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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
January 17, 2006
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)
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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))
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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 17, 2006, Yahoo! Inc., a Delaware corporation ("Yahoo!")
announced its financial results for the fourth quarter and year ended December
31, 2005 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 17, 2006.
2
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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 17, 2006
3
YAHOO! INC.
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
99.1 Press Release dated January 17, 2006
4
Exhibit 99.1
Yahoo! Reports Fourth Quarter and Full Year 2005 Financial Results; Full Year
Revenues - $5,258 Million, Operating Income - $1,108 Million, Operating Income
Before Depreciation and Amortization - $1,557 Million
SUNNYVALE, Calif.--(BUSINESS WIRE)--Jan. 17, 2006--Yahoo! Inc.
(Nasdaq:YHOO) today reported results for the fourth quarter and full year ended
December 31, 2005.
"Yahoo! has a strong track record of focusing and delivering on some of the
biggest opportunities on the Internet," said Terry Semel, chairman and chief
executive officer, Yahoo!. "In 2005, Yahoo! continued to achieve significant
results by providing some of the most innovative services to our hundreds of
millions of consumers and deepening both our global reach and user engagement.
As we look ahead, we will continue to focus on creating the best consumer
experience, finding new ways to engage our audience and delivering the best
value for our advertisers."
Fourth Quarter 2005 Financial Results
-- Revenues were $1,501 million for the fourth quarter of 2005, a 39
percent increase compared to $1,078 million for the same period of
2004.
-- Marketing services revenue was $1,315 million for the fourth
quarter of 2005, a 39 percent increase compared to $943 million
for the same period of 2004.
-- Fees revenue was $186 million for the fourth quarter of 2005, a
38 percent increase compared to $135 million for the same period
of 2004.
-- Revenues excluding traffic acquisition costs ("TAC") were $1,068
million for the fourth quarter of 2005, a 36 percent increase compared
to $785 million for the same period of 2004.
-- Gross profit for the fourth quarter of 2005 was $928 million, a 34
percent increase compared to $691 million for the same period of 2004.
-- Operating income for the fourth quarter of 2005 was $329 million, a 40
percent increase compared to $235 million for the same period of 2004.
-- Operating income before depreciation and amortization for the fourth
quarter of 2005 was $459 million, a 40 percent increase compared to
$327 million for the same period of 2004.
-- Cash flow from operating activities for the fourth quarter of 2005 was
$481 million, a 43 percent increase compared to $337 million for the
same period of 2004.
-- Free cash flow for the fourth quarter of 2005 was $330 million, a 31
percent increase compared to $251 million for the same period of 2004.
-- Net income for the fourth quarter of 2005 was $683 million or $0.46
per diluted share compared to $373 million or $0.25 per diluted share
for the same period of 2004.
-- Adjusted net income for the fourth quarter of 2005 was $247 million or
$0.16 per diluted share compared to $187 million or $0.13 per diluted
share for the same period of 2004.
-- The provision for income taxes for the fourth quarter of 2005 was $18
million and yielded an effective tax rate of 3 percent as a result of
a tax benefit related to a subsidiary restructuring transaction
completed in the quarter. The provision for income taxes for the
fourth quarter of 2004 was $234 million, and yielded an effective tax
rate of 40 percent.
-- Explanations of the Company's non-GAAP financial measures and the
related reconciliations to the GAAP financial measures the Company
considers most comparable are included in the accompanying "Note to
Unaudited Condensed Consolidated Statements of Operations" and the
"Reconciliations to Unaudited Condensed Consolidated Statements of
Operations".
"We continued to execute on our plan during both the fourth quarter and the
full year 2005 - delivering very strong revenue growth, profitability and
returns on our significant free cash flow -- while also investing in our
business to position the company for future growth," said Susan Decker, chief
financial officer, Yahoo!. "In 2006, we will focus on continuing to enhance our
advertising products, offering the most effective solutions to our advertisers
and publishers, while also seeking to generate maximum value for our network."
Full Year 2005 Financial Results
-- Revenues for the year ended December 31, 2005 were $5,258 million, a
47 percent increase compared to $3,575 million for 2004.
