!'s advertising offerings into their Websites or other...

  • Page 68
    ... Affiliate sites. In the transitioned markets, the Company reports as revenue the 88 percent share of revenue generated from Microsoft's services on Yahoo! Properties and Affiliate sites, as the Company is not the primary obligor in the arrangement with the advertisers. See Note 16-"Search Agreement...

  • Page 69
    ...price or rate. Product Development. Product development expenses consist primarily of compensation related expenses (including stock-based compensation expense) incurred for research and development, the development of, enhancements to, and maintenance and operation of Yahoo! Properties, advertising...

  • Page 70
    ...-line basis over the requisite service period, generally one to four years. Calculating stock-based compensation expense requires the input of highly subjective assumptions, including the expected term of the stock options, stock price volatility, and the pre-vesting forfeiture rate of stock awards...

  • Page 71
    ...-sale securities, the Company determines cost based on amounts paid, including direct costs such as commissions to acquire the security, using the specific identification method. During the year ended December 31, 2008, gross realized gains and losses on available-for-sale debt and equity securities...

  • Page 72
    ...Capitalized internal use software and Website development costs are included in property and equipment, net. Included in the capitalized amounts above are $22 million, $14 million, and $16 million, respectively, of stock-based compensation expense in the years ended December 31, 2008, 2009, and 2010...

  • Page 73
    ... 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 using period-end rates of exchange...

  • Page 74
    ... entities in which the Company holds equity interests that are accounted for using the equity method. For 2008, 2009, and 2010, potentially dilutive securities representing approximately 140 million, 122 million, and 80 million shares of common stock, respectively, were excluded from the computation...

  • Page 75
    ... and liabilities 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 ...Goodwill...

  • Page 76
    ... and liabilities 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 ...Goodwill...

  • Page 77
    ... common stock of Alibaba Group, which represented approximately 40 percent on a fully diluted basis, in exchange for $1.0 billion in cash, the contribution of the Company's China-based businesses, including 3721 Network Software Company Limited ("Yahoo! China"), and direct transaction costs...

  • Page 78
    ...Company's consolidated balance sheets. The Company records its share of the results of Alibaba Group and any related amortization expense, one quarter in arrears, within earnings in equity interests in the consolidated statements of income. The Company's initial purchase price was based on acquiring...

  • Page 79
    ... Company's approximate 35 percent ownership in the common stock of Yahoo Japan, based on the quoted stock price, was approximately $8 billion as of December 31, 2010. The investment in Yahoo Japan is being accounted for using the equity method and the total investment, including net tangible assets...

  • Page 80
    ... received and related taxes, of $1.1 billion and $1.5 billion as of December 31, 2009 and 2010, respectively. Under technology and trademark license and other commercial arrangements with Yahoo Japan, the Company records revenue from Yahoo Japan based on a percentage of advertising revenue earned by...

  • Page 81
    ... 31, 2010. The intangible assets have original estimated useful lives as follows: • Customer, affiliate, and advertiser related relationships-three to eight years; • Developed technology and patents-less than one year to eight years; and • Trade names, trademarks, and domain names-one year...

  • Page 82
    ... income, net. The transaction was accounted for as a sale of a business. Imputed interest on convertible debt relates to the Company's $750 million of zero coupon senior convertible notes (the "Notes") issued in 2003 and converted into shares of Yahoo! common stock during the year ended December 31...

  • Page 83
    ... (in thousands): 2009 2010 Accrued content, connection, traffic acquisition, and other costs ...Deferred income taxes (Note 9) ...Accrued compensation and related expenses ...Accrued taxes payable ...Accrued professional service expenses ...Accrued sales and marketing related expenses ...Accrued...

  • Page 84
    ..., the components of accumulated other comprehensive income were as follows (in thousands): 2009 2010 Unrealized gains and losses on available-for-sale securities, net of tax ...Foreign currency translation, net of tax ...Accumulated other comprehensive income ... $ 4,921 364,315 $ 8,734 495,520...

  • Page 85
    ... Reported as: Short-term marketable debt securities ...Long-term marketable debt securities ...Other assets ...Total ... $2,015,655 1,226,919 2,597 $3,245,171 $1,357,661 744,594 1,469 $2,103,724 Available-for-sale securities included in cash and cash equivalents on the consolidated balance sheets...

  • Page 86
    ...Level 3 The following table sets forth the financial assets, measured at fair value, by level within the fair value hierarchy as of December 31, 2009 (in thousands): Assets Fair Value Measurements at Reporting Date Using Level 1 Level 2 Total Money market funds(1) ...Available-for-sale securities...

  • Page 87
    ...the consolidated balance sheet. (2) The amount of cash and cash equivalents as of December 31, 2010 includes $1.1 billion in cash deposited with commercial banks, of which $425 million are time deposits. The fair values of the Company's Level 1 financial assets are based on quoted market prices of...

