Yahoo 2014 Annual Report Download - page 113

Interest expense is related to the Notes, interest expense on notes payable related to building
obligations and capital lease obligations for data centers.
The Company recorded a pre-tax gain of approximately $4.6 billion in 2012 related to the sale to
Alibaba Group of Alibaba Group shares and in 2014 the Company recorded a pre-tax gain of
approximately $10.3 billion related to the sale of Alibaba Group ADSs in the IPO. See Note 8—
“Investments in Equity Interests Accounted for Using the Equity Method of Accounting” for
additional information.
The Company holds warrants that vested upon the December 12, 2014 initial public offering of
Hortonworks, which entitle the Company to purchase an aggregate of 3.7 million shares of
Hortonworks common stock upon exercise of the warrants. The Company holds 6.5 million preferred
warrants that are exercisable for 3.25 million shares of common stock at an exercise price of $0.01
per share, as well as 0.5 million common warrants that are exercisable for 0.5 million shares of
common stock at an exercise price of $8.46 per share. The Company determined the estimated fair
value of the warrants using the Black-Scholes model. During the year ended December 31, 2014, the
Company recorded a gain of $57 million upon the initial public offering of Hortonworks and a $41
million gain related to the mark to market of the warrants held as of December 31, 2014, which were
included within other income, net in the consolidated statements of income. Changes in the
estimated fair value of the Hortonworks warrants will be recorded through other income, net in the
consolidated statements of income. See Note 2—“Marketable Securities, Investments and Fair Value
Disclosures” for additional information.
Other income (expense), net consists of gains and losses from sales or impairments of marketable
securities and/or investments in privately-held companies, foreign exchange gains and losses due to
re-measurement of monetary assets and liabilities denominated in non-functional currencies, and
unrealized and realized foreign currency transaction gains and losses, including gains and losses
related to balance sheet hedges.
Reclassifications Out of Accumulated Other Comprehensive Income
Reclassifications out of accumulated other comprehensive income for the period ended December 31,
2012 were as follows (in thousands):
Amount
Reclassified from
Accumulated
Other
Comprehensive
Income
Affected Line Item in the
Statement of Income
Realized losses on available-for-sale securities, net
of tax
$ 9,088
Yahoo!’s share of earnings in
equity method investments
and Other income, net
Foreign currency translation adjustments (“CTA”):
Korea business closure CTA reclassification
$ (16,208) Restructuring charges, net
Alibaba Group Initial Repurchase related CTA
reclassification, net of $68,130 in tax (120,978) Other income, net
Total foreign currency translation adjustments, net
of tax
$(137,186)
Total reclassifications for the period $(128,098)
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