-- Marketing services revenue was $4,594 million for 2005, a 47
percent increase compared to $3,127 million for 2004.
-- Fees revenue was $664 million for 2005, a 48 percent increase
compared to $447 million for 2004.
-- Revenues excluding TAC for 2005 were $3,696 million, a 42 percent
increase compared to $2,600 million for 2004.
-- Gross profit for 2005 was $3,225 million, a 42 percent increase
compared to $2,276 million for 2004.
-- Operating income for 2005 was $1,108 million, a 61 percent increase
compared to $689 million for 2004.
-- Operating income before depreciation and amortization for 2005 was
$1,557 million, a 51 percent increase compared to $1,032 million for
2004.
-- Cash flow from operating activities for 2005 was $1,711 million, a 57
percent increase compared to $1,090 million for 2004.
-- Free cash flow for 2005 was $1,292 million, a 53 percent increase
compared to $844 million for 2004.
-- Net income for 2005 was $1,896 million or $1.28 per diluted share
compared to $840 million or $0.58 per diluted share for 2004.
-- Adjusted net income for 2005 was $854 million or $0.58 per diluted
share compared to $525 million or $0.36 per diluted share for the same
period of 2004.
-- The provision for income taxes for 2005 was $768 million and yielded
an effective tax rate of 30 percent for 2005 as a result of a tax
benefit related to a subsidiary restructuring transaction completed in
the fourth quarter of 2005. The provision for income taxes for 2004
was $438 million, and yielded an effective tax rate of 37 percent.
Segment Financial Results
-- United States revenues for the fourth quarter of 2005 were $1,056
million, a 36 percent increase compared to $775 million for the same
period of 2004.
-- International revenues for the fourth quarter of 2005 were $445
million, a 47 percent increase compared to $303 million for the same
period of 2004.
-- United States segment operating income before depreciation and
amortization for the fourth quarter of 2005 was $352 million, a 26
percent increase compared to $278 million for the same period of 2004.
-- International segment operating income before depreciation and
amortization for the fourth quarter of 2005 was $107 million, a 118
percent increase compared to $49 million for the same period of 2004.
-- United States revenues for the year ended December 31, 2005 were
$3,668 million, a 38 percent increase compared to $2,653 million for
2004.
-- International revenues for the year ended December 31, 2005 were
$1,590 million, a 73 percent increase compared to $921 million for
2004.
-- United States segment operating income before depreciation and
amortization for the year ended December 31, 2005 was $1,220 million,
a 37 percent increase compared to $891 million for 2004.
-- International segment operating income before depreciation and
amortization for the year ended December 31, 2005 was $338 million, a
140 percent increase compared to $141 million for 2004.
Cash Flow Information
Free cash flow was $330 million in the fourth quarter of 2005 compared to
$251 million for the same period of 2004. In addition to free cash flow, Yahoo!
generated $369 million from the issuance of common stock as a result of the
exercise of employee stock options, and a net $141 million from structured stock
repurchase transactions. These increases were offset by $1,571 million used for
acquisitions and $14 million used for direct stock repurchases. Cash, cash
equivalents and investments in marketable debt securities were $4,000 million at
December 31, 2005 as compared to $4,764 million at September 30, 2005, a
reduction of $764 million.
Free cash flow was $1,292 million for the year ended December 31, 2005
compared to $844 million for 2004. In addition to free cash flow, Yahoo!
generated $747 million from the issuance of common stock as a result of the
exercise of employee stock options and $1,006 million was received as proceeds
from sales of marketable equity securities. These increases were offset by
$1,698 million used for acquisitions, $388 million used for direct stock
repurchases and a net $611 million used in structured stock repurchase
transactions. Cash, cash equivalents and investments in marketable debt
securities were $4,000 million at December 31, 2005 as compared to $3,742
million at December 31, 2004, an increase of $258 million.
Please refer to the "Note to Unaudited Condensed Consolidated Statements of
Operations" for definitions of certain key financial measures used here and in
the "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 website 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: 13626682.
