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
April 18, 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)
================================================================================
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 April 18, 2006, Yahoo! Inc., a Delaware corporation ("Yahoo!")
announced its financial results for the first quarter ended March 31, 2006 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 April 18, 2006.
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: April 18, 2006
3
YAHOO! INC.
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
99.1 Press Release dated April 18, 2006
4
Exhibit 99.1
Yahoo! Reports First Quarter 2006 Financial Results;
Revenues - $1,567 Million, Operating Income - $201 Million,
Operating Income Before Depreciation and Amortization - $435 Million
SUNNYVALE, Calif.--(BUSINESS WIRE)--April 18, 2006--Yahoo! Inc.
(Nasdaq:YHOO) today reported results for the first quarter ended March
31, 2006.
"Yahoo! had another strong performance this quarter. Our overall
advertising business saw solid growth and our user numbers continued
to climb," said Terry Semel, chairman and chief executive officer,
Yahoo! "We believe that our business model and our focus on exploring
new opportunities in emerging areas has set us apart from the
competition and has enabled us to offer our users the best online
experience and our advertisers the most value online."
First Quarter 2006 Financial Results
-- Revenues were $1,567 million for the first quarter of 2006, a
34 percent increase compared to $1,174 million for the same
period of 2005.
-- Marketing services revenue was $1,381 million for the first
quarter of 2006, a 35 percent increase compared to $1,025
million for the same period of 2005.
-- Fees revenue was $186 million for the first quarter of 2006, a
25 percent increase compared to $149 million for the same
period of 2005.
-- Revenues excluding traffic acquisition costs ("TAC") were
$1,088 million for the first quarter of 2006, a 33 percent
increase compared to $821 million for the same period of 2005.
-- Gross profit for the first quarter of 2006 was $909 million, a
29 percent increase compared to $707 million for the same
period of 2005.
-- Operating income for the first quarter of 2006 was $201
million (including $109 million for stock compensation expense
recorded under the fair value method), a 19 percent decrease
compared to $247 million (including $9 million for stock
compensation expense recorded under the intrinsic value
method) for the same period of 2005.
-- Operating income before depreciation and amortization for the
first quarter of 2006 was $435 million, a 26 percent increase
compared to $345 million for the same period of 2005.
-- Cash flow from operating activities for the first quarter of
2006 was $445 million, a 15 percent increase compared to $386
million for the same period of 2005.
-- Free cash flow for the first quarter of 2006 was $343 million,
an 8 percent increase compared to $318 million for the same
period of 2005.
-- Net income for the first quarter of 2006 was $160 million or
$0.11 per diluted share (including $71 million of stock
compensation expense, net of tax, recorded under the fair
value method), compared to $205 million or $0.14 per diluted
share for the same period of 2005 (including $6 million of
stock compensation expense, net of tax, recorded under the
intrinsic value method) or compared to adjusted net income of
$138 million or $0.09 per diluted share (including $57 million
of stock compensation, net of tax, calculated under the fair
value method and excluding gains of $15 million, net of tax,
on the sale of certain investments and settlements) for the
first quarter of 2005.
-- Adjusted net income excluding stock compensation expense, net
of tax, recorded under the fair value method for the first
quarter of 2006 was $231 million or $0.15 per diluted share.
This compares to adjusted net income of $195 million or $0.13
per diluted share, excluding stock compensation expense, net
of tax, recorded under the intrinsic value method and gains on
the sale of certain investments and settlements, net of tax,
for the same period of 2005.
-- 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 are off to a terrific start to the year, demonstrated by
strong revenue and profitability growth, along with significant free
cash generation," said Susan Decker, chief financial officer, Yahoo!
"Our business strength allowed us to both invest close to $750 million
in buying back stock this quarter while also investing in key
operating initiatives that will enhance our solutions for our
advertisers and our offerings for our user community."
Segment Financial Results
-- United States revenues for the first quarter of 2006 were
$1,097 million, a 34 percent increase compared to $819 million
for the same period of 2005.
-- International revenues for the first quarter of 2006 were $470
million, a 32 percent increase compared to $355 million for
the same period of 2005.
-- United States segment operating income before depreciation and
amortization for the first quarter of 2006 was $335 million, a
24 percent increase compared to $270 million for the same
period of 2005.
