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<br /> Annual Report 2011<br /> <br /> UNITED STATES<br /> SECURITIES AND EXCHANGE COMMISSION<br /> Washington, D.C. 20549<br /> Form 10-K<br /> Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES<br /> EXCHANGE ACT OF 1934<br /> For the fiscal year ended December 31, 2011<br /> OR<br /> ` TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES<br /> EXCHANGE ACT OF 1934<br /> For the transition period from to<br /> Commission File Number 000-28018<br /> Yahoo! Inc.<br /> (Exact name of Registrant as specified in its charter)<br /> Delaware 77-0398689<br /> (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identific<a title="YHOO-20120605-AR-AM page 1" href="http://viewer.zmags.com/publication/f9a8bd2a?page=1"> Annual Report 2011</a> <a title="YHOO-20120605-AR-AM page 2" href="http://viewer.zmags.com/publication/f9a8bd2a?page=2"> </a> <a title="YHOO-20120605-AR-AM page 3" href="http://viewer.zmags.com/publication/f9a8bd2a?page=3"> UNITED STATES SEC</a> <a title="YHOO-20120605-AR-AM page 4" href="http://viewer.zmags.com/publication/f9a8bd2a?page=4"> YAHOO! INC. </a> <a title="YHOO-20120605-AR-AM page 5" href="http://viewer.zmags.com/publication/f9a8bd2a?page=5">Part I Item 1. Business OVERVIEW Yah</a> <a title="YHOO-20120605-AR-AM page 6" href="http://viewer.zmags.com/publication/f9a8bd2a?page=6">2011 HIGHLIGHTS Transactions and Alliances · Ac</a> <a title="YHOO-20120605-AR-AM page 7" href="http://viewer.zmags.com/publication/f9a8bd2a?page=7"> · Introduced Yahoo! App Search, for desktop</a> <a title="YHOO-20120605-AR-AM page 8" href="http://viewer.zmags.com/publication/f9a8bd2a?page=8"> Yahoo! Messenger instant messaging service provid</a> <a title="YHOO-20120605-AR-AM page 9" href="http://viewer.zmags.com/publication/f9a8bd2a?page=9"> While Microsoft provides the algorithmic search </a> <a title="YHOO-20120605-AR-AM page 10" href="http://viewer.zmags.com/publication/f9a8bd2a?page=10"> providers. Some of these providers pay a fee when</a> <a title="YHOO-20120605-AR-AM page 11" href="http://viewer.zmags.com/publication/f9a8bd2a?page=11"> advertisers in our non-guaranteed marketplace, da</a> <a title="YHOO-20120605-AR-AM page 12" href="http://viewer.zmags.com/publication/f9a8bd2a?page=12"> Yahoo! Search BOSS is an open search Web services</a> <a title="YHOO-20120605-AR-AM page 13" href="http://viewer.zmags.com/publication/f9a8bd2a?page=13"> advertising team also sells search advertising to</a> <a title="YHOO-20120605-AR-AM page 14" href="http://viewer.zmags.com/publication/f9a8bd2a?page=14"> of which may have a potential competitive advanta</a> <a title="YHOO-20120605-AR-AM page 15" href="http://viewer.zmags.com/publication/f9a8bd2a?page=15"> Additional information regarding certain risks re</a> <a title="YHOO-20120605-AR-AM page 16" href="http://viewer.zmags.com/publication/f9a8bd2a?page=16">Item 1A. Risk Factors We face significant com</a> <a title="YHOO-20120605-AR-AM page 17" href="http://viewer.zmags.com/publication/f9a8bd2a?page=17"> · successfully acquiring, investing in, and impl</a> <a title="YHOO-20120605-AR-AM page 18" href="http://viewer.zmags.com/publication/f9a8bd2a?page=18"> Transition, implementation and execution risks as</a> <a title="YHOO-20120605-AR-AM page 19" href="http://viewer.zmags.com/publication/f9a8bd2a?page=19"> Our comprehensive strategic review may cause unce</a> <a title="YHOO-20120605-AR-AM page 20" href="http://viewer.zmags.com/publication/f9a8bd2a?page=20"> are unable to license or acquire compelling conte</a> <a title="YHOO-20120605-AR-AM page 21" href="http://viewer.zmags.com/publication/f9a8bd2a?page=21"> We are, and may in the future be, subject to inte</a> <a title="YHOO-20120605-AR-AM page 22" href="http://viewer.zmags.com/publication/f9a8bd2a?page=22"> legal services, can be unclear. Internationally, </a> <a title="YHOO-20120605-AR-AM page 23" href="http://viewer.zmags.com/publication/f9a8bd2a?page=23"> and data retention laws and