View:
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
==================
FORM 8-K
==================
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
January 18, 2005
Date of Report (Date of Earliest Event Reported)
==================
Yahoo! Inc.
(Exact name of Registrant as specified in its charter)
==================
Delaware 0-28018 77-0398689
(State or other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
701 First Ave.
Sunnyvale, California 94089
(Address of principal executive offices, including zip code)
(408) 349-3300
(Registrant's telephone number, including area code)
================================================================================
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
================================================================================
Item 2.02 Results of Operations and Financial Condition
The information in this Current Report is being furnished and shall not be
deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of
1934, as amended.
On January 18, 2005, Yahoo! Inc., a Delaware corporation ("Yahoo!")
announced its financial results for the fiscal quarter and year ended December
31, 2004 and certain other information. A copy of Yahoo!'s press release
announcing these financial results and certain other information is attached
hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits.
The following exhibit is furnished with this report on Form 8-K:
99.1 Yahoo! Inc. press release dated January 18, 2005.
2
================================================================================
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
YAHOO! INC.
By:/s/ Susan Decker
----------------
Susan Decker
Executive Vice President, Finance and
Administration, and Chief Financial
Officer (Principal Financial Officer)
Date: January 18, 2005
3
YAHOO! INC.
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
99.1 Press Release dated January 18, 2005
4
EXHIBIT NUMBER DESCRIPTION ------- 99.1 Press release dated January 18, 2005.
5
Exhibit 99.1
Yahoo! Reports Fourth Quarter and Full Year 2004 Financial Results
SUNNYVALE, Calif.--(BUSINESS WIRE)--Jan. 18, 2005--
Company Posts Full Year Revenues of $3,575 Million, Operating Income
of $689 Million, Operating Income Before Depreciation
and Amortization of $1,032 Million
Yahoo! Inc. (Nasdaq:YHOO) today reported results for the fourth
quarter and full year ended December 31, 2004.
"Yahoo! moved at an impressive pace in the fourth quarter, capping
another record year for the Company. Our users were more engaged in
2004 than ever before because of Yahoo!'s relentless focus on
delivering the most innovative products and services on the Internet,"
said Terry Semel, chairman and chief executive officer, Yahoo!.
"Yahoo! also benefited from the growing acceptance of online
advertising with marketers who recognize its effectiveness and are
therefore increasingly using this platform to reach their consumers."
-- Revenues were $1,078 million for the fourth quarter of 2004, a
62 percent increase compared to $664 million for the same
period of 2003.
-- Revenues excluding traffic acquisition costs ("TAC") were $785
million for the fourth quarter of 2004, a 54 percent increase
compared to $511 million for the same period of 2003.
-- Gross profit for the fourth quarter of 2004 was $691 million,
a 56 percent increase compared to $443 million for the same
period of 2003.
-- Operating income for the fourth quarter of 2004 was $235
million, a 149 percent increase compared to $94 million for
the same period of 2003.
-- Operating income before depreciation and amortization for the
fourth quarter of 2004 was $327 million, an 84 percent
increase compared to $178 million for the same period of 2003.
-- Cash flow from operating activities for the fourth quarter of
2004 was $337 million, a 231 percent increase compared to $102
million for the same period of 2003.
-- Free cash flow for the fourth quarter of 2004 was $251
million, a 172 percent increase compared to $92 million for
the same period of 2003.
-- Net income for the fourth quarter of 2004 was $373 million or
$0.25 per diluted share (including a net impact of $185
million, or $0.13 per diluted share, related to the sale of an
investment). Excluding this gain, net income for the fourth
quarter was $187 million, or $0.13 per diluted share. This
compares with net income of $75 million or $0.05 per diluted
share for the same period of 2003.
"Yahoo!'s strong fourth quarter performance completes our third
consecutive year of delivering strong organic revenue growth,
expanding operating margins, and generating substantial free cash
flow," said Susan Decker, chief financial officer, Yahoo!. "We are
attracting more and more users to Yahoo!'s network of services and
driving their usage deeper with more relevant products and services.
This deeper usage is the real magic behind the surpassing of our
financial objectives."
-- Revenues for the year ended December 31, 2004 were $3,575
million, a 120 percent increase compared to $1,625 million for
2003.
-- Revenues excluding TAC for 2004 were $2,600 million, a 77
percent increase compared to $1,473 million for 2003.