-- International segment operating income before depreciation and
amortization for the first quarter of 2006 was $100 million, a
34 percent increase compared to $75 million for the same
period of 2005.
Cash Flow Information
Free cash flow was $343 million in the first quarter of 2006
compared to $318 million for the same period of 2005. In addition to
free cash flow, Yahoo! generated $88 million from the issuance of
common stock as a result of the exercise of employee stock options,
and a net $22 million from structured stock repurchase transactions.
These increases were offset by $639 million used for direct stock
repurchases. Cash, cash equivalents and investments in marketable debt
securities were $3,833 million at March 31, 2006 as compared to $4,000
million at December 31, 2005, a reduction of $167 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 first 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: 14394012.
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 the 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
joint ventures and 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 April 18, 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,
2005 which is 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 Quarterly Report on Form 10-Q for the quarter
ended March 31, 2006, which will be filed with the SEC in the second
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
March 31,
-----------------------
2005 2006
----------- -----------
Revenues $1,173,742 $1,567,055
Cost of revenues (1) 466,924 657,943
---------- ----------
Gross profit 706,818 909,112
---------- ----------
Operating expenses:
Sales and marketing (2) 232,009 331,160
Product development (2) 122,611 217,577
General and administrative (2) 78,259 128,305
Amortization of intangibles (1) 26,576 30,858
---------- -----------
Total operating expenses 459,455 707,900
---------- ----------
Income from operations 247,363 201,212
Other income, net 49,994 35,436
---------- ----------
Income before income taxes, earnings in equity
interests and minority interests 297,357 236,648
Provision for income taxes (120,435) (102,932)
Earnings in equity interests 29,378 26,437
Minority interests in operations of
consolidated subsidiaries (1,740) (294)
---------- ----------
Net income $ 204,560 $ 159,859
========== ==========
Net income per share - diluted $ 0.14 $ 0.11
========== ==========
Shares used in per share calculation - diluted 1,477,811 1,493,307
========== ==========
(2) Stock compensation expense was allocated as follows:
Cost of revenues $ - $ 1,685
Sales and marketing 1,490 38,867
Product development 3,262 37,717
General and administrative 4,714 30,372
---------- ----------
Total stock compensation expense $ 9,466 $ 108,641
========== ==========
- ----------------------------------------------------------------------
Supplemental Financial Data (See Note)
- -----------------------------------------------
Revenues excluding traffic acquisition costs
("TAC") $ 820,755 $1,087,698
Operating income before depreciation and
amortization $ 345,062 $ 434,932
Free cash flow $ 317,566 $ 342,946
Adjusted net income per diluted share including
fair value stock compensation expense $ 0.09 $ 0.11
Adjusted net income per diluted share excluding
stock compensation expense $ 0.13 $ 0.15
- ----------------------------------------------------------------------
(1) Yahoo! has changed its classification of amortization expense
related to developed technology and patents. Amortization expense
of $14 million for the three months ended March 31, 2005 has been
reclassified to cost of revenues from operating expenses.
(2) Prior to January 1, 2006, Yahoo! accounted for stock compensation
under Accounting Principles Board, Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25"). In accordance with APB 25,
Yahoo! historically used the intrinsic value method to account for
stock compensation expense. As of January 1, 2006 Yahoo! accounts
for stock compensation expense under the fair value method. As
Yahoo! adopted the modified prospective transition method, results
for prior periods have not been restated under the fair value
method for GAAP purposes. Yahoo! is presenting a non-GAAP adjusted
net income per diluted share financial measure which includes
stock compensation expense calculated under the fair value method
for all periods presented. Yahoo! is also presenting a non-GAAP
adjusted net income per diluted share financial measure which
excludes stock compensation expense for all periods presented.
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 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 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, amortization costs and stock
compensation expense 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 expense related to our workforce.
Free cash flow is defined as cash flow from operating activities, less
net capital expenditures and dividends received and including the
excess tax benefits from stock compensation. 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 and further
adjusted for stock compensation expense under two different methods.