  • Page 88
    ... of deferred tax assets associated with an effective tax rate reduction in California starting in 2011. • Stock-based compensation increases the Company's effective tax rate to the extent that stock-based compensation expense recorded in the Company's financial statements is non-deductible...

  • Page 89
    ... for financial reporting purposes and the amounts used for income tax purposes. The components of deferred income tax assets and liabilities are as follows (in thousands): December 31, 2009 2010 Deferred income tax assets: Net operating loss and tax credit carryforwards ...Stock-based compensation...

  • Page 90
    ...recorded on the Company's consolidated balance sheets as follows (in thousands): December 31, 2009 2010 Total unrecognized tax benefits balance ...Amounts netted against related deferred tax assets ...Unrecognized tax benefits recorded on consolidated balance sheets ...Amounts classified as accrued...

  • Page 91
    ... Settlement process with the IRS related to certain capital losses that became available for use. In the fourth quarter of 2010, the Company reached a formal agreement through a pre-filing agreement with the IRS to treat certain bad debt expense as a deductible business expense on the 2009 federal...

  • Page 92
    .... Treasury stock is accounted for under the cost method. Note 11 EMPLOYEE BENEFITS Benefit Plans. The Company maintains a Yahoo! Inc. 401(k) Plan (the "401(k) Plan") for its full-time employees in the U.S. The 401(k) Plan allows employees of the Company to contribute up to the Internal Revenue Code...

  • Page 93
    ... 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...

  • Page 94
    ... using the Black-Scholes option pricing model with the following weighted average assumptions: Stock Options Years Ended December 31, 2008 2009 2010 Purchase Plans(5) Years Ended December 31, 2008 2009 2010 Expected dividend yield(1) ...0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Risk-free interest rate...

  • Page 95
    ... reversed an amount of $51 million of stock-based compensation expense related to unvested stock awards as a result of an increase in its estimated forfeiture rate assumption based on updated information on actual forfeitures. In 2008, 2009, and 2010, $125 million, $108 million, and $131 million...

  • Page 96
    ... executive's award agreement based on the performance of the Company relative to the applicable performance target. The first type of restricted stock unit generally will vest on the third anniversary of the grant date based on the Company's attainment of certain annual financial performance targets...

  • Page 97
    ... as stock-based compensation expense over a three-year service period. Note 12 COMMITMENTS AND CONTINGENCIES Lease Commitments. The Company leases office space and data centers under operating and capital lease agreements with original lease periods up to 13 years which expire between 2010 and...

  • Page 98
    ...is obligated to make payments under various non-cancelable arrangements with vendors and other business partners, principally for marketing, bandwidth, co-location, and content arrangements. As of December 31, 2010, these commitments totaled $191 million, of which $95 million will be payable in 2011...

  • Page 99
    ... 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 100
    .... Beginning in the first quarter of 2010, management began to rely on an internal reporting process that provided revenue and direct costs by segment and consolidated income from operations for making decisions related to the evaluation of the financial performance of, and allocating resources to...

  • Page 101
    ... cost of revenue (excluding TAC) and other operating expenses that are directly attributable to the segment such as employee compensation expense (excluding stock-based compensation expense), local sales and marketing expenses, and facilities expenses. Beginning in the fourth quarter of 2010, the...

  • Page 102
    ... according to the online property that generated the revenue. No single foreign country was material to revenue in 2008, 2009, and 2010, respectively. December 31, 2009 2010 Property and equipment, net: U.S...International ...Total property and equipment, net ...Note 14 RELATED PARTY TRANSACTIONS...

  • Page 103
    ...with the five restructuring activities initiated in 2008, 2009, and 2010. It includes employee severance pay and related costs, accelerations and reversals of stock-based compensation expense, facility restructuring costs, and other non-cash charges associated with the exit of facilities, as well as...

  • Page 104
    ... in severance pay expenses and related cash expenses in connection with this workforce realignment, net of reversal for adjustments to original estimates totaling $2 million. The pre-tax cash charges were offset by a $12 million credit related to non-cash stock-based compensation expense reversals...

  • Page 105
    ...million in severance and other costs related to this realignment. In connection with the strategic realignment efforts, a U.S. 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...

  • Page 106
    ...paid ...Non-cash reversals (accelerations) of stockbased compensation expense ...Non-cash adjustments ...Balance as of December 31, 2009 ...Employee severance pay and related costs ...Reversals of stock-based compensation... consolidated balance sheet as follows (in thousands): 2009 2010 Accrued ...

  • Page 107
    ...88 percent revenue share in connection with the Search Agreement was $172 million as of December 31, 2010. The global transition of the algorithmic and paid search platforms to Microsoft's platform and migration of the paid search advertisers and publishers are being done on a market by market basis...

