Yahoo 2013 Annual Report Download - page 84

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Yahoo! Inc.
Notes to Consolidated Financial Statements
Note 1 T
HE
C
OMPANY
A
ND
S
UMMARY
O
F
S
IGNIFICANT
A
CCOUNTING
P
OLICIES
The Company. Yahoo! Inc., together with its consolidated subsidiaries (“Yahoo” or the “Company”) is a global
technology company focused on making the world’s daily habits inspiring and entertaining. The Company’s
mission is driven by its commitment to creating highly personalized experiences that reach the Company’s users
wherever they might be—on their mobile phone, tablet or desktop. Yahoo’s more than 800 million monthly users
connect to the things that matter most to them with beautiful, engaging experiences across Search,
Communications, Digital Magazines and Video—some of which will be powered by Flickr and Tumblr.
The Company creates value for advertisers with a streamlined, simplified advertising technology stack that
leverages Yahoo’s data, reach and analytics to connect advertisers with their target audiences. For advertisers, the
opportunity to be a part of users’ daily habits across products and platforms is a powerful tool to engage
audiences and build brand loyalty.
Advertisers can build their businesses through advertising to targeted audiences on the Company’s online
properties and services (“Yahoo Properties”), or through a distribution network of third party entities
(“Affiliates”) who integrate the Company’s advertising offerings into their Websites or other offerings (“Affiliate
sites”; together with Yahoo Properties, the “Yahoo Network”). The Company manages and measures its business
geographically, principally in the Americas, EMEA (Europe, Middle East, and Africa) and Asia Pacific.
Basis of Presentation. The consolidated financial statements include the accounts of Yahoo! Inc. and its
majority-owned or otherwise controlled subsidiaries. All significant intercompany accounts and transactions have
been eliminated. Investments in entities in which the Company can exercise significant influence, but does not
own a majority equity interest or otherwise control, are accounted for using the equity method and are included
as investments in equity interests on the consolidated balance sheets. The Company has included the results of
operations of acquired companies from the date of acquisition. Certain prior period amounts have been
reclassified to conform to the current period presentation
The preparation of consolidated financial statements in conformity with generally accepted accounting principles
(“GAAP”) in the United States (“U.S.”) requires management to make estimates, judgments, and assumptions
that affect the reported amounts of assets, liabilities, revenue, and expenses and the related disclosure of
contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those
related to revenue, the useful lives of long-lived assets including property and equipment and intangible assets,
investment fair values, stock-based compensation, goodwill, income taxes, contingencies, and restructuring
charges. The Company bases its estimates of the carrying value of certain assets and liabilities on historical
experience and on various other assumptions that are believed to be reasonable under the circumstances, when
these carrying values are not readily available from other sources. Actual results may differ from these estimates.
Concentration of Risk. Financial instruments that potentially subject the Company to significant concentration of
credit risk consist primarily of cash, cash equivalents, marketable securities, accounts receivable, and derivative
financial instruments. The primary focus of the Company’s investment strategy is to preserve capital and meet
liquidity requirements. A large portion of the Company’s cash is managed by external managers within the
guidelines of the Company’s investment policy. The Company’s investment policy addresses the level of credit
exposure by limiting the concentration in any one corporate issuer or sector and establishing a minimum
allowable credit rating. To manage the risk exposure, the Company maintains its portfolio of cash and cash
equivalents and short-term and long-term investments in a variety of fixed income securities, including U.S. and
foreign government, agency, municipal and highly rated corporate debt obligations and money market funds. The
Company’s derivative instruments, including the note hedge transactions, expose the Company to credit risk to
the extent that its counterparties may be unable to meet the terms of the agreements. The Company seeks to
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