Yahoo 2014 Annual Report Download - page 69

Other Income, Net
Other income, net was as follows (dollars in thousands):
Years Ended December 31, 2012-2013
Dollar Change
2013-2014
Dollar Change2012 2013 2014
Interest, dividend, and
investment income $ 41,673 $ 57,544 $ 26,309 $ 15,871 $ (31,235)
Interest expense (9,297) (14,319) (68,851) (5,022) (54,532)
Gain related to the sale of
Alibaba Group shares 4,603,322 — — (4,603,322) —
Gain on sale of Alibaba Group
ADSs — — 10,319,437 — 10,319,437
Gain on Hortonworks warrants — — 98,062 — 98,062
Other income (expense), net 12,141 132 (5,518) (12,009) (5,650)
Total other income, net $4,647,839 $ 43,357 $10,369,439 $(4,604,482) $10,326,082
Interest, dividend, and investment income consists of income earned from cash in bank accounts,
investments made in marketable securities and money market funds, and dividend income on the
Alibaba Group Preference Shares prior to the redemption of such shares in May 2013. Interest,
dividend, and investment income increased $16 million and decreased $31 million for the years ended
December 31, 2013 and 2014, respectively, compared to 2012 and 2013, respectively, primarily due to
dividend income on the Alibaba Group Preference Shares received during the years ended
December 31, 2012 and 2013, for which there was no similar income for the year ended December 31,
2014.
Interest expense is related to the $1.4375 billion of 0.00% Convertible Notes due 2018 (the “Notes”)
we issued in November 2013, interest expense on notes payable related to building obligations and
capital lease obligations for data centers. Interest expense increased $5 million and $54 million for
the years ended December 31, 2013 and 2014, respectively, compared to 2012 and 2013, respectively,
primarily due to the accreted non-cash interest expense related to the Notes.
For the year ended December 31, 2012, we recorded a pre-tax gain of approximately $4.6 billion
related to the sale to Alibaba Group of the Alibaba Group shares. See Note 8—“Investments in Equity
Interests Accounted for Using the Equity Method of Accounting” in the Notes to our consolidated
financial statements for additional information.
For the year ended December 31, 2014, we recorded a pre-tax gain of approximately $10 billion
related to the sale of Alibaba Group ADSs. See “Significant Transactions—Alibaba Group Holding
Limited Initial Public Offering” above and Note 8—“Investments in Equity Interests Accounted for
Using the Equity Method of Accounting” in the Notes to our consolidated financial statements for
additional information.
We hold warrants that vested upon the December 12, 2014 initial public offering of Hortonworks Inc.
(“Hortonworks”), which entitle us to purchase an aggregate of 3.7 million shares of Hortonworks
common stock upon exercise of the warrants. We hold 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. We determined the estimated fair value of the warrants using the
Black-Scholes model. During the year ended December 31, 2014, we recorded a gain of $57 million
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