-- Gross profit for 2004 was $2,276 million, an 80 percent
increase compared to $1,267 million for 2003.
-- Operating income for 2004 was $689 million, a 133 percent
increase compared to $296 million for 2003.
-- Operating income before depreciation and amortization for 2004
was $1,032 million, a 116 percent increase compared to $477
million for 2003.
-- Cash flow from operating activities for 2004 was $1,090
million, a 155 percent increase compared to $428 million for
2003.
-- Free cash flow for 2004 was $844 million, a 149 percent
increase compared to $339 million for 2003.
-- Net income for 2004 was $840 million or $0.58 per diluted
share (including a net impact of $314 million, or $0.22 per
diluted share, related to the sale of an investment and the
associated tax benefit resulting from fully reserved capital
losses becoming realizable). Excluding this gain, net income
for 2004 was $526 million, or $0.36 per diluted share. This
compares with net income of $238 million or $0.18 per diluted
share for 2003.
-- The provision for income taxes of $438 million yielded an
effective tax rate of 37% for 2004 as a result of the
previously described tax benefit associated with the capital
loss carryforwards. The provision for income taxes for 2003
was $147 million, and yielded an effective tax rate of 43%.
Fourth Quarter and Year Ended 2004 Financial Highlights
Marketing services revenue for the fourth quarter of 2004 totaled
$911 million, a 67 percent increase from the $545 million reported for
the same period of 2003. Marketing services revenue for the year ended
December 31, 2004 totaled $3,002 million, a 150 percent increase from
the $1,200 million reported for 2003. Listings revenue for the fourth
quarter of 2004 totaled $38 million, a 15 percent increase compared to
the $33 million reported for the same period of 2003. Listings revenue
for the year ended December 31, 2004 totaled $147 million, a 16
percent increase compared to the $127 million reported for 2003. The
year over year increases in marketing services and listings revenues
resulted from growth in Yahoo!'s organic revenue and incremental
revenue associated with acquisitions completed during the past year.
Fees revenue for the fourth quarter of 2004 totaled $129 million, a 52
percent increase compared to the $85 million reported for the same
period of 2003. Fees revenue for the year ended December 31, 2004
totaled $426 million, a 43 percent increase compared to the $298
million reported for 2003. The year over year increases in fees
revenues were primarily driven by the growth in the number of paying
relationships for Yahoo!'s premium services, which were approximately
8.4 million at December 31, 2004 compared to approximately 4.9 million
at December 31, 2003.
United States revenues for the fourth quarter of 2004 were $775
million, a 42 percent increase from the $546 million reported for the
same period of 2003. United States revenues for the year ended
December 31, 2004 were $2,653 million, a 96 percent increase from the
$1,355 million reported for 2003. International revenues for the
fourth quarter of 2004 were $303 million, a 156 percent increase from
the $118 million reported for the same period of 2003. International
revenues for the year ended December 31, 2004 were $921 million, a 241
percent increase from the $270 million reported for 2003.
United States segment operating income before depreciation and
amortization in the fourth quarter of 2004 was $278 million, a 68
percent increase from the $166 million reported for the same period of
2003. United States segment operating income before depreciation and
amortization for the year ended December 31, 2004 was $891 million, a
102 percent increase from the $441 million reported for 2003.
International segment operating income before depreciation and
amortization in the fourth quarter of 2004 was $49 million, a 315
percent increase from the $12 million for the same period of 2003.
International segment operating income before depreciation and
amortization for the year ended December 31, 2004 was $141 million, a
291 percent increase from the $36 million reported for 2003. These
increases were primarily a result of the increases in United States
and International revenues and continued efforts to control
discretionary spending.
Free cash flow was $251 million in the fourth quarter of 2004 and
$844 million for the year ended December 31, 2004. Free cash flow was
the largest contributor to the increase of $1,176 million in our cash,
cash equivalents and investments in marketable debt securities which
grew from approximately $2,566 million at December 31, 2003 to $3,742
million at December 31, 2004. Other contributors to the increase were
$651 million of cash generated from the issuance of common stock as a
result of the exercise of employee stock options, and $503 million in
proceeds from sales of marketable equity securities, offset by a net
$70 million used in structured stock repurchase transactions and $756
million used for acquisitions.