Effective January 1, 2006, we have adopted SFAS 123R under the
modified prospective transition method and therefore have recorded
stock compensation expense under the fair value method for the three
months ended March 31, 2006. Prior to January 1, 2006, including the
three month period ended March 31, 2005, we recorded stock
compensation expense under the intrinsic value method. We have
included two non-GAAP measures for adjusted net income and adjusted
net income per share. In one adjusted net income measure, we have
excluded stock compensation expense in addition to certain gains,
losses and expenses and their related tax effects. In the alternative
adjusted net income measure, we have included our calculation of stock
compensation expense calculated under the fair value method (as
previously disclosed) for the three months ended March 31, 2005, in
addition to excluding certain gains, losses and expenses and their
related tax effects, so that both presented periods include stock
compensation expense under the fair value method. 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
March 31,
----------- -----------
2005 2006
----------- -----------
Revenues for groups of similar services:
Marketing services $1,024,796 $1,380,854
Fees 148,946 186,201
---------- ----------
Total revenues $1,173,742 $1,567,055
========== ==========
Revenues by segment:
United States $ 818,726 $1,097,038
International 355,016 470,017
---------- ----------
Total revenues $1,173,742 $1,567,055
========== ==========
Cost of revenues:
Traffic acquisition costs ("TAC") $ 352,987 $ 479,357
Other cost of revenues 113,937 178,586
---------- ----------
Total cost of revenues $ 466,924 $ 657,943
========== ==========
Revenues excluding TAC:
Gross profit $ 706,818 $ 909,112
Other cost of revenues 113,937 178,586
---------- ----------
Revenues excluding TAC $ 820,755 $1,087,698
========== ==========
Revenues excluding TAC by segment:
United States:
Gross profit $ 527,897 $ 682,391
Other cost of revenues 90,995 144,274
---------- ----------
Revenues excluding TAC $ 618,892 $ 826,665
========== ==========
International:
Gross profit $ 178,921 $ 226,721
Other cost of revenues 22,942 34,312
---------- ----------
Revenues excluding TAC $ 201,863 $ 261,033
========== ==========
Operating income before depreciation and amortization:
Income from operations $ 247,363 $ 201,212
Depreciation and amortization 88,233 125,079
Stock compensation expense 9,466 108,641
---------- ----------
Operating income before depreciation and
amortization $ 345,062 $ 434,932
========== ==========
Operating income before depreciation and amortization by segment:
Operating income before depreciation and
amortization - United States $ 270,415 $ 335,269
Operating income before depreciation and
amortization - International 74,647 99,663
---------- ----------
Operating income before depreciation and
amortization $ 345,062 $ 434,932
========== ==========
United States:
Income from operations $ 190,018 $ 136,951
Depreciation and amortization 71,603 100,557
Stock compensation expense 8,794 97,761
---------- ----------
Operating income before depreciation and
amortization - United States $ 270,415 $ 335,269
========== ==========
International:
Income from operations $ 57,345 $ 64,261
Depreciation and amortization 16,630 24,522
Stock compensation expense 672 10,880
---------- ----------
Operating income before depreciation and
amortization - International $ 74,647 $ 99,663
========== ==========
Free cash flow:
Cash flow from operating activities $ 385,715 $ 444,711
Acquisition of property and equipment, net (68,149) (141,747)
Dividends received - -
Excess tax benefits from stock compensation - 39,982
---------- ----------
Free cash flow $ 317,566 $ 342,946
========== ==========
Yahoo! Inc.
