Yahoo 2012 Annual Report Download - page 104

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September 30,
2011
September 30,
2012
Balance sheet data(*):
Current assets .................................................... $3,491,753 $4,062,823
Long-term assets ................................................. $2,993,329 $3,204,144
Current liabilities ................................................. $1,562,840 $2,624,656
Long-term liabilities ............................................... $ 134,160 $4,705,347
Convertible preferred shares ........................................ $ 1,415 $1,317,526
Noncontrolling interests ............................................ $ 406,805 $ 65,907
(*) In the period ended June 30, 2012, Alibaba Group purchased the remaining noncontrolling interest in
Alibaba.com for total consideration of approximately $2.5 billion. The purchase was primarily financed by
the issuance of debt. The excess of consideration over book value of the noncontrolling interest was recorded
as a reduction to the shareholders’ equity of Alibaba Group, which increased the Company’s excess cost
related to its investment in Alibaba Group.
Since acquiring its interest in Alibaba Group, the Company has recorded, in retained earnings, cumulative
earnings in equity interests, net of tax, of $440 million and $661 million as of December 31, 2011 and 2012,
respectively.
Equity Investment in Yahoo Japan. During April 1996, the Company signed a joint venture agreement with
Softbank, which was amended in September 1997, whereby Yahoo Japan Corporation (“Yahoo Japan”) was
formed. Yahoo Japan was formed to establish and manage a local version of Yahoo! in Japan.
The investment in Yahoo Japan is being accounted for using the equity method and the total investment,
including net tangible assets, identifiable intangible assets and goodwill, is classified as part of the investments in
equity interests balance on the Company’s consolidated balance sheets. The Company records its share of the
results of Yahoo Japan and any related amortization expense, one quarter in arrears, within earnings in equity
interests in the consolidated statements of income.
Yahoo Japan’s financial statements are prepared in accordance with accounting principles generally accepted in
Japan (“Japanese GAAP”). The Company makes adjustments to its earnings in equity interests line in the
consolidated statements of income for any differences between U.S. GAAP and Japanese GAAP.
During the year ended December 31, 2011, the Company recorded $33 million in U.S. GAAP adjustments to
Yahoo Japan’s net income to reflect the Company’s 35 percent share of non-cash losses related to impairments of
assets held by Yahoo Japan. The $33 million recorded during the year ended December 31, 2011 primarily
includes $7 million related to the Company’s share of a non-cash loss in connection with an impairment of assets
held by Yahoo Japan in the second quarter of 2011 and a $26 million, U.S. GAAP adjustment to Yahoo Japan’s
net income in the first quarter of 2011 to reflect the Company’s share of an other-than-temporary impairment of a
cost method investment of Yahoo Japan that resulted primarily from reductions in the projected operating results
of the Yahoo Japan investee.
The fair value of the Company’s ownership in the common stock of Yahoo Japan, based on the quoted stock
price, was approximately $7 billion as of December 31, 2012.
During the years ended December 31, 2010, 2011 and 2012, the Company received cash dividends from Yahoo
Japan in the amounts of $61 million, $75 million, and $84 million, net of tax, respectively, which were recorded
as reductions in the Company’s investment in Yahoo Japan.
The following tables present summarized financial information derived from Yahoo Japan’s consolidated
financial statements. The Company has made adjustments to the Yahoo Japan financial information to address
differences between Japanese GAAP and U.S. GAAP that materially impact the summarized financial
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