Please refer to the "Note to Unaudited Condensed Consolidated
Statements of Operations" for definition of these key financial
measures and "Business Outlook" attached to this press release.
Quarterly Conference Call
Yahoo! will host a conference call to discuss fourth quarter
results at 5:00 p.m. Eastern Time today. A live Webcast of the
conference call, together with supplemental financial information can
be accessed through the Company's Investor Relations Web site at
http://yhoo.client.shareholder.com/earnings.cfm. In addition, an
archive of the Webcast can be accessed through the same link. An audio
replay of the call will be available following the conference call by
calling 877-213-9653 or 630-652-3041, reservation number: 10575210.
About Yahoo!
Yahoo! Inc. is the No. 1 Internet brand globally and the most
trafficked Internet destination worldwide. Yahoo! provides online
products and services essential to consumers' lives, and offers a full
range of tools and marketing solutions for businesses to connect with
Internet users around the world. Yahoo! is headquartered in Sunnyvale,
Calif.
This press release includes the following financial measures
defined as non-GAAP financial measures by the Securities and Exchange
Commission: revenues excluding traffic acquisition costs, operating
income before depreciation and amortization, and free cash flow. These
measures may be different from non-GAAP financial measures used by
other companies. The presentation of this financial information is not
intended to be considered in isolation or as a substitute for the
financial information prepared and presented in accordance with
generally accepted accounting principles. See Note to Unaudited
Condensed Consolidated Statements of Operations and Reconciliations to
Unaudited Condensed Consolidated Statements of Operations included in
this press release for further information regarding these non-GAAP
financial measures.
This press release and its attachments contain forward-looking
statements that involve risks and uncertainties concerning Yahoo!'s
expected financial performance (as described without limitation in the
Business Outlook section and quotations from management in this press
release), as well as Yahoo!'s strategic and operational plans. Actual
results may differ materially from the results predicted and reported
results should not be considered as an indication of future
performance. The potential risks and uncertainties include, among
others, decreases or delays in marketing services spending, the demand
by customers for Yahoo!'s premium services; acceptance of new products
and services; the Company's ability to compete with new or existing
competitors; general economic conditions; risks related to the
integration of recent acquisitions; adverse results in litigation,
including intellectual property infringement claims; the Company's
ability to protect its intellectual property and the value of its
brands; dependence on key personnel; and the dependence on third
parties for technology, services, content and distribution. All
information set forth in this release and its attachments is as of
January 18, 2005. Yahoo! undertakes no duty to update this
information. More information about potential factors that could
affect the Company's business and financial results is included under
the captions, "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations," in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2003
and the Quarterly Report on Form 10-Q for the quarter ended September
30, 2004, which are on file with the SEC and available at the SEC's
website at www.sec.gov. Additional information will also be set forth
in those sections in Yahoo!'s Annual Report on Form 10-K for the year
ended December 31, 2004, which will be filed with the SEC in the first
quarter of 2005.
Yahoo! and the Yahoo! logos are trademarks and/or registered
trademarks of Yahoo! Inc. All other names are trademarks and/or
registered trademarks of their respective owners.
Yahoo! Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
----------------------- ----------------------
2003 2004 2003 2004
----------- ---------- ---------- ----------
Revenues $ 663,922 $1,077,717 $1,625,097 $3,574,517
Cost of revenues 220,842 387,138 358,103 1,298,559
---------- ---------- ---------- ----------
Gross profit 443,080 690,579 1,266,994 2,275,958
---------- ---------- ---------- ----------
Operating expenses:
Sales and marketing 166,280 226,909 530,613 778,029
Product development 78,105 107,598 207,285 368,760
General and
administrative 54,844 72,672 157,027 262,602
Stock compensation
expense (1) 20,078 6,467 22,029 32,290
Amortization of
intangibles 29,354 42,108 54,374 145,696
---------- ---------- ---------- ----------
Total operating
expenses 348,661 455,754 971,328 1,587,377
---------- ---------- ---------- ----------
Income from operations 94,419 234,825 295,666 688,581
Other income, net 13,202 345,605 47,506 496,443
---------- ---------- ---------- ----------
Income before income
taxes, earnings in
equity interests,
minority interests (2) 107,621 580,430 343,172 1,185,024
Provision for income
taxes (47,205) (233,623) (147,024) (437,966)
Earnings in equity
interests 15,427 25,319 47,652 94,991
Minority interests in