About Yahoo!
Yahoo! Inc. is a leading global internet brand and one of the most
trafficked Internet destinations worldwide. Yahoo! seeks to provide online
products and services essential to users' 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, California.
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, free cash flow, and adjusted net income and adjusted net income
per share. 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,
the Company's ability to compete with new or existing competitors; reduction in
spending by, or loss of, marketing services customers; the demand by customers
for Yahoo!'s premium services; acceptance by users of new products and services;
risks related to the integration of recent acquisitions; risks related to the
Company's international operations; failure to manage growth and
diversification; 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; dependence on third
parties for technology, services, content and distribution; and general economic
conditions. All information set forth in this release and its attachments is as
of January 17, 2006. Yahoo! does not intend, and undertakes no duty, to update
this information to reflect future events or circumstances. 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 year ended December 31, 2004
and the Quarterly Report on Form 10-Q for the quarter ended September 30, 2005
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, 2005, which
will be filed with the SEC in the first quarter of 2006.
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,
----------------------- ----------------------
2004 2005 2004 2005
----------- ----------- ---------- -----------
Revenues $1,077,717 $1,501,000 $3,574,517 $5,257,668
Cost of revenues 387,138 572,886 1,298,559 2,032,319
---------- ---------- ---------- ----------
Gross profit 690,579 928,114 2,275,958 3,225,349
---------- ---------- ---------- ----------
Operating expenses:
Sales and marketing 226,909 282,610 778,029 1,025,249
Product development 107,598 160,628 368,760 547,137
General and
administrative 72,672 86,982 262,602 319,690
Stock compensation
expense (1) 6,467 18,533 32,290 52,471
Amortization of
intangibles 42,108 50,413 145,696 173,077
---------- ---------- ---------- ----------
Total operating
expenses 455,754 599,166 1,587,377 2,117,624
---------- ---------- ---------- ----------
Income from operations 234,825 328,948 688,581 1,107,725
Other income, net 345,605 340,132 496,443 1,435,857
---------- ---------- ---------- ----------
Income before income
taxes, earnings in
equity interests,
minority interests 580,430 669,080 1,185,024 2,543,582
Provision for income
taxes (233,623) (17,729) (437,966) (767,816)
Earnings in equity
interests 25,319 33,597 94,991 128,244
Minority interests in
operations of
consolidated
subsidiaries 398 (1,740) (2,496) (7,780)
---------- ---------- ---------- ----------
Net income $ 372,524 $ 683,208 $ 839,553 $1,896,230
========== ========== ========== ==========
Net income per share -
diluted $ 0.25 $ 0.46 $ 0.58 $ 1.28
========== ========== ========== ==========
Shares used in per
share calculation -
diluted 1,475,131 1,496,942 1,452,499 1,485,591
========== ========== ========== ==========
(1) Stock compensation expense is allocated as follows:
Sales and marketing $ 1,908 $ 3,421 $ 9,620 $ 8,698
Product development 2,368 8,570 12,010 22,390
General and
administrative 2,191 6,542 10,660 21,383
---------- ---------- ---------- ----------
Total stock
compensation
expense $ 6,467 $ 18,533 $ 32,290 $ 52,471
========== ========== ========== ==========
- ----------------------------------------------------------------------
Supplemental Financial Data (See Note)
- ---------------------------
Revenues excluding
traffic acquisition
costs ("TAC") $ 785,011 $1,067,949 $2,599,703 $3,695,931
Operating income
before depreciation
and amortization $ 327,225 $ 458,714 $1,031,912 $1,557,338
Free cash flow $ 251,351 $ 329,702 $ 844,320 $1,291,779
- ----------------------------------------------------------------------
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, free cash flow and adjusted net income
and adjusted net income per share, which are reconciled to gross
profit, income from operations, cash flow from operating activities,
and net income and net income per share, respectively, which we
believe are the most comparable GAAP measures. We use these non-GAAP
financial measures for internal managerial purposes, when publicly
providing our business outlook, 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, cash flow from operating activities and net income and net
income per share 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. TAC consists of payments
made to affiliates that have integrated our sponsored search offerings
into their websites and payments made to companies that direct
consumer and business traffic to the Yahoo! website. We present
revenues excluding TAC: (1) to provide a metric for our investors to
analyze and value our Company and (2) to provide investors one of the
primary metrics used by the Company for evaluation and decision-making
purposes. We 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 our sponsored
search offerings 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
including the tax benefit from stock options, less net capital
expenditures and dividends received. 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.
