Yahoo 2015 Annual Report Download - page 65
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Interest expense is related to the $1.4375 billion of 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 $3 million and $54 million for the years ended December 31, 2015
and 2014, respectively, compared to 2014 and 2013, respectively, primarily due to the accreted non-
cash interest expense related to the Notes.
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.
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. For the year ended December 31, 2015, we recorded a loss of $19 million due to
the change in estimated fair value of the Hortonworks warrants during the period, which was
recorded through other income, net in our consolidated statements of operations. During the year
ended December 31, 2014, we recorded a gain of $57 million upon the initial public offering of
Hortonworks and a $41 million gain related to the mark to market of the warrants held as of
December 31, 2014, which were included within other income, net on the consolidated statements of
operations.
Foreign exchange losses consists of foreign exchange gains and losses due to re-measurement of
monetary assets and liabilities denominated in non-functional currencies, and unrealized and realized
foreign currency transaction gains and losses, including gains and losses related to balance sheet
hedges.
Other consists of gains from other non-operational items.
Other income (expense), net may fluctuate in future periods due to changes in our average
investment balances, changes in interest and foreign exchange rates, changes in the fair value of
foreign currency forward contracts, realized gains and losses on investments, and impairments of
investments.
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