Yahoo 2014 Annual Report Download - page 29

We use derivative instruments, such as foreign currency forward contracts and options, to partially
offset certain exposures to fluctuations in foreign currency exchange rates. The use of such
instruments may not offset any, or more than a portion, of the adverse financial effects of
unfavorable movements in foreign currency exchange rates. Any losses on these instruments that we
experience may adversely impact our financial results, cash flows and financial condition. Further, we
hedge a portion of our net investment in Yahoo Japan Corporation (“Yahoo Japan”) with currency
forward contracts and option contracts. If the Japanese yen has appreciated at maturity beyond the
contract execution rate, we would be required to settle the contract by making a cash payment
which could be material and could adversely impact our cash flows and financial condition. See Part
II, Item 7A—“Quantitative and Qualitative Disclosures About Market Risk” of this Annual Report.
Our international operations expose us to additional risks that could harm our business, operating
results, and financial condition.
In addition to uncertainty about our ability to continue to generate revenue from our foreign
operations and expand our international market position, there are additional risks inherent in doing
business internationally (including through our international joint ventures), including:
• tariffs, trade barriers, customs classifications and changes in trade regulations;
• difficulties in developing, staffing, and simultaneously managing a large number of varying
foreign operations as a result of distance, language, and cultural differences;
• stringent local labor laws and regulations;
• longer payment cycles;
• credit risk and higher levels of payment fraud;
• profit repatriation restrictions and foreign currency exchange restrictions;
• political or social unrest, economic instability, repression, or human rights issues;
• geopolitical events, including natural disasters, acts of war and terrorism;
• import or export regulations;
• compliance with U.S. laws such as the Foreign Corrupt Practices Act, and local laws prohibiting
bribery and corrupt payments to government officials;
• antitrust and competition regulations;
• potentially adverse tax developments;
• seasonal volatility in business activity and local economic conditions;
• economic uncertainties relating to volatility in emerging markets and global economic
uncertainty;
• laws, regulations, licensing requirements, and business practices that favor local competitors or
prohibit foreign ownership or investments;
• different, uncertain or more stringent user protection, content, data protection, privacy,
intellectual property and other laws; and
• risks related to other government regulation (including the potential for actions restricting access
to our products), required compliance with local laws or lack of legal precedent.
We are subject to numerous and sometimes conflicting U.S. and foreign laws and regulations which
increase our cost of doing business. Violations of these complex laws and regulations that apply to
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