Adjusted net income is defined as net income excluding certain gains,
losses and expenses and their related tax effects that we do not
believe are indicative of our ongoing operating results. We consider
adjusted net income to be a profitability measure which facilitates
the forecasting of our operating results for future periods and allows
for the comparison of our results to historical periods and to other
companies in our industry. A limitation of adjusted net income is that
it does not include all items that impact our net income and net
income per share for the period.
Yahoo! Inc.
Reconciliations to Unaudited Condensed Consolidated Statements of
Operations
(in thousands)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2004 2005 2004 2005
---------- ---------- ---------- ----------
Revenues for groups of similar services (2):
Marketing services $ 942,910 $1,315,303 $3,127,229 $4,593,972
Fees 134,807 185,697 447,288 663,696
---------- ---------- ---------- ----------
Total revenues $1,077,717 $1,501,000 $3,574,517 $5,257,668
========== ========== ========== ==========
Revenues by segment:
United States $ 775,020 $1,056,406 $2,653,437 $3,667,509
International 302,697 444,594 921,080 1,590,159
---------- ---------- ---------- ----------
Total revenues $1,077,717 $1,501,000 $3,574,517 $5,257,668
========== ========== ========== ==========
Cost of revenues:
Traffic acquisition
costs ("TAC") $ 292,706 $ 433,051 $ 974,814 $1,561,737
Other cost of
revenues 94,432 139,835 323,745 470,582
---------- ---------- ---------- ----------
Total cost of
revenues $ 387,138 $ 572,886 $1,298,559 $2,032,319
========== ========== ========== ==========
Revenues excluding TAC:
Gross profit $ 690,579 $ 928,114 $2,275,958 $3,225,349
Other cost of
revenues 94,432 139,835 323,745 470,582
---------- ---------- ---------- ----------
Revenues excluding
TAC $ 785,011 $1,067,949 $2,599,703 $3,695,931
========== ========== ========== ==========
Revenues excluding TAC by segment:
United States:
Gross profit $ 526,826 $ 696,019 $1,768,459 $2,421,034
Other cost of
revenues 74,269 112,518 261,530 370,057
---------- ---------- ---------- ----------
Revenues excluding
TAC $ 601,095 $ 808,537 $2,029,989 $2,791,091
========== ========== ========== ==========
International:
Gross profit $ 163,753 $ 232,095 $ 507,499 $ 804,315
Other cost of
revenues 20,163 27,317 62,215 100,525
---------- ---------- ---------- ----------
Revenues excluding
TAC $ 183,916 $ 259,412 $ 569,714 $ 904,840
========== ========== ========== ==========
Operating income before depreciation and amortization:
Income from
operations $ 234,825 $ 328,948 $ 688,581 $1,107,725
Depreciation and
amortization 85,933 111,233 311,041 397,142
Stock compensation
expense 6,467 18,533 32,290 52,471
---------- ---------- ---------- ----------
Operating income
before depreciation
and amortization $ 327,225 $ 458,714 $1,031,912 $1,557,338
========== ========== ========== ==========
Operating income before depreciation and amortization by segment:
Operating income
before depreciation
and amortization -
United States $ 278,224 $ 351,849 $ 891,103 $1,219,539
Operating income
before depreciation
and amortization -
International 49,001 106,865 140,809 337,799
---------- ---------- ---------- ----------
Operating income
before depreciation
and amortization $ 327,225 $ 458,714 $1,031,912 $1,557,338
========== ========== ========== ==========
United States:
Income from
operations $ 203,808 $ 242,594 $ 605,055 $ 844,622
Depreciation and
amortization 68,596 91,552 258,275 325,159
Stock compensation
expense 5,820 17,703 27,773 49,758
---------- ---------- ---------- ----------
Operating income
before depreciation
and amortization -
United States $ 278,224 $ 351,849 $ 891,103 $1,219,539
========== ========== ========== ==========
International:
Income from
operations $ 31,017 $ 86,354 $ 83,526 $ 263,103
Depreciation and
amortization 17,337 19,681 52,766 71,983
Stock compensation
expense 647 830 4,517 2,713
---------- ---------- ---------- ----------
Operating income
before depreciation
and amortization -
International $ 49,001 $ 106,865 $ 140,809 $ 337,799
========== ========== ========== ==========
Free cash flow:
Cash flow from
operating
activities $ 336,720 $ 481,342 $1,089,821 $1,711,383
