Yahoo 2011 Annual Report Download - page 51

Download and view the complete annual report

Please find page 51 of the 2011 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 136

  • 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
  • 135
  • 136

is currently being discussed with the IRS, then the settlement will not cause us to have tax exposure beyond what
has already been provided. In addition, our 2007 and 2008 U.S. income tax returns are still under IRS
examination.
As of December 31, 2011, we were also under audit by the California Franchise Tax Board for our 2005 and
2006 tax returns. We believe our existing reserves for all tax matters are adequate.
We are in various stages of examination and appeal in connection with our taxes in foreign jurisdictions, which
generally span tax years 2005 through 2010. It is difficult to determine when these examinations will be settled
or what their final outcomes will be. We believe that we have adequately provided for any reasonably foreseeable
adjustment and that any settlement will not have a material adverse effect on our consolidated financial position,
results of operations, or cash flows.
Earnings in Equity Interests. Earnings in equity interests for the year ended December 31, 2011 were
approximately $477 million, compared to $396 million and $250 million for 2010 and 2009, respectively.
Earnings in equity interests increased during the year ended December 31, 2011 compared to 2010 due primarily
to Yahoo Japan and Alibaba Group’s continued improved financial performance and the recognition of a dilution
gain of $25 million, net of tax in third quarter of 2011, related to our ownership interest in Alibaba Group offset
by $33 million in non-cash losses related to the impairment of assets held by Yahoo Japan. 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. 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 $14 million in 2011, compared to $13 million and $7 million in 2010 and 2009, respectively.
Noncontrolling interests recorded in 2011, 2010, and 2009, were mainly related to the Yahoo! 7 venture in
Australia.
Business Segment Results
We manage our business geographically. The primary areas of measurement and decision making are the
Americas, EMEA (Europe, Middle East and Africa) and Asia Pacific. Management relies 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.
49