operations of
consolidated
subsidiaries (824) 398 (5,921) (2,496)
---------- ---------- ---------- ----------
Net income $ 75,019 $ 372,524 $ 237,879 $ 839,553
========== ========== ========== ==========
Net income per share -
diluted (3) $ 0.05 $ 0.25 $ 0.18 $ 0.58
========== ========== ========== ==========
Shares used in per
share calculation -
diluted (3) 1,409,613 1,475,131 1,310,796 1,452,499
========== ========== ========== ==========
(1) Stock compensation expense is allocated as follows:
Sales and marketing $ 5,366 $ 1,908 $ 5,785 $ 9,620
Product development 9,309 2,368 10,526 12,010
General and
administrative 5,403 2,191 5,718 10,660
---------- ---------- ---------- ----------
Total stock
compensation
expense $ 20,078 $ 6,467 $ 22,029 $ 32,290
========== ========== ========== ==========
- ----------------------------------------------------------------------
Supplemental Financial Data (See Note)
- ---------------------------
Revenues excluding
traffic acquisition
costs ("TAC") $ 511,339 $ 785,011 $1,472,514 $2,599,703
Operating income
before depreciation
and amortization $ 177,596 $ 327,225 $ 477,383 $1,031,912
Free cash flow $ 92,320 $ 251,351 $ 338,886 $ 844,320
- ----------------------------------------------------------------------
(2) Beginning this quarter, a new subtotal is being presented in the
unaudited condensed consolidated statement of operations: Income
before income taxes, earnings in equity interests and minority
interests. Earnings in equity interests and Minority interests in
operations of consolidated subsidiaries are now presented below
Provision for income taxes. In accordance with generally accepted
accounting principles, these items have consistently been
presented net of income taxes. This presentation has also been
adopted for prior periods.
(3) In accordance with the adoption of EITF 04-08 "The Effect of
Contingently Convertible Instruments on Diluted Earnings per
Share", the number of diluted shares for the three months and year
ended December 31, 2003 has been revised to include the shares
related to the Company's convertible notes since issuance. The
inclusion of these shares results in a decrease of $0.01 to
previously reported diluted earnings per share for the year ended
December 31, 2003. There is no change to the previously reported
diluted earnings per share for the quarter ended December 31,
2003. In addition, there is no change to the previously reported
diluted earnings per share for any of the periods reported in the
year ended December 31, 2004, as the computation of diluted
earnings per share for all such periods included the shares
issuable upon conversion of the convertible notes as the market
price condition for convertibility was satisfied in all periods
reported.
Yahoo! Inc.
Note to Unaudited Condensed Consolidated Statements of Operations
This press release includes the non-GAAP financial measures of
revenues excluding traffic acquisition costs, operating income before
depreciation and amortization, and free cash flow, which are
reconciled to gross profit, income from operations, and cash flow from
operating activities, respectively, which we believe are the most
comparable GAAP measures. We use these non-GAAP financial measures for
internal managerial purposes, when publicly providing guidance on
possible future results, and as a means to evaluate period-to-period
comparisons. These non-GAAP financial measures are used in addition to
and in conjunction with results presented in accordance with GAAP.
These non-GAAP financial measures reflect an additional way of viewing
aspects of our operations that, when viewed with our GAAP results and
the accompanying reconciliations to corresponding GAAP financial
measures, provide a more complete understanding of factors and trends
affecting our business. These non-GAAP measures should be considered
as a supplement to, and not as a substitute for, or superior to, gross
profit, income from operations, and cash flow from operating
activities calculated in accordance with generally accepted accounting
principles.
Revenues excluding traffic acquisition costs or TAC is defined as
gross profit plus other cost of revenues. Under GAAP, both our
revenues and cost of revenues include TAC. In defining revenues
excluding TAC as our non-GAAP gross profit measure, we have removed
TAC from both revenues and cost of revenues. We began incurring TAC
when we acquired Overture Services, Inc. in October 2003. TAC
primarily represents revenues, a significant portion of which is
shared with, and paid to, Overture's third party affiliates who
integrate Overture's sponsored search service into their websites. We
present revenues excluding TAC: (1) to permit investors to make a
meaningful comparison of our current performance to our performance
before we acquired Overture, (2) to provide a metric for our investors
to analyze and value our Company and (3) to provide investors one of
the primary metrics used by the Company for evaluation and
decision-making purposes. Specifically, it allows investors to compare
gross profit as a percentage of revenues before and after the Overture
acquisition, since TAC is the only significant difference in the cost
of revenues between our legacy business and Overture's business.