regulations are curre</a> <a title="YHOO-20120605-AR-AM page 24" href="http://viewer.zmags.com/publication/f9a8bd2a?page=24"> Yahoo! brand or via distribution on Yahoo! Proper</a> <a title="YHOO-20120605-AR-AM page 25" href="http://viewer.zmags.com/publication/f9a8bd2a?page=25"> · the difficulty of integrating operations, syst</a> <a title="YHOO-20120605-AR-AM page 26" href="http://viewer.zmags.com/publication/f9a8bd2a?page=26"> technical expertise. As we acquire users who rely</a> <a title="YHOO-20120605-AR-AM page 27" href="http://viewer.zmags.com/publication/f9a8bd2a?page=27"> Distribution agreements often involve revenue</a> <a title="YHOO-20120605-AR-AM page 28" href="http://viewer.zmags.com/publication/f9a8bd2a?page=28"> Our international operations are subject to addit</a> <a title="YHOO-20120605-AR-AM page 29" href="http://viewer.zmags.com/publication/f9a8bd2a?page=29"> Framework Agreement due to risks and uncertaintie</a> <a title="YHOO-20120605-AR-AM page 30" href="http://viewer.zmags.com/publication/f9a8bd2a?page=30"> · Despite our implementation of network security</a> <a title="YHOO-20120605-AR-AM page 31" href="http://viewer.zmags.com/publication/f9a8bd2a?page=31"> it is possible that a resolution of one or more s</a> <a title="YHOO-20120605-AR-AM page 32" href="http://viewer.zmags.com/publication/f9a8bd2a?page=32"> of changing tax regulations and legislation. Alth</a> <a title="YHOO-20120605-AR-AM page 33" href="http://viewer.zmags.com/publication/f9a8bd2a?page=33">Item 1B. Unresolved Staff Comments None. </a> <a title="YHOO-20120605-AR-AM page 34" href="http://viewer.zmags.com/publication/f9a8bd2a?page=34">Part II Item 5. Market for Registrant's Co</a> <a title="YHOO-20120605-AR-AM page 35" href="http://viewer.zmags.com/publication/f9a8bd2a?page=35"> Performance Graph This performance graph shall n</a> <a title="YHOO-20120605-AR-AM page 36" href="http://viewer.zmags.com/publication/f9a8bd2a?page=36">Item 6. Selected Financial Data The follow</a> <a title="YHOO-20120605-AR-AM page 37" href="http://viewer.zmags.com/publication/f9a8bd2a?page=37"> (4) Our revenue declined in 2011 due to the Sea</a> <a title="YHOO-20120605-AR-AM page 38" href="http://viewer.zmags.com/publication/f9a8bd2a?page=38">Item 7. Management's Discussion and Analysis </a> <a title="YHOO-20120605-AR-AM page 39" href="http://viewer.zmags.com/publication/f9a8bd2a?page=39"> Strategic Review During 2011, our Board of Direc</a> <a title="YHOO-20120605-AR-AM page 40" href="http://viewer.zmags.com/publication/f9a8bd2a?page=40"> We completed the transition of our algorithmic an</a> <a title="YHOO-20120605-AR-AM page 41" href="http://viewer.zmags.com/publication/f9a8bd2a?page=41"> revenue when the services are performed. Tr</a> <a title="YHOO-20120605-AR-AM page 42" href="http://viewer.zmags.com/publication/f9a8bd2a?page=42"> Results of Operations Revenue. Revenue by groups</a> <a title="YHOO-20120605-AR-AM page 43" href="http://viewer.zmags.com/publication/f9a8bd2a?page=43"> 7 percent, compared to 2009. Search revenue</a> <a title="YHOO-20120605-AR-AM page 44" href="http://viewer.zmags.com/publication/f9a8bd2a?page=44"> (2) For the years ended December 31, 2009, 2010</a> <a title="YHOO-20120605-AR-AM page 45" href="http://viewer.zmags.com/publication/f9a8bd2a?page=45"> The changes in operating costs and expenses for t</a> <a title="YHOO-20120605-AR-AM page 46" href="http://viewer.zmags.com/publication/f9a8bd2a?page=46"> depreciation and amortization expense decreased $</a> <a title="YHOO-20120605-AR-AM page 47" href="http://viewer.zmags.com/publication/f9a8bd2a?page=47"> Restructuring Charges, Net. For the years ended D</a> <a title="YHOO-20120605-AR-AM page 48" href="http://viewer.zmags.com/publication/f9a8bd2a?page=48"> Q209 Restructuring Plan. During the second quarte</a> <a title="YHOO-20120605-AR-AM page 49" href="http://viewer.zmags.com/publication/f9a8bd2a?page=49"> through the second quarter of 2012. During the ye</a> <a title="YHOO-20120605-AR-AM