Yahoo 2010 Annual Report Download - page 47

tax treatment were charged to additional paid-in capital due to the interaction of stock option deductions and the
foreign tax credit computations. Accordingly, the $102 million was recorded as a credit to additional paid-in
capital with a corresponding reduction of $49 million in current year income taxes payable and a $53 million
receivable from the IRS for taxes paid in prior years.
Earnings in Equity Interests. Earnings in equity interests for the year ended December 31, 2010 were
approximately $396 million, compared to $250 million and $597 million for 2009 and 2008, respectively.
Earnings in equity interests increased during the year ended December 31, 2010 compared to 2009 due primarily
to Yahoo Japan’s improved financial performance and the impact of foreign currency exchange rate fluctuations.
Earnings in equity interests for the year ended December 31, 2008 included a $401 million non-cash gain related
to Alibaba Group’s IPO of Alibaba.com, net of tax. In connection with the IPO, we made a direct investment of 1
percent in Alibaba.com, which we sold during the third quarter of 2009 for net proceeds of $145 million. In 2008,
we also recorded an impairment charge of $30 million, net of tax, within earnings in equity interests to reduce the
carrying value of the Alibaba.com investment to fair value. See Note 4—“Investments in Equity Interests” in the
Notes to the consolidated financial statements for additional information.
Noncontrolling Interests. Noncontrolling interests represent the noncontrolling holders’ percentage share of
income or losses from the subsidiaries in which we hold a majority, but less than 100 percent, ownership interest
and the results of which are consolidated in our consolidated financial statements. Noncontrolling interests were
approximately $13 million in 2010, compared to $7 million and $6 million in 2009 and 2008, respectively.
Noncontrolling interests recorded in 2010, 2009, and 2008, were mainly related to our Yahoo! 7 joint venture in
Australia.
Business Segment Results
We manage our business geographically. Through the first quarter of 2010, the primary areas of measurement
and decision-making were the U.S. and International. Beginning in the second quarter of 2010, our business
management structure was redefined along three geographies: Americas, EMEA (Europe, Middle East, and
Africa) and Asia Pacific. As a result, prior period presentations have been updated to conform to the segments
currently being used by our management team to evaluate our operational performance.
In our Annual Report on Form 10-K for the year ended December 31, 2009, the segment profitability measure we
reported was segment operating income before depreciation, 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 segment and consolidated income from operations for making decisions
related to the evaluation of the financial performance of, and allocating resources to, our segments. Beginning in
the fourth quarter of 2010, management began to rely on an internal reporting process that provides revenue
ex-TAC, which is defined as revenue less TAC, direct costs excluding TAC by segment, and consolidated
income from operations for making decisions related to the evaluation of the financial performance of, and
allocating resources to, our segments. As a result, prior period presentations have been updated to conform to the
current profitability measures being used by our management team to evaluate the financial performance of our
segments.
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