Acquisition of
property and
equipment, net (85,369) (151,640) (245,501) (408,934)
Dividends received - - - (10,670)
---------- ---------- ---------- ----------
Free cash flow $ 251,351 $ 329,702 $ 844,320 $1,291,779
========== ========== ========== ==========
(2) Yahoo! currently classifies its revenues as either Marketing
Services or Fees. For the three months and year ended December 31,
2004, Yahoo! reclassified previously reported Marketing Services
revenues of $6 million and $22 million, respectively, as Fees in
order to refine its alignment of revenue sources with these
classifications.
Yahoo! Inc.
Reconciliations to Unaudited Condensed Consolidated Statements of
Operations
(in thousands, except per share amounts)
Three Months Ended
December 31, 2004
-----------------------------------------
Reported Adjustments Adjusted
------------ ----------- -----------
Adjusted net income and adjusted net income per share:
Income from operations $ 234,825 $ - $ 234,825
Other income, net 345,605 (307,482)(a) 38,123
------------ ----------- -----------
Income before income
taxes, earnings in equity
interests, minority
interests 580,430 (307,482) 272,948
Provision for income taxes (233,623) 122,055 (b) (111,568)
Earnings in equity
interests 25,319 - 25,319
Minority interests in
operations of
consolidated subsidiaries 398 - 398
------------ ----------- -----------
Net income $ 372,524 $ (185,427) $ 187,097
============ =========== ===========
Net income per share -
diluted $ 0.25 $ 0.13
============ ===========
Shares used in per share
calculation - diluted 1,475,131 1,475,131
============ ===========
Year Ended
December 31, 2004
-----------------------------------------
Reported Adjustments Adjusted
------------ ----------- -----------
Income from operations $ 688,581 $ - $ 688,581
Other income, net 496,443 (412,890)(a) 83,553
------------ ----------- -----------
Income before income
taxes, earnings in equity
interests, minority
interests 1,185,024 (412,890) 772,134
Provision for income taxes (437,966) 98,563 (b) (339,403)
Earnings in equity
interests 94,991 - 94,991
Minority interests in
operations of
consolidated subsidiaries (2,496) - (2,496)
------------ ----------- -----------
Net income $ 839,553 $ (314,327) $ 525,226
============ =========== ===========
Net income per share -
diluted $ 0.58 $ 0.36
============ ===========
Shares used in per share
calculation - diluted 1,452,499 1,452,499
============ ===========
Three Months Ended
December 31, 2005
-----------------------------------------
Reported Adjustments Adjusted
------------ ----------- -----------
Adjusted net income and adjusted net income per share:
Income from operations $ 328,948 $ - $ 328,948
Other income, net 340,132 (309,788)(c) 30,344
------------ ----------- -----------
Income before income
taxes, earnings in equity
interests, minority
interests 669,080 (309,788) 359,292
Provision for income taxes (17,729) (126,822)(b,d) (144,551)
Earnings in equity
interests 33,597 - 33,597
Minority interests in
operations of
consolidated subsidiaries (1,740) - (1,740)
------------ ----------- -----------
Net income $ 683,208 $ (436,610) $ 246,598
============ =========== ===========
Net income per share -
diluted $ 0.46 $ 0.16
============ ===========
Shares used in per share
calculation - diluted 1,496,942 1,496,942
============ ===========
Year Ended
December 31, 2005
-----------------------------------------
Reported Adjustments Adjusted
------------ ----------- -----------
Income from operations $ 1,107,725 $ - $ 1,107,725
Other income, net 1,435,857 (1,311,578)(e) 124,279
------------ ----------- -----------
Income before income
taxes, earnings in equity
interests, minority
interests 2,543,582 (1,311,578) 1,232,004
Provision for income taxes (767,816) 269,701 (b,d) (498,115)
Earnings in equity
interests 128,244 - 128,244
Minority interests in
operations of
consolidated subsidiaries (7,780) - (7,780)
------------ ----------- -----------
Net income $ 1,896,230 $(1,041,877) $ 854,353
============ =========== ===========
Net income per share -
diluted $ 1.28 $ 0.58
============ ===========
Shares used in per share
calculation - diluted 1,485,591 1,485,591
============ ===========
Notes:
(a) To eliminate gains on the sale of an investment.