page 50" href="http://viewer.zmags.com/publication/f9a8bd2a?page=50"> Income Taxes. The provision for income taxes for </a> <a title="YHOO-20120605-AR-AM page 51" href="http://viewer.zmags.com/publication/f9a8bd2a?page=51"> is currently being discussed with the IRS, then t</a> <a title="YHOO-20120605-AR-AM page 52" href="http://viewer.zmags.com/publication/f9a8bd2a?page=52"> Summarized information by segment was as follows </a> <a title="YHOO-20120605-AR-AM page 53" href="http://viewer.zmags.com/publication/f9a8bd2a?page=53"> Americas revenue ex-TAC for the year ended </a> <a title="YHOO-20120605-AR-AM page 54" href="http://viewer.zmags.com/publication/f9a8bd2a?page=54"> and Taiwan dollars. The statements of income of o</a> <a title="YHOO-20120605-AR-AM page 55" href="http://viewer.zmags.com/publication/f9a8bd2a?page=55"> Liquidity and Capital Resources As of and for ea</a> <a title="YHOO-20120605-AR-AM page 56" href="http://viewer.zmags.com/publication/f9a8bd2a?page=56"> value below cost due primarily to the changes in </a> <a title="YHOO-20120605-AR-AM page 57" href="http://viewer.zmags.com/publication/f9a8bd2a?page=57"> $49 million for tax withholding payments related </a> <a title="YHOO-20120605-AR-AM page 58" href="http://viewer.zmags.com/publication/f9a8bd2a?page=58"> (1) We have entered into various non-cancelable</a> <a title="YHOO-20120605-AR-AM page 59" href="http://viewer.zmags.com/publication/f9a8bd2a?page=59"> liabilities. We base our estimates on historical </a> <a title="YHOO-20120605-AR-AM page 60" href="http://viewer.zmags.com/publication/f9a8bd2a?page=60"> future taxable income on a jurisdiction by jurisd</a> <a title="YHOO-20120605-AR-AM page 61" href="http://viewer.zmags.com/publication/f9a8bd2a?page=61"> Significant management judgment is involved in de</a> <a title="YHOO-20120605-AR-AM page 62" href="http://viewer.zmags.com/publication/f9a8bd2a?page=62">different from what we have recorded in the curren</a> <a title="YHOO-20120605-AR-AM page 63" href="http://viewer.zmags.com/publication/f9a8bd2a?page=63"> Transaction Exposure Our exposure to foreign cur</a> <a title="YHOO-20120605-AR-AM page 64" href="http://viewer.zmags.com/publication/f9a8bd2a?page=64"> We invest in equity instruments of public compani</a> <a title="YHOO-20120605-AR-AM page 65" href="http://viewer.zmags.com/publication/f9a8bd2a?page=65">Item 8. Financial Statements and Supplementar</a> <a title="YHOO-20120605-AR-AM page 66" href="http://viewer.zmags.com/publication/f9a8bd2a?page=66"> Report of Independent Registered Public Accountin</a> <a title="YHOO-20120605-AR-AM page 67" href="http://viewer.zmags.com/publication/f9a8bd2a?page=67"> Yahoo! Inc. Consolidated Statements of Income Y</a> <a title="YHOO-20120605-AR-AM page 68" href="http://viewer.zmags.com/publication/f9a8bd2a?page=68"> Yahoo! Inc. Consolidated Balance Sheets Decemb</a> <a title="YHOO-20120605-AR-AM page 69" href="http://viewer.zmags.com/publication/f9a8bd2a?page=69"> Yahoo! Inc. Consolidated Statements of Cash Flow</a> <a title="YHOO-20120605-AR-AM page 70" href="http://viewer.zmags.com/publication/f9a8bd2a?page=70"> Yahoo! Inc. Consolidated Statements of Stockhold</a> <a title="YHOO-20120605-AR-AM page 71" href="http://viewer.zmags.com/publication/f9a8bd2a?page=71"> Yahoo! Inc. Consolidated Statements of Stockhold</a> <a title="YHOO-20120605-AR-AM page 72" href="http://viewer.zmags.com/publication/f9a8bd2a?page=72"> Yahoo! Inc. Notes to Consolidated Financial Stat</a> <a title="YHOO-20120605-AR-AM page 73" href="http://viewer.zmags.com/publication/f9a8bd2a?page=73"> Revenue is generated from several offerings </a> <a title="YHOO-20120605-AR-AM page 74" href="http://viewer.zmags.com/publication/f9a8bd2a?page=74"> The Company accounts for cash consideration given</a> <a title="YHOO-20120605-AR-AM page 75" href="http://viewer.zmags.com/publication/f9a8bd2a?page=75"> Stock-Based Compensation Expense. The Company rec</a> <a title="YHOO-20120605-AR-AM page 