Yahoo 2015 Annual Report Download - page 74

As of December 31, 2014, we had cash, cash equivalents, and marketable securities (excluding
Alibaba Group and Hortonworks equity securities) totaling $10.2 billion compared to $5.0 billion at
December 31, 2013. The increase was due to the net cash proceeds of $9.4 billion received from the
sale of 140 million Alibaba Group ADSs in the Alibaba Group IPO. This was partially offset by the
repurchase of approximately 102 million shares of our outstanding common stock for approximately
$4.2 billion and $859 million used for acquisitions.
Our foreign subsidiaries held $498 million of our total $6.8 billion of cash and cash equivalents and
marketable securities (excluding Alibaba Group and Hortonworks equity securities) as of
December 31, 2015. The cumulative earnings remaining in our consolidated foreign subsidiaries, if
repatriated to the U.S., under current law, would be subject to U.S. income taxes with an adjustment
for foreign tax credits. As of December 31, 2015, we do not anticipate repatriating our undistributed
foreign earnings of approximately $3.3 billion. Those earnings are principally related to our equity
method investment in Yahoo Japan. It is not practicable to determine the income tax liability that
might be incurred if these earnings were to be repatriated.
We have a credit agreement with Citibank, N.A., as Administrative Agent (as amended, the “Credit
Agreement”) that provides for a $750 million unsecured revolving credit facility, subject to increase
by up to $250 million in accordance with its terms. The Credit Agreement is scheduled to terminate
on July 22, 2016, unless extended by the parties. As of December 31, 2015, we were in compliance
with the financial covenants in the Credit Agreement and no amounts were outstanding.
We invest excess cash predominantly in marketable securities, money market funds, and time
deposits that are liquid and highly rated, and our investment portfolio has an effective maturity of
less than one year. Our marketable securities are classified as available-for-sale and are reported at
fair value, with unrealized gains and losses, net of tax, recorded in accumulated other comprehensive
income. Realized gains or losses and declines in value judged to be other-than-temporary, if any, on
available-for-sale securities are reported in other income, net. The fair value of securities is
determined based on quoted market prices of the historical underlying security or from readily
available pricing sources for the identical underlying securities that may not be actively traded as of
the valuation date. As of December 31, 2015, certain of our marketable securities had a fair value
below cost due primarily to the changes in market rates of interest and yields on these securities. We
evaluate these investments periodically for possible other-than-temporary impairment. We have no
current requirement or intent to sell these securities. We expect to recover up to (or beyond) the
initial cost of the investment.
We currently hedge a portion of our net investment in Yahoo Japan with forward and option
contracts to reduce the risk that our investment in Yahoo Japan will be adversely affected by foreign
currency translation exchange rate fluctuations. The forward contracts are required to be settled in
cash and the amount of cash payment we receive or could be required to pay upon settlement could
be material. The amount of cash paid or received on the option contracts would only be required if
the exchange rate is outside a predetermined range.
We expect to continue to evaluate possible acquisitions of, or strategic investments in, businesses,
products, and technologies that are complementary to our business, which acquisitions and
investments may require the use of cash.
We use cash generated by operations as our primary source of liquidity and believe that existing
cash, cash equivalents, and investments in marketable securities, together with any cash generated
from operations, and borrowings under the Credit Agreement, will be sufficient to meet normal
operating requirements and capital expenditures for the next twelve months.
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