Yahoo 2013 Annual Report Download - page 62

partially offset by the repurchase of approximately 126 million shares of our outstanding common stock for $2.2
billion during the year ended December 31, 2012 and cash taxes paid of $2.3 billion in 2012 related to the sale of
Alibaba Group Shares. After the payment of taxes and fees, net cash proceeds from the Initial Repurchase and
the $550 million TIPLA payment were approximately $4.3 billion.
Our foreign subsidiaries held $593 million of our total $5 billion of cash and cash equivalents and marketable
securities as of December 31, 2013. During the year ended December 31, 2012, we recorded the tax effect of a
one-time distribution of earnings from certain foreign subsidiaries. We made a one-time repatriation of foreign
earnings and return of basis of foreign subsidiaries of $962 million from certain of our consolidated foreign
subsidiaries in 2012. The cumulative earnings remaining in our consolidated foreign subsidiaries, if repatriated to
the U.S., under current law, would be subject to the U.S. income taxes with an adjustment for foreign tax
credits. For the earnings that are considered indefinitely reinvested outside the U.S, we do not anticipate a need
to repatriate these earnings for use in our U.S. operations.
On October 19, 2012, we entered into a credit agreement (the “Credit Agreement”) with Citibank, N.A., as
Administrative Agent, and the other lenders party thereto from time to time, which was scheduled to mature on
October 18, 2013. On October 10, 2013, we entered into Amendment No. 1 to the Credit Agreement, which
extended the termination date of the Credit Agreement from October 18, 2013 to October 9, 2014. During the
three months ended September 30, 2013, we borrowed $150 million under the Credit Agreement and
subsequently repaid the amount within the same period. As of December 31, 2013, we were in compliance with
the financial covenants in the Credit Agreement and no amounts were outstanding. See Note 10—“Credit
Agreement” in the Notes to our consolidated financial statements for additional information regarding our Credit
Agreement.
We invest excess cash predominantly in marketable securities, money market funds, and time deposits that are
liquid, highly rated, and the majority of which have effective maturities of less than one year. Our marketable
securities are classified as available-for-sale and are reported at fair value, with unrealized gains and losses, net
of tax, recorded in accumulated other comprehensive income. Realized gains or losses and declines in value
judged to be other-than-temporary, if any, on available-for-sale securities are reported in other income, net. The
fair value for securities is determined based on quoted market prices of the historical underlying security or from
readily available pricing sources for the identical underlying securities that may not be actively traded as of the
valuation date. As of December 31, 2013, certain of our marketable securities had a fair value below cost due
primarily to the changes in market rates of interest and yields on these securities. We evaluate these investments
periodically for possible other-than-temporary impairment. We have no current requirement or intent to sell these
securities. We expect to recover up to (or beyond) the initial cost of the investment.
We currently hedge a portion of our net investment in Yahoo Japan with forward contracts to reduce the risk that
our investment in Yahoo Japan will be adversely affected by foreign currency exchange rate fluctuations. The
forward contracts are required to be settled in cash and the amount of cash payment we receive or could be
required to pay upon settlement could be material. In 2013, we received $304 million in cash settlement of
certain foreign exchange forward contracts designated as net investment hedges reducing the outstanding
notional amount to $1.3 billion.
We expect to continue to evaluate possible acquisitions of, or strategic investments in, businesses, products, and
technologies that are complementary to our business, which acquisitions and investments may require the use of
cash.
We expect to generate positive cash flows from operations in 2014. We use cash generated by operations as our
primary source of liquidity, since we believe that internally generated cash flows are sufficient to support our
business operations and capital expenditures. We believe that existing cash, cash equivalents, and investments in
marketable securities, together with any cash generated from operations, proceeds from the issuance of the Notes,
and borrowings under the Credit Agreement, will be sufficient to meet normal operating requirements including
capital expenditures for the next twelve months.
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