Yahoo 2011 Annual Report Download - page 46

depreciation and amortization expense decreased $34 million for year ended December 31, 2011, compared to
2010. The decrease was primarily driven by a decrease in depreciation and amortization expense for fully
depreciated or amortized assets acquired in prior years. The decline in depreciation and amortization expense was
offset by decreased Microsoft reimbursements of $4 million during the year ended December 31, 2011, compared
to 2010.
Depreciation and amortization expenses decreased $82 million for the year ended December 31, 2010, compared
to 2009. Excluding the impact of Microsoft reimbursements, depreciation and amortization expense decreased
$56 million for year ended December 31, 2010, compared to 2009. The decline was primarily due to decreased
amortization expense for intangible assets associated with divested business lines as well as fully amortized
intangible assets acquired in prior years. The decrease in depreciation and amortization expenses was offset by
increased Microsoft reimbursements of $26 million during the year ended December 31, 2010, for which there
were no similar reimbursements in 2009.
TAC. TAC decreased $1,133 million and $41 million for the years ended December 31, 2011 and December 31,
2010, respectively, compared to 2010 and 2009, respectively. The decrease year-over-year in both years is
primarily due to the change in the recording of TAC in the fourth quarter 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. In addition, the decrease in TAC
for the year ended December 31, 2011, compared to 2010, was due to the loss of an Affiliate in the Asia Pacific
region during late 2010. The decrease for the year ended December 31, 2010, compared to 2009, was offset by
increases in TAC due to a new Affiliate in the Asia Pacific segment added in the fourth quarter of 2009 as well as
increases in revenue from Affiliate sites.
Facilities and Other Expenses. Facilities and other expenses decreased $117 million year ended December 31,
2011, compared to 2010. Excluding the impact of Microsoft reimbursements, facilities and other expenses
decreased $161 million, primarily due to decreases in marketing-related expenses. Marketing-related expenses
decreased during the year ended December 31, 2011 compared to 2010 due to the launch of various 2010
marketing campaigns, including our global branding campaign, for which there were no similar campaigns in
2011. The decline in facilities and other expenses was offset by decreased Microsoft reimbursements of $44
million during the year ended December 31, 2011, compared to 2010. The decrease in Microsoft reimbursements
for the year ended December 31, 2011 was due to the transition of paid search to Microsoft platforms.
Facilities and other expenses decreased $133 million for the year ended December 31, 2010, compared to 2009.
Excluding the impact of Microsoft reimbursements, facilities and other expenses decreased $61 million. The
decrease is mainly due to a reduction in restructuring charges of $69 million, a reduction in third-party service-
provider expenses of $45 million, and decreases in legal settlements of $21 million, offset by increases in
marketing expenses of $33 million. For the year ended December 31, 2010, we recorded total cost
reimbursements from Microsoft of $93 million for other costs, for which there were no similar reimbursements in
2009. For the year ended December 31, 2010, the net impact of the reimbursements by Microsoft for our cost of
running search and transition costs incurred in 2009 was a reduction in facilities and other expenses of $72
million compared to 2009. Third-party service-provider expenses decreased primarily due to lower advisory and
consulting costs. Marketing-related expenses increased during the year ended December 31, 2010 compared to
2009 due to additional 2010 marketing campaigns including our global branding campaign.
We currently expect our operating costs to increase for the first quarter of 2012, compared to the same period of
2011, reflecting our planned reinvestments in the business and the integration of interclick, inc.
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