Reconciliations to Unaudited Condensed Consolidated Statements of
Operations
(in thousands, except per share amounts)
ADJUSTED NET INCOME EXCLUDING STOCK COMPENSATION EXPENSE:
Three Months Ended
March 31, 2005
----------------------------------------
Reported Adjustments Adjusted
----------------------------------------
Revenues $ 1,173,742 $ - $ 1,173,742
Cost of revenues 466,924 - 466,924
----------- ----------- -----------
Gross profit 706,818 - 706,818
----------- ----------- -----------
Operating expenses:
Sales and marketing 232,009 (1,490) (a) 230,519
Product development 122,611 (3,262) (a) 119,349
General and administrative 78,259 (4,714) (a) 73,545
Amortization of intangibles 26,576 26,576
----------- ----------- -----------
Total operating expenses 459,455 (9,466) 449,989
----------- ----------- -----------
Income from operations $ 247,363 $ 9,466 $ 256,829
Other income, net 49,994 (25,685) (c) 24,309
----------- ----------- -----------
Income before income taxes,
earnings in equity interests
and minority interests 297,357 (16,219) 281,138
Provision for income taxes (120,435) 6,581 (d) (113,854)
Earnings in equity interests 29,378 - 29,378
Minority interests in
operations of consolidated
subsidiaries (1,740) - (1,740)
----------- ----------- -----------
Net income $ 204,560 $ (9,638) $ 194,922
=========== =========== ===========
Net income per share -
diluted $ 0.14 $ 0.13
=========== ===========
Shares used in per share
calculation - diluted 1,477,811 1,477,811
=========== ===========
Three Months Ended
March 31, 2006
---------------------------------------
Reported Adjustments Adjusted
---------------------------------------
Revenues $ 1,567,055 $ - $ 1,567,055
-
Cost of revenues 657,943 (1,685) (b) 656,258
----------- ----------- -----------
Gross profit 909,112 1,685 910,797
----------- ----------- -----------
Operating expenses:
Sales and marketing 331,160 (38,867) (b) 292,293
Product development 217,577 (37,717) (b) 179,860
General and administrative 128,305 (30,372) (b) 97,933
Amortization of intangibles 30,858 - 30,858
----------- ----------- -----------
Total operating expenses 707,900 (106,956) 600,944
----------- ----------- -----------
Income from operations $ 201,212 $ 108,641 $ 309,853
Other income, net 35,436 - 35,436
----------- ----------- -----------
Income before income taxes,
earnings in equity interests
and minority interests 236,648 108,641 345,289
Provision for income taxes (102,932) (37,147) (d) (140,079)
Earnings in equity interests 26,437 26,437
Minority interests in
operations of consolidated
subsidiaries (294) - (294)
----------- ----------- -----------
Net income $ 159,859 $ 71,494 $ 231,353
=========== =========== ===========
Net income per share -
diluted $ 0.11 $ 0.15
=========== ===========
Shares used in per share
calculation - diluted 1,493,307 1,493,307
=========== ===========
ADJUSTED NET INCOME INCLUDING FAIR VALUE STOCK COMPENSATION EXPENSE:
Three Months Ended
March 31, 2005
----------------------------------------
Reported Adjustments Adjusted
----------------------------------------
Net income $ 204,560 $ (66,684)(e,g) $ 137,876
=========== =========== ===========
Adjusted net income including
stock compensation expense
per share - diluted $ 0.14 $ 0.09
=========== ===========
Shares used in per share
calculation - diluted 1,477,811 921 (h) 1,478,732
=========== =========== ===========
Three Months Ended
March 31, 2006
---------------------------------------
Reported Adjustments Adjusted
---------------------------------------
Net income $ 159,859 (f) $ 159,859
=========== ===========
Adjusted net income including
stock compensation expense
per share - diluted $ 0.11 $ 0.11
=========== ===========
Shares used in per share
calculation - diluted 1,493,307 1,493,307
=========== ===========
Notes:
(a) To eliminate stock compensation expense as measured using the
intrinsic value method under APB 25.
(b) To eliminate stock compensation expenses as measured using the
fair value method under SFAS 123R.
(c) To eliminate gains on the sale of certain investments and
settlements.
(d) To eliminate income tax effects associated with adjustments
referenced in (a), (b), and (c).
(e) To include fair value stock compensation expense of $57 million,
net of tax, using the fair value method under SFAS 123 as
previously disclosed and exclude recorded stock compensation
expense of $6 million, net of tax, using the intrinsic value
method under APB 25.
(f) Fair value stock compensation expenses calculated under SFAS 123R
is included in the reported figures and therefore no adjustment is
made.
(g) To eliminate gains of $15 million, net of tax, on the sale of
certain investments and settlements.
(h) To adjust the number of shares used in the diluted net income per
share count for the impact of applying SFAS 123.
Yahoo! Inc.
