Yahoo 2014 Annual Report Download - page 38

partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The
effect of ASC 470-20 on the accounting for the Notes is that the equity component is required to be
included in the additional paid-in capital section of stockholders’ equity on our consolidated balance
sheet, and the value of the equity component would be treated as debt discount for purposes of
accounting for the debt component of the Notes. As a result, we will be required to record a greater
amount of non-cash interest expense in current periods presented as a result of the amortization of the
discounted carrying value of the Notes to their face amount over the term of the Notes. We will report
lower net income in our financial results because ASC 470-20 will require interest to include the
current period’s amortization of the debt discount, which could adversely affect our reported or future
financial results, the trading price of our common stock and the trading price of the Notes.
In addition, under certain circumstances, convertible debt instruments (such as the Notes) that may
be settled entirely or partly in cash are currently accounted for utilizing the treasury stock method,
the effect of which is that the shares issuable upon conversion of the Notes are not included in the
calculation of diluted earnings per share except to the extent that the conversion value of the Notes
exceeds their principal amount. Under the treasury stock method, for diluted earnings per share
purposes, the transaction is accounted for as if the number of shares of common stock that would be
necessary to settle such excess, if we elected to settle such excess in shares, are issued. We cannot
be sure that the accounting standards in the future will continue to permit the use of the treasury
stock method. If we are unable to use the treasury stock method in accounting for the shares issuable
upon conversion of the Notes, then our diluted earnings per share would be adversely affected.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our headquarters is located in Sunnyvale, California and consists of owned space aggregating
approximately one million square feet. We also lease office space in Argentina, Australia, Brazil,
Canada, China, France, Germany, Hong Kong, Hungary, India, Ireland, Israel, Italy, Japan, Jordan,
Mexico, New Zealand, Norway, the Philippines, Singapore, Spain, Switzerland, Taiwan, the United
Arab Emirates, and the United Kingdom. In the United States, we lease offices in various locations,
including Atlanta, Boston, Champaign, Chicago, Dallas, Detroit, Hillsboro, the Los Angeles Area,
Miami, New York, Omaha, San Francisco, and Washington, D.C. Our data centers are operated in
locations in the United States, Brazil, Europe, and Asia.
We believe that our existing facilities are adequate to meet current requirements, and that suitable
additional or substitute space will be available as needed to accommodate any further physical
expansion of operations and for any additional sales offices.
Item 3. Legal Proceedings
For a description of our material legal proceedings, see “Legal Contingencies” in Note 12—
“Commitments and Contingencies” in the Notes to our consolidated financial statements, which is
incorporated herein by reference.
Item 4. Mine Safety Disclosures
Not applicable.
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