Yahoo 2013 Annual Report Download - page 46
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From February 23, 2010 until the applicable services were fully transitioned to Microsoft in all markets,
Microsoft was required under the Search Agreement to reimburse us for the costs of operating algorithmic and
paid search services subject to specified exclusions and limitations. Our results reflect search operating cost
reimbursements from Microsoft under the Search Agreement of $49 million, $67 million, and $212 million for
the years ended December 31, 2013, 2012, and 2011, respectively.
We record receivables for the reimbursements as costs are incurred and apply them against the operating expense
categories in which the costs were incurred. Of the total amounts incurred during the years ended December 31,
2012 and 2013, the total reimbursements not yet received from Microsoft of $5 million were classified as part of
prepaid expenses and other current assets on our consolidated balance sheets as of December 31, 2012 and 2013.
See Note 19—“Search Agreement with Microsoft Corporation” in the Notes to our consolidated financial
statements for additional information.
Results of Operations
Years Ended December 31, 2011-2012
% Change
2012-2013
% Change2011 2012 2013
(dollars in thousands)
Revenue for groups of similar services:
Display
Yahoo Properties ..................... $1,998,312 $1,930,234 $1,744,130 (3)% (10)%
Affiliate sites ........................ 161,997 212,584 205,700 31% (3)%
Total Display revenue ............. $2,160,309 $2,142,818 $1,949,830 (1)% (9)%
Search
Yahoo Properties ..................... $1,056,053 $1,206,209 $1,371,134 14% 14%
Affiliate sites ........................ 797,057 679,651 370,657 (15)% (45)%
Total Search revenue .............. $1,853,110 $1,885,860 $1,741,791 2% (8)%
Other ................................... $ 970,780 $ 957,888 $ 988,759 (1)% 3%
Total revenue .................... $4,984,199 $4,986,566 $4,680,380 — (6)%
Cost of revenue—TAC ..................... 603,371 518,906 254,442 (14)% (51)%
Cost of revenue—other .................... 983,626 1,101,660 1,094,938 12% (1)%
Sales and marketing ....................... 1,122,193 1,101,572 1,130,820 (2)% 3%
Product development ...................... 919,368 885,824 1,008,487 (4)% 14%
General and administrative ................. 497,288 540,247 569,555 9% 5%
Amortization of intangibles ................. 33,592 35,819 44,841 7% 25%
Gains on sales of patents ................... — — (79,950) — 100%
Goodwill impairment charge ................ — — 63,555 — 100%
Restructuring charges, net .................. 24,420 236,170 3,766 N/M (98)%
Total operating expenses ........... $4,183,858 $4,420,198 $4,090,454 6% (7)%
Income from operations ............ $ 800,341 $ 566,368 $ 589,926 (29)% 4%
Includes:
Stock-based compensation expense . . . $ 203,958 $ 224,365 $ 278,220 10% 24%
Costs associated with the Korea
business and its closure .......... $ — $ 99,485 $ — 100% (100)%
N/M = Not Meaningful
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