Business Outlook
Business Outlook
The following business outlook is based on current information and
expectations as of April 18, 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
June 30, December 31,
2006 2006
------------- --------------
Revenues excluding traffic acquisition costs ("TAC") (3) outlook
(in millions):
Gross profit $895-$965 $3,820-$4,030
Other cost of revenues 185-195 780-820
------------- --------------
Revenues excluding TAC $1,080-$1,160 $4,600-$4,850
============== ==============
Operating income before depreciation and amortization (3) outlook
(in millions):
Income from operations $190-$215 $995-$1,070
Depreciation and amortization 130-140 530-570
Stock compensation expense 95-100 390-415
------------- --------------
Operating income before depreciation
and amortization $415-$455 $1,915-$2,055
============= ==============
(3) Refer to Note to Unaudited Condensed Consolidated Statements of
Operations.
Yahoo! Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended
March 31,
-------------------------
2005 2006
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 204,560 $ 159,859
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 88,233 125,079
Stock compensation expense 9,466 108,641
Tax benefits from stock compensation 107,527 79,745
Excess tax benefits from stock
compensation - (39,982)
Earnings in equity interests (29,378) (26,437)
Dividends received - -
Minority interests in operations of
consolidated subsidiaries 1,740 294
(Gain)/loss from sale of investments,
assets and other, net (14,268) (7,277)
Changes in assets and liabilities, net
of effects of acquisitions:
Accounts receivable, net (30,417) (40,101)
Prepaid expenses and other 19,108 (11,359)
Accounts payable (24,626) 35,653
Accrued expenses and other liabilities 45,219 46,269
Deferred revenue 8,551 14,327
----------- -----------
Net cash provided by operating activities 385,715 444,711
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment, net (68,149) (141,747)
Purchases of marketable debt securities (1,636,760) (334,762)
Proceeds from sales and maturities of
marketable debt securities 1,777,385 435,995
Acquisitions, net of cash acquired (53,970) 5,504
Proceeds from sales of marketable equity
securities 11,382 -
Other investing activities, net 11,318 (345)
----------- -----------
Net cash provided by (used in) investing
activities 41,206 (35,355)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 90,304 87,519
Repurchases of common stock (164,895) (638,898)
Structured stock repurchases, net (96,202) 22,295
Excess tax benefits from stock
compensation - 39,982
Other financing activities, net 800 -
----------- -----------
Net cash provided by (used in) financing
activities (169,993) (489,102)
----------- -----------
Effect of exchange rate changes on cash and
cash equivalents 10,259 12,148
Net change in cash and cash equivalents 267,187 (67,598)
Cash and cash equivalents, beginning of
period 823,723 1,429,693
----------- -----------
Cash and cash equivalents, end of period $ 1,090,910 $ 1,362,095
=========== ===========
Supplemental schedule of acquisition-related
activities:
Cash paid for acquisitions $ 53,997 $ 2,023
Cash acquired in acquisitions (27) (7,527)
----------- -----------
$ 53,970 $ (5,504)
=========== ===========
Common stock, restricted stock and stock
options issued in connection with
acquisitions $ 37,766 $ -
=========== ===========
Yahoo! Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
December 31, March 31,
2005 2006
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,429,693 $ 1,362,095
Marketable debt securities 1,131,141 1,066,396
Accounts receivable, net 721,723 766,511
Prepaid expenses and other current
assets 166,976 171,855
------------ ------------
Total current assets 3,449,533 3,366,857
Long-term marketable debt securities 1,439,014 1,404,990
Property and equipment, net 697,522 774,952
Goodwill 2,895,557 2,925,909
Intangible assets, net 534,615 501,396
Other assets 57,192 66,364
Investments in equity interests 1,758,401 1,784,940
------------ ------------
Total assets $ 10,831,834 $ 10,825,408
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 70,291 $ 107,689
Accrued expenses and other current
liabilities 827,589 877,997
Deferred revenue 306,172 323,743
------------ ------------
Total current liabilities 1,204,052 1,309,429
Long-term deferred revenue 67,792 66,404
Long-term debt 749,995 749,993
Other long-term liabilities 243,580 246,842
Minority interests in consolidated
subsidiaries - 7,638
Stockholders' equity 8,566,415 8,445,102
------------ ------------
Total liabilities and stockholders' equity $ 10,831,834 $ 10,825,408
============ ============
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