Yahoo 2010 Annual Report Download - page 45

Other Income, Net. Other income, net was as follows (in thousands):
Years Ended December 31, 2008-2009
Dollar Change
2009-2010
Dollar Change2008 2009 2010
Interest and investment income ................... $86,056 $ 22,116 $ 23,062 $ (63,940) $ 946
Gain on sale of Kelkoo SAS ...................... 25,149 — — (25,149) —
Imputed interest on convertible debt ............... (9,088) — — 9,088 —
Gain on sales of marketable equity securities ......... — 164,851 — 164,851 (164,851)
Gain on sale of Zimbra, Inc. ...................... — — 66,130 — 66,130
Gain on sale of HotJobs ......................... — — 186,345 — 186,345
Other ........................................ (28,367) 561 22,332 28,928 21,771
Total other income, net ...................... $73,750 $187,528 $297,869 $113,778 $ 110,341
Other income, net was $298 million for the year ended December 31, 2010, an increase of $110 million,
compared to 2009. In February 2010, we sold Zimbra, Inc., for net proceeds of $100 million and recorded a
pre-tax gain of $66 million. In August 2010, we sold HotJobs for net proceeds of $225 million and recorded a
pre-tax gain of $186 million. Other consists of foreign exchange gains and losses due to re-measurement of
monetary assets and liabilities denominated in non-functional currencies, gains/losses from sales of marketable
debt securities and/or investments in privately-held companies, and other non-operating items.
Other income, net was $188 million for the year ended December 31, 2009, an increase of $114 million,
compared to 2008. Interest and investment income for the year ended December 31, 2009 decreased due to lower
average interest rates compared to the same period in 2008. Average interest rates were less than 1 percent in
2009, compared to 2.8 percent in 2008. Gains on sales of marketable equity securities include gains from sales of
publicly traded companies. In May 2009, we sold all of our Gmarket shares for net proceeds of $120 million and
recorded a pre-tax gain of $67 million. In September 2009, we sold our direct investment in Alibaba.com for net
proceeds of $145 million and recorded a pre-tax gain of $98 million. We had no imputed interest on our
convertible debt in 2009, compared to a charge of $9 million in 2008. Other charges decreased by $29 million for
the year ended December 31, 2009, compared to 2008, primarily due to foreign exchange re-measurement of
assets and liabilities denominated in non-functional currencies.
Other income, net may fluctuate in future periods due to changes in our average investment balances, changes in
interest and foreign exchange rates, realized gains and losses on investments, and impairments of investments.
Income Taxes. The provision for income taxes for the year ended December 31, 2010 differs from the amount
computed by applying the federal statutory income tax rate to income before provision for income taxes and
earnings in equity interests as 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 ........ $ 30,349 35% $200,976 35% $ 374,638 35%
State income taxes, net of federal benefit ...................... (8,925) (10)% (4,549) (1)% 54,268 5%
Change in valuation allowance .............................. 25,674 30% 13,521 2% (1,315) —
Stock-based compensation expense .......................... 44,938 52% 28,322 5% 4,404 —
Research tax credits ...................................... (13,954) (16)% (11,046) (2)% (10,345) (1)%
Effect of non-U.S. operations ............................... 18,403 21% 20,126 4% (17,344) (2)%
Resolution with tax authorities .............................. (5,245) (6)% — — (159,168) (14)%
Tax gain in excess of book gain from sales of Zimbra, Inc. and
HotJobs due to basis differences .......................... — — — — 23,184 2%
Nondeductible goodwill ................................... 170,644 197% — — — —
Tax restructuring ........................................ — — (25,583) (4)% (43,361) (4)%
Other .................................................. (2,878) (4)% (2,446) (1)% (3,438) —
Provision for income taxes ................................. $259,006 299% $219,321 38% $ 221,523 21%
(1) Percent of income before income taxes and earnings in equity interests.
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