Yahoo 2012 Annual Report Download - page 94

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(2) The corporate equity securities are classified as part of the other long-term assets in the consolidated balance
sheet.
(3) Foreign currency derivative contracts are classified as part of either other current assets or other current
liabilities in the consolidated balance sheet. The notional amounts of the foreign currency derivative contracts
are $92 million as of December 31, 2011 and $3.4 billion, including contracts designated as net investment
hedges of $3 billion, as of December 31, 2012.
The amount of cash and cash equivalents as of December 31, 2011 and 2012 includes $911 million and $597
million, respectively, in cash deposits.
The fair values of the Company’s Level 1 financial assets and liabilities are based on quoted market prices of the
identical underlying security. The fair values of the Company’s Level 2 financial assets and liabilities are
obtained from readily-available pricing sources for the identical underlying security that may not be actively
traded. The Company utilizes a pricing service to assist in obtaining fair value pricing for the majority of this
investment portfolio. The Company classifies its investment in the Alibaba Group Preference Shares within
Level 3 because it is valued using significant unobservable inputs. To estimate the fair value, the Company
performed benchmarking by comparing the terms and conditions of the Alibaba Group Preference Shares to
dividend rates, subordination terms, and credit ratings of those of similar type instruments. The credit rating of
Alibaba Group Holding Limited (“Alibaba Group”), general business conditions, and market rates could
materially affect the fair value of the Alibaba Group Preference Shares. The Company conducts reviews on a
quarterly basis to verify pricing, assess liquidity, and determine if significant inputs have changed that would
impact the fair value hierarchy disclosure.
Activity between Levels of the Fair Value Hierarchy
During the years ended December 31, 2012 and 2011, the Company did not make any transfers between Level 1,
Level 2, or Level 3 assets or liabilities. During the year ended December 31, 2012, the Company recognized $23
million as interest income related to its investment in Alibaba Group Preference Shares. Interest income is
included within other income, net on the consolidated statements of income. There was no other activity related
to our Level 3 assets. As of December 31, 2011, the Company did not have any significant Level 3 financial
assets or liabilities.
Note 3 C
ONSOLIDATED
F
INANCIAL
S
TATEMENT
D
ETAILS
Prepaid expenses and other current assets
As of December 31, prepaid expenses and other current assets consisted of the following (in thousands):
2011 2012
Prepaid expenses .......................................................... $ 81,880 $ 74,268
Deferred income taxes ...................................................... 128,581 249,936
Other receivables non-trade ................................................. 5,292 41,748
Other ................................................................... 143,730 94,360
Total prepaid expenses and other current assets .............................. $359,483 $460,312
80