Consequently, presenting revenues excluding TAC helps investors better
understand changes in our gross profit as a percentage of revenues for
pre- and post-acquisition of Overture. We also provide revenues
excluding TAC because we believe it is useful to investors in valuing
our Company. One of the ways investors value companies is to apply a
multiple to revenues. Since a significant portion of the GAAP revenues
associated with Overture is paid to our third party affiliates, we
believe investors find it more meaningful to apply multiples to
revenues excluding TAC to assess our value as this avoids "double
counting" revenues that are paid to, and being reported by, our third
party affiliates. Further, management uses revenues excluding TAC for
evaluating the performance of our business, making operating
decisions, for budgeting purposes, and as a factor in determining
management compensation. A limitation of revenues excluding TAC is
that it is a measure which we have defined for internal and investor
purposes that may be unique to the Company and therefore it may not
enhance the comparability of our results to other companies in our
industry who have similar business arrangements but address the impact
of TAC differently.
Operating income before depreciation and amortization is defined as
income from operations before depreciation, amortization of intangible
assets and amortization of stock compensation expense. We consider
operating income before depreciation and amortization to be an
important indicator of the operational strength of the Company. This
measure eliminates the effects of depreciation, amortization of
intangible assets and amortization of stock compensation expense from
period to period, which we believe is useful to management and
investors in evaluating the operating performance of the Company, as
depreciation and amortization costs are not directly attributable to
the underlying performance of the Company's business operations. A
limitation associated with this measure is that it does not reflect
the periodic costs of certain capitalized tangible and intangible
assets used in generating revenues in the Company's businesses.
Management evaluates the costs of such tangible and intangible assets
through other financial measures such as capital expenditures. A
further limitation associated with this measure is that it does not
include stock compensation expenses related to our workforce.
Management compensates for this limitation by providing supplemental
information about stock compensation expense on the face of the
consolidated statements of operations.
Free cash flow is defined as cash flow from operating activities less
net capital expenditures. In addition, for the quarters ended June 30,
2002 and December 31, 2003, free cash flow also included a change in
long-term deferred revenue and an Overture receivable settled through
acquisition, respectively. The change in long-term deferred revenue
represented cash payments received in advance of revenue recognized.
The Overture receivable settled through acquisition represented a
Yahoo! accounts receivable balance owed from Overture that was settled
as part of the acquisition. We consider free cash flow to be a
liquidity measure which provides useful information to management and
investors about the amount of cash generated by the business after the
acquisition of property and equipment, which can then be used for
strategic opportunities including, among others, investing in the
Company's business, making strategic acquisitions, strengthening the
balance sheet and repurchasing stock. A limitation of free cash flow
is that it does not represent the total increase or decrease in the
cash balance for the period.
Yahoo! Inc.
Reconciliations to Unaudited Condensed Consolidated Statements
of Operations
(in thousands)
Three Months Ended Year Ended
December 31, December 31,
--------------------- -----------------------
2003 2004 2003 2004
--------- ----------- ----------- -----------
Revenues for groups of similar services:
Marketing services $545,498 $ 910,563 $1,199,733 $3,001,777
Fees 85,179 129,054 298,192 425,576
Listings 33,245 38,100 127,172 147,164
-------- ---------- ---------- ----------
Total revenues $663,922 $1,077,717 $1,625,097 $3,574,517
======== ========== ========== ==========
Revenues by segment:
United States $545,503 $ 775,020 $1,355,153 $2,653,437
International 118,419 302,697 269,944 921,080
-------- ---------- ---------- ----------
Total revenues $663,922 $1,077,717 $1,625,097 $3,574,517
======== ========== ========== ==========
Cost of revenues:
