Yahoo 2013 Annual Report Download - page 107

materially impact the summarized financial information below. Due to these adjustments, the Yahoo Japan
summarized financial information presented below is not materially different than such information presented on
the basis of U.S. GAAP.
Twelve Months Ended September 30,
2011 2012 2013
Operating data:
Revenue ............................................... $3,988,377 $4,242,623 $4,296,522
Gross profit ............................................ $3,311,357 $3,594,633 $3,577,001
Income from operations .................................. $1,963,924 $2,189,323 $2,150,644
Net income ............................................ $1,114,637 $1,313,494 $1,365,443
Net income attributable to Yahoo Japan ...................... $1,108,390 $1,308,539 $1,355,457
September 30,
2012 2013
Balance sheet data:
Current assets ..................................................... $5,752,826 $6,318,156
Long-term assets ................................................... $1,837,829 $1,728,912
Current liabilities ................................................... $1,167,772 $1,992,508
Long-term liabilities ................................................ $ 49,461 $ 56,762
Noncontrolling interests ............................................. $ 31,034 $ 74,754
Since acquiring its equity interest in Yahoo Japan, the Company has recorded cumulative earnings in equity
interests, net of dividends received and related taxes on dividends, of $2.3 billion and $2.8 billion as of
December 31, 2012 and 2013, respectively.
Under technology and trademark license and other commercial arrangements with Yahoo Japan, the Company
records revenue from Yahoo Japan based on a percentage of advertising revenue earned by Yahoo Japan. The
Company recorded revenue from Yahoo Japan of approximately $287 million, $281 million, and $266 million,
respectively, for the years ended December 31, 2011, 2012, and 2013. As of December 31, 2012 and 2013, the
Company had net receivable balances from Yahoo Japan of approximately $43 million and $42 million,
respectively.
Note 9 D ERIVATIVE F INANCIAL I NSTRUMENTS
The Company uses derivative financial instruments, primarily forward contracts, to mitigate risk associated with
adverse movements in foreign currency exchange rates.
The Company generally enters into master netting arrangements, which are designed to reduce credit risk by
permitting net settlement of transactions with the same counterparty. The Company presents its derivative assets
and liabilities at their gross fair values on the consolidated balance sheets. The Company is not required to
pledge, and is not entitled to receive, cash collateral related to these derivative transactions.
Net Investment Hedges. The Company hedges, on an after-tax basis, a portion of its net investment in Yahoo
Japan with forward contracts to reduce the risk that its carrying value of its investment in Yahoo Japan will be
adversely affected by foreign currency exchange rate fluctuations. At inception, the forward contracts had
maturities ranging from 9 to 15 months. The Company applies hedge accounting on its forward contracts for the
net investment hedge of Yahoo Japan. The total balance of the after-tax net investment hedge was less than the
Yahoo Japan investment balance as of both December 31, 2012 and 2013. As such, the net investment hedge was
considered to be effective, and, as a result, the changes in the fair value were recorded within accumulated other
comprehensive income on the Company’s consolidated balance sheets. The Company recognizes net investment
derivative instruments as either an asset or a liability on the Company’s consolidated balance sheets at fair value.
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