(b) To eliminate income tax effects associated with adjustments
referenced in (a), (c), and (e).
(c) To eliminate a gain on the divestiture of Yahoo! China in
connection with the Alibaba.com transaction and the impairment of
an investment.
(d) To eliminate the tax benefit related to a subsidiary
restructuring transaction.
(e) To eliminate a gain on the divestiture of Yahoo! China in
connection with the Alibaba.com transaction, the impairment of an
investment, gains on the sale of certain investments and
proceeds from settlements.
Yahoo! Inc.
Business Outlook
Business Outlook
The following business outlook is based on current information and
expectations as of January 17, 2006. Yahoo!'s business outlook as of
today is expected to be available on the Company's Investor Relations
website throughout the current quarter. Yahoo! does not expect, and
undertakes no obligation, to update the outlook prior to the release
of the Company's next quarterly earnings announcement, notwithstanding
subsequent developments; however, Yahoo! may update the outlook or any
portion thereof at any time at its discretion.
Three months Year
ending ending
March 31, December 31,
2006 2006
-------------- --------------
Revenues excluding traffic acquisition costs ("TAC") (3) outlook
(in millions):
Gross profit $893-$943 $3,915-$4,115
Other cost of revenues 147-157 685-735
-------------- --------------
Revenues excluding TAC $1,040-$1,100 $4,600-$4,850
============== ==============
Operating income before depreciation and amortization (3) outlook
(in millions):
Income from operations (4) $180-$195 $965-$1,035
Depreciation and amortization 120-130 530-570
Stock compensation expense (4) 110-115 420-450
-------------- --------------
Operating income before depreciation
and amortization $410-$440 $1,915-$2,055
============== ==============
(3) Refer to Note to Unaudited Condensed Consolidated Statements of
Operations.
(4) Includes impact of adoption of Financial Accounting Standards
Board Statement No. 123 R ("FAS 123R"), "Share Based Payments",
which the Company adopted on January 1, 2006.