Traffic acquisition
costs ("TAC") $152,583 $ 292,706 $ 152,583 $ 974,814
Other cost of revenues 68,259 94,432 205,520 323,745
-------- ---------- ---------- ----------
Total cost of revenues $220,842 $ 387,138 $ 358,103 $1,298,559
======== ========== ========== ==========
Revenues excluding TAC:
Gross profit $443,080 $ 690,579 $1,266,994 $2,275,958
Other cost of revenues 68,259 94,432 205,520 323,745
-------- ---------- ---------- ----------
Revenues excluding TAC $511,339 $ 785,011 $1,472,514 $2,599,703
======== ========== ========== ==========
Revenues excluding TAC by segment:
United States:
Gross profit $371,557 $ 526,826 $1,068,965 $1,768,459
Other cost of revenues 58,446 74,269 170,688 261,530
-------- ---------- ---------- ----------
Revenues excluding TAC $430,003 $ 601,095 $1,239,653 $2,029,989
======== ========== ========== ==========
International:
Gross profit $ 71,523 $ 163,753 $ 198,029 $ 507,499
Other cost of revenues 9,813 20,163 34,832 62,215
-------- ---------- ---------- ----------
Revenues excluding TAC $ 81,336 $ 183,916 $ 232,861 $ 569,714
======== ========== ========== ==========
Operating income before depreciation and amortization:
Income from operations $ 94,419 $ 234,825 $ 295,666 $ 688,581
Depreciation and
amortization 63,099 85,933 159,688 311,041
Stock compensation
expense 20,078 6,467 22,029 32,290
-------- ---------- ---------- ----------
Operating income before
depreciation and
amortization $177,596 $ 327,225 $ 477,383 $1,031,912
======== ========== ========== ==========
Operating income before depreciation and amortization by segment:
Operating income before
depreciation and
amortization - United
States $165,796 $ 278,224 $ 441,372 $ 891,103
Operating income before
depreciation and
amortization -
International 11,800 49,001 36,011 140,809
-------- ---------- ---------- ----------
Operating income before
depreciation and
amortization 177,596 327,225 477,383 1,031,912
======== ========== ========== ==========
United States:
Income from operations $ 90,246 $ 203,808 $ 279,402 $ 605,055
Depreciation and
amortization 57,423 68,596 141,892 258,275
Stock compensation
expense 18,127 5,820 20,078 27,773
-------- ---------- ---------- ----------
Operating income before
depreciation and
amortization - United
States $165,796 $ 278,224 $ 441,372 $ 891,103
======== ========== ========== ==========
International:
Income from operations $ 4,173 $ 31,017 $ 16,264 $ 83,526
Depreciation and
amortization 5,676 17,337 17,796 52,766
Stock compensation
expense 1,951 647 1,951 4,517
-------- ---------- ---------- ----------
Operating income before
depreciation and
amortization -
International $ 11,800 $ 49,001 $ 36,011 $ 140,809
======== ========== ========== ==========
Free cash flow:
Cash flow from
operating activities $101,860 $ 336,720 $ 428,144 $1,089,821
Acquisition of
property and
equipment, net (37,611) (85,369) (117,329) (245,501)
Overture receivable
settled through
acquisition 28,071 - 28,071 -
-------- ---------- ---------- ----------
Free cash flow $ 92,320 $ 251,351 $ 338,886 $ 844,320
======== ========== ========== ==========
Yahoo! Inc.
Business Outlook
Business Outlook
The following business outlook is based on current information and
expectations as of January 18, 2005. Yahoo!'s business outlook as of
today is expected to be available on the Company's Investor Relations
Web site throughout the current quarter. It is currently expected the
outlook will not be updated until the release of Yahoo!'s next
quarterly earnings announcement, notwithstanding subsequent
developments; however, Yahoo! may update the outlook or any portion
thereof at any time.
Three months Year
ending ending
March 31, 2005 Dec. 31, 2005
----------------- ----------------
Revenues excluding traffic acquisition costs (1) ("TAC") outlook
(in millions):
Gross Profit $670-700 $2,920-3,080
Other cost of revenues $95-105 $445-485
----------------- ----------------
Revenues excluding TAC $765-805 $3,365-3,565
================= ================
Operating income before depreciation and amortization (1) outlook
(in millions):
Income from operations $201-212 $1,005-1,070
Depreciation and amortization $84-90 $370-395
Stock compensation expense $5-8 $15-25
----------------- ----------------
Operating income before
depreciation and amortization $290-310 $1,390-1,490
================= ================
(1) Refer to Note to Unaudited Condensed Consolidated Statements of
Operations.
(2) Business Outlook excludes the impact of adoption of Financial
Accounting Standards Board Statement (FASB 123R) "Share Based
Payments", which will be effective July 1, 2005.
