Yahoo 2014 Annual Report Download - page 96

Yahoo! Inc.
Notes to Consolidated Financial Statements
Note 1 The Company And Summary Of Significant Accounting
Policies
The Company. Yahoo! Inc., together with its consolidated subsidiaries (“Yahoo” or the “Company”),
is a guide focused on making users’ digital habits inspiring and entertaining. By creating highly
personalized experiences for its users, the Company keeps people connected to what matters most
to them, across devices and around the world. In turn, the Company creates value for advertisers by
connecting them with the audiences that build their businesses. For advertisers, the opportunity to
be a part of users’ digital habits across products and platforms is a powerful tool to engage
audiences and build brand loyalty. Advertisers can build their businesses by advertising to targeted
audiences on the Company’s online properties and services (“Yahoo Properties”) and through a
distribution network of third-party entities (“Affiliates”) who integrate the Company’s advertising
offerings into their Websites or other offerings (“Affiliate sites” and, together with Yahoo Properties,
the “Yahoo Network”). The Company manages and measures its business geographically, principally
in the Americas, EMEA (Europe, Middle East, and Africa) and Asia Pacific.
Basis of Presentation. The consolidated financial statements include the accounts of Yahoo! Inc. and
its majority-owned or otherwise controlled subsidiaries. All significant intercompany accounts and
transactions have been eliminated. Investments in entities in which the Company can exercise
significant influence, but does not own a majority equity interest or otherwise control, are accounted
for using the equity method and are included as investments in equity interests on the consolidated
balance sheets. The Company has included the results of operations of acquired companies from the
date of the acquisition. Certain prior period amounts have been reclassified to conform to the current
period presentation.
The preparation of consolidated financial statements in conformity with generally accepted
accounting principles (“GAAP”) in the United States (“U.S.”) requires management to make
estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses and the related disclosure of contingent assets and liabilities. On an ongoing basis, the
Company evaluates its estimates, including those related to revenue, the useful lives of long-lived
assets including property and equipment and intangible assets, investment fair values, stock-based
compensation, goodwill, income taxes, contingencies, and restructuring charges. Actual results may
differ from these estimates.
Concentration of Risk. Financial instruments that potentially subject the Company to significant
concentration of credit risk and equity price consist primarily of cash, cash equivalents, marketable
securities (including Alibaba Group Holding Limited (“Alibaba Group”) and Hortonworks, Inc.
(“Hortonworks”) equity securities), accounts receivable, and derivative financial instruments. The
primary focus of the Company’s investment strategy is to preserve capital and meet liquidity
requirements. A large portion of the Company’s cash is managed by external managers within the
guidelines of the Company’s investment policy. The Company’s investment policy addresses the level
of credit exposure by limiting the concentration in any one corporate issuer or sector and
establishing a minimum allowable credit rating. To manage the risk exposure, the Company maintains
its portfolio of cash and cash equivalents and short-term and long-term investments in marketable
securities, including U.S. and foreign government, agency, municipal and highly rated corporate debt
obligations and money market funds.
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