76" href="http://viewer.zmags.com/publication/f9a8bd2a?page=76"> Income Taxes. Deferred income taxes are determine</a> <a title="YHOO-20120605-AR-AM page 77" href="http://viewer.zmags.com/publication/f9a8bd2a?page=77"> impairment charges equal to the amount that the c</a> <a title="YHOO-20120605-AR-AM page 78" href="http://viewer.zmags.com/publication/f9a8bd2a?page=78"> estimated using an average of a market approach a</a> <a title="YHOO-20120605-AR-AM page 79" href="http://viewer.zmags.com/publication/f9a8bd2a?page=79"> The derivative entered into by the Company has no</a> <a title="YHOO-20120605-AR-AM page 80" href="http://viewer.zmags.com/publication/f9a8bd2a?page=80"> The Company takes into account the effect on cons</a> <a title="YHOO-20120605-AR-AM page 81" href="http://viewer.zmags.com/publication/f9a8bd2a?page=81"> Transactions completed in 2009 Maktoob. On Novem</a> <a title="YHOO-20120605-AR-AM page 82" href="http://viewer.zmags.com/publication/f9a8bd2a?page=82"> resulted in a net cash outlay of $157 million. Of</a> <a title="YHOO-20120605-AR-AM page 83" href="http://viewer.zmags.com/publication/f9a8bd2a?page=83"> The Company's business combinations completed in </a> <a title="YHOO-20120605-AR-AM page 84" href="http://viewer.zmags.com/publication/f9a8bd2a?page=84"> As of December 31, 2011 the difference between th</a> <a title="YHOO-20120605-AR-AM page 85" href="http://viewer.zmags.com/publication/f9a8bd2a?page=85"> Framework Agreement with Alibaba Group regarding </a> <a title="YHOO-20120605-AR-AM page 86" href="http://viewer.zmags.com/publication/f9a8bd2a?page=86"> the deconsolidation of Alipay; and (b) the Compa</a> <a title="YHOO-20120605-AR-AM page 87" href="http://viewer.zmags.com/publication/f9a8bd2a?page=87"> The following tables present summarized fina</a> <a title="YHOO-20120605-AR-AM page 88" href="http://viewer.zmags.com/publication/f9a8bd2a?page=88"> (2) Gross goodwill balances for the EMEA </a> <a title="YHOO-20120605-AR-AM page 89" href="http://viewer.zmags.com/publication/f9a8bd2a?page=89"> Note 7 CONSOLIDATED FINANCIAL STATEMENT DETAIL</a> <a title="YHOO-20120605-AR-AM page 90" href="http://viewer.zmags.com/publication/f9a8bd2a?page=90"> (1) Includes data center equipment acquired und</a> <a title="YHOO-20120605-AR-AM page 91" href="http://viewer.zmags.com/publication/f9a8bd2a?page=91"> Accumulated other comprehensive income As of </a> <a title="YHOO-20120605-AR-AM page 92" href="http://viewer.zmags.com/publication/f9a8bd2a?page=92"> The contractual maturities of available-for-sale </a> <a title="YHOO-20120605-AR-AM page 93" href="http://viewer.zmags.com/publication/f9a8bd2a?page=93"> valuation techniques used to measure fair value. </a> <a title="YHOO-20120605-AR-AM page 94" href="http://viewer.zmags.com/publication/f9a8bd2a?page=94"> The following table sets forth the financial asse</a> <a title="YHOO-20120605-AR-AM page 95" href="http://viewer.zmags.com/publication/f9a8bd2a?page=95"> The provision (benefit) for income taxes is compo</a> <a title="YHOO-20120605-AR-AM page 96" href="http://viewer.zmags.com/publication/f9a8bd2a?page=96"> · During 2010, in connection with tax restructur</a> <a title="YHOO-20120605-AR-AM page 97" href="http://viewer.zmags.com/publication/f9a8bd2a?page=97"> The total amount of gross unrecognized tax benefi</a> <a title="YHOO-20120605-AR-AM page 98" href="http://viewer.zmags.com/publication/f9a8bd2a?page=98"> Note 10 STOCKHOLDERS' EQUITY The Board has th</a> <a title="YHOO-20120605-AR-AM page 99" href="http://viewer.zmags.com/publication/f9a8bd2a?page=99"> Options granted under the 1995 Stock Plan before </a> <a title="YHOO-20120605-AR-AM page 100" href="http://viewer.zmags.com/publication/f9a8bd2a?page=100"> $26 million, and $46 million, respectively. As of</a> <a title="YHOO-20120605-AR-AM page 101" href="http://viewer.zmags.com/publication/f9a8bd2a?page=101"> The fair value of option grants is determined usi</a> <a title="YHOO-20120605-AR-AM page 102" href="http://viewer.zmags.com/publication/f9a