Yahoo! Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended Year Ended
December 31, December 31,
-------------------- -----------------------
2003 2004 2003 2004
--------- ---------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 75,019 $ 372,524 $ 237,879 $ 839,553
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization 63,099 85,933 159,688 311,041
Tax benefits from
stock options 39,009 231,710 124,852 408,976
Earnings in equity
interests (15,427) (25,319) (47,652) (94,991)
Minority interests in
operations of
consolidated
subsidiaries 824 (398) 5,921 2,496
Stock compensation
expense 20,078 6,467 22,029 32,290
(Gain)/loss from sale
of investments,
assets and other,
net 1,716 (302,961) 11,047 (394,028)
Changes in assets and
liabilities, net of
effects of
acquisitions:
Accounts
receivable, net (90,405) (79,402) (122,220) (162,690)
Prepaid expenses
and other assets 17,591 (5,783) 16,835 (12,217)
Accounts payable (13,169) (2,671) (12,889) (3,570)
Accrued expenses
and other
liabilities (18,787) 30,392 (640) 113,953
Deferred revenue 22,312 26,228 33,294 49,008
--------- ---------- ----------- -----------
Net cash provided by
operating activities 101,860 336,720 428,144 1,089,821
--------- ---------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property
and equipment, net (37,611) (85,369) (117,329) (245,501)
Purchases of marketable
securities (284,502) (611,152) (1,916,800) (1,789,893)
Proceeds from sales and
maturities of
marketable debt
securities 247,773 365,987 1,289,202 1,268,059
Acquisitions, net of
cash acquired (147,918) (148,015) (376,236) (755,707)
Proceeds from sales of
marketable equity
securities - 310,026 1,928 502,806
Other investing
activities, net (3,189) (2,066) (2,354) 12,087
--------- ---------- ----------- -----------
Net cash used in
investing activities (225,447) (170,589) (1,121,589) (1,008,149)
--------- ---------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance
of debt, net - - 733,125 -
Proceeds from issuance
of common stock, net 150,174 226,934 353,201 650,525
Structured stock
repurchase, net - 26,349 - (69,558)
--------- ---------- ----------- -----------
Net cash provided by
financing activities 150,174 253,283 1,086,326 580,967
--------- ---------- ----------- -----------
Effect of exchange rate
changes on cash and cash
equivalents 5,434 23,128 9,686 29,892
Net change in cash and
cash equivalents 32,021 442,542 402,567 692,531
Cash and cash
equivalents, beginning
of period 681,518 963,528 310,972 713,539
--------- ---------- ----------- -----------
Cash and cash
equivalents, end of
period $ 713,539 $1,406,070 $ 713,539 $ 1,406,070
========= ========== =========== ===========
Yahoo! Inc.
Condensed Consolidated Balance Sheets
(in thousands)
Dec. 31, Dec. 31,
2003 2004
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 713,539 $1,406,070
Short-term investments in marketable debt
securities 595,978 1,293,617
Short-term investments in marketable equity
securities - 812,288
Accounts receivable, net 282,415 479,993
Prepaid expenses and other current assets 129,777 208,591
---------- ----------
Total current assets 1,721,709 4,200,559
Long-term investments in marketable debt
securities 1,256,698 1,042,575
Property and equipment, net 449,512 531,696
Goodwill 1,805,561 2,550,957
Intangible assets, net 445,640 480,666
Other assets 252,534 285,916
---------- ----------
Total assets $5,931,654 $9,092,369
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 31,890 $ 48,205
Accrued and other current liabilities 483,628 657,199
Deferred revenue 192,278 279,387
---------- ----------
Total current liabilities 707,796 984,791
Long-term deferred revenue - 65,875
Long-term debt 750,000 750,000
Other liabilities 72,890 145,991
Minority interests in consolidated subsidiaries 37,478 44,266
Stockholders' equity 4,363,490 7,101,446
---------- ----------
Total liabilities and stockholders' equity $5,931,654 $9,092,369
========== ==========
CONTACT: Yahoo! Inc.
Brian Nelson, 408-349-7329 (Media Relations)
bnelson@yahoo-inc.com
Cathy La Rocca, 408-349-5188
cathy@yahoo-inc.com
or
Fleishman-Hillard
Ruben Osorio, 415-318-4108 (Investor Relations)
osorior@fleishman.com