Yahoo 2014 Annual Report Download - page 126

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Yahoo Japan
During April 1996, the Company signed a joint venture agreement with Softbank, as amended in
September 1997, which formed Yahoo Japan. Yahoo Japan was formed to establish and manage a
local version of Yahoo in Japan.
The investment in Yahoo Japan is being accounted for using the equity method and the total
investment, including net tangible assets, identifiable intangible assets, and goodwill, is classified as
part of the investments in equity interests balance on the Company’s consolidated balance sheets.
The Company records its share of the results of Yahoo Japan and any related amortization expense,
one quarter in arrears, within earnings in equity interests in the consolidated statements of income.
The Company makes adjustments to the earnings in equity interests line in the consolidated
statements of income for any differences between U.S. GAAP and International Financial Reporting
Standards (“IFRS”), the standards by which Yahoo Japan’s financial statements are prepared.
The fair value of the Company’s ownership interest in the common stock of Yahoo Japan, based on
the quoted stock price, was approximately $7 billion as of December 31, 2014.
During the years ended December 31, 2012, 2013 and 2014, the Company received cash dividends
from Yahoo Japan in the amounts of $84 million, $77 million, and $84 million, net of withholding
taxes, respectively, which were recorded as reductions to the Company’s investment in Yahoo Japan.
During the year ended December 31, 2014, the Company sold data center assets and assigned a data
center lease to Yahoo Japan for cash proceeds of $11 million and recorded a net gain of
approximately $5 million within general and administrative operating expenses.
The following tables present summarized financial information derived from Yahoo Japan’s
consolidated financial statements, which are prepared on the basis of IFRS. The Company has made
adjustments to the Yahoo Japan financial information to address differences between IFRS and U.S.
GAAP that 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,
2012 2013 2014
Operating data:
Revenue
$4,242,623 $4,296,522 $4,046,412
Gross profit
$3,594,633 $3,577,001 $3,262,450
Income from operations
$2,189,323 $2,150,644 $1,896,368
Net income
$1,313,494 $1,365,443 $1,236,583
Net income attributable to Yahoo Japan
$1,308,539 $1,355,457 $1,225,221
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