Yahoo! Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended Year Ended
December 31, December 31,
------------------------------------------------
2004 2005 2004 2005
----------- ----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 372,524 $ 683,208 $ 839,553 $ 1,896,230
Adjustments to
reconcile net
income to net cash
provided by
operating
activities:
Depreciation and
amortization 85,933 111,233 311,041 397,142
Tax benefits from
stock options 231,710 35,782 408,976 759,530
Earnings in equity
interests (25,319) (33,597) (94,991) (128,244)
Dividends received - - - 10,670
Minority interests
in operations of
consolidated
subsidiaries (398) 1,740 2,496 7,780
Stock compensation
expense 6,467 18,533 32,290 52,471
(Gain)/loss from
sale of
investments,
assets and other,
net (302,961) (301,573) (394,028) (1,278,311)
Changes in assets
and liabilities,
net of effects of
acquisitions:
Accounts
receivable, net (79,402) (143,466) (162,690) (272,387)
Prepaid expenses
and other (5,783) (43,080) (12,217) (35,344)
Accounts payable (2,671) 36,928 (3,570) 31,574
Accrued expenses
and other
liabilities 30,392 100,716 113,953 212,112
Deferred revenue 26,228 14,918 49,008 58,160
----------- ----------- ----------- -----------
Net cash provided by
operating activities 336,720 481,342 1,089,821 1,711,383
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of
property and
equipment, net (85,369) (151,640) (245,501) (408,934)
Purchases of
marketable debt
securities (1,291,267) (391,383) (3,449,155) (7,023,802)
Proceeds from sales
and maturities of
marketable debt
securities 777,345 552,453 2,642,621 7,341,974
Acquisitions, net of
cash acquired (153,080) (1,570,701) (761,605) (1,698,164)
Proceeds from sales
of marketable
equity securities 310,026 - 502,806 1,006,142
Other investing
activities, net 2,999 (116) 17,985 (39,146)
----------- ----------- ----------- -----------
Net cash provided by
(used in) investing
activities (439,346) (1,561,387) (1,292,849) (821,930)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from
issuance of common
stock, net 226,934 369,056 650,525 746,807
Repurchases of
common stock - (14,383) - (387,735)
Structured stock
repurchases, net 26,349 141,296 (69,558) (611,421)
Other financing
activities, net - - - 1,749
----------- ----------- ----------- -----------
Net cash provided by
(used in) financing
activities 253,283 495,969 580,967 (250,600)
----------- ----------- ----------- -----------
Effect of exchange
rate changes on
cash and cash
equivalents 23,128 (13,234) 29,892 (32,883)
Net change in cash and
cash equivalents 173,785 (597,310) 407,831 605,970
Cash and cash
equivalents,
beginning of period 649,938 2,027,003 415,892 823,723
----------- ----------- ----------- -----------
Cash and cash
equivalents, end of
period $ 823,723 $ 1,429,693 $ 823,723 $ 1,429,693
=========== =========== =========== ===========
Supplemental schedule of acquisition-related activities:
Cash paid for
acquisitions $ 165,020 $ 1,572,306 821,034 $ 1,700,898
Cash acquired in
acquisitions (11,940) (1,605) (59,429) (2,734)
----------- ----------- ----------- -----------
$ 153,080 $ 1,570,701 $ 761,605 $ 1,698,164
=========== =========== =========== ===========
Common stock,
restricted stock
and stock options
issued in
connection with
acquisitions $ 929 $ 392 $ 4,313 $ 44,773
=========== =========== =========== ===========
Yahoo! Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
December 31, December 31,
2004 2005
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 823,723 $ 1,429,693
Marketable debt securities 1,875,964 1,131,141
Marketable equity securities 812,288 -
Accounts receivable, net 479,993 721,723
Prepaid expenses and other current assets 98,507 205,615
------------ ------------
Total current assets 4,090,475 3,488,172
Long-term marketable debt securities 1,042,575 1,439,014
Property and equipment, net 531,696 697,522
Goodwill 2,550,957 2,895,557
Intangible assets, net 480,666 534,615
Other assets 242,029 57,192
Investments in equity interests 239,803 1,758,401
------------ ------------
Total assets $ 9,178,201 $ 10,870,473
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 48,205 $ 70,291
Accrued expenses and other current
liabilities 853,115 827,589
Deferred revenue 279,387 306,172
------------ ------------
Total current liabilities 1,180,707 1,204,052
Long-term deferred revenue 65,875 67,792
Long-term debt 750,000 749,995
Other long-term liabilities 35,907 138,001
Minority interests in consolidated
subsidiaries 44,266 -
Stockholders' equity 7,101,446 8,710,633
------------ ------------
Total liabilities and stockholders' equity $ 9,178,201 $ 10,870,473
============ ============
CONTACT: Yahoo! Inc.
Kelly Delaney, 408-349-2579 (Media Relations)
kellyd@yahoo-inc.com
Cathy La Rocca, 408-349-5188 (Investor Relations)
cathy@yahoo-inc.com
or
OutCast Communications
Kim Milosevich, 415-345-4734 (Media Relations)
kim@outcastpr.com