  • Page 108
    ... for the year ended December 31, 2010 also reflect transition cost reimbursements from Microsoft under the Search Agreement, which were equal to the transition costs of $81 million incurred by Yahoo! related to the Search Agreement in the year ended December 31, 2010. In addition, in the year ended...

  • Page 109
    ... receivable Allowance for doubtful accounts 2008 ...2009 ...2010 ... 46,521 51,600 41,003 Balance at Beginning of Year 24,937 4,607 4,944 (19,858) (15,204) (22,972) 51,600 41,003 22,975 Balance at End of Year Charged (Credited) Charged to to Other Expenses Accounts(*) (In thousands) Deferred...

  • Page 110
    ... and paid search services to the Microsoft platform in the U.S. and Canada, revenue was impacted by the required change in revenue presentation and the revenue share with Microsoft associated with the transition pursuant to the Search Agreement. For transitioned markets, Yahoo! now reports an...

  • Page 111
    ...appears on page 59. Changes in Internal Control Over Financial Reporting During the fourth quarter of 2010, the Company began the transition of algorithmic and paid search services to Microsoft under the Search Agreement. As a result, the Company's management changed certain of the Company's systems...

  • Page 112
    ...annual base salary, for the Company's principal executive officer, principal financial officer, and the other executive officers who were named in the Summary Compensation Table of the Company's Proxy Statement filed with the SEC on April 29, 2010 and who are currently employed as executive officers...

  • Page 113
    ..., in connection with the approval of the Severance Agreements, the Compensation Committee approved a letter agreement with Ms. Bartz amending her 2010 stock option and 2010 time-based RSU award (the "Bartz Letter Amendment") to provide that, in the event the Company terminates Ms. Bartz's employment...

  • Page 114
    ...the fiscal year ended December 31, 2010. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item is incorporated by reference to Yahoo!'s Proxy Statement for its 2011 Annual Meeting of Shareholders to be filed with...

  • Page 115
    ...Accounts for each of the three years in the period ended December 31, 2010 ...All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto Supplementary Financial Data: Selected Quarterly Financial Data...

  • Page 116
    ... requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Signature Title Date /S/ /S/ /S/ CAROL BARTZ Carol Bartz Chief Executive Officer and Director (Principal...

  • Page 117
    Signature Title Date /S/ BRAD SMITH Brad Smith Director February 18, 2011 /S/ GARY WILSON Gary Wilson Director February 28, 2011 /S/ JERRY YANG Jerry Yang Director February 28, 2011 115

  • Page 118
    ... the Registrant's Current Report on Form 8-K filed October 27, 2005 and incorporated 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...

  • Page 119
    ... Registrant's Annual Report on Form 10-K filed February 26, 2010 and incorporated herein by reference). Form of Letter Amendment (2011) to Performance Restricted Stock Unit Award Agreement (AFP version) under the Yahoo! Inc. 1995 Stock Plan. Form of Performance Restricted Stock Unit Award Agreement...

  • Page 120
    ... 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 Executive Officers. Yahoo! Inc. Executive Incentive Plan. Form of Severance Agreement. Yahoo! Inc. Change in Control Employee Severance Plan for Level...

  • Page 121
    ...the Registrant's Annual Report on Form 10-K filed February 26, 2010 and incorporated herein by reference). Form of Letter Amendment (2011) to 2010 Time-Based Award Agreements between the Registrant and Carol Bartz under the Yahoo! Inc. 1995 Stock Plan. Form of Performance Restricted Stock Unit Award...

  • Page 122
    ... Agreement, dated October 1, 2010, between the Registrant and Hilary Schneider (previously filed as Exhibit 10.19 to the Registrant's Quarterly report on Form 10-Q filed November 8, 2010 and incorporated herein by reference). List of Subsidiaries. Consent of Independent Registered Public Accounting...

  • Page 123
    ... report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated: February 28, 2011 By: /S/ CAROL BARTZ 3. 4. Carol Bartz Chief Executive Officer

  • Page 124
    ... report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated: February 28, 2011 By: /S/ TIMOTHY R. MORSE Timothy R. Morse Chief Financial Officer...

  • Page 125
    ... connection with the Annual Report on Form 10-K of Yahoo! Inc. (the "Company") for the year ended December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Carol Bartz, as Chief Executive Officer of the Company, and Timothy R. Morse, as Chief Financial...

  • Page 126
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  • Page 127
    ... del.icio.us, Flickr, Right Media, omg, Shine, Sportacular, Prime Time in No Time, Behind Enemy Lines, Ready Set Dance, Yahoo! Search BOSS, Wretch, Meme, Citizen Sports, Associated Content and their respective logos. Other names are trademarks and/or registered trademarks of their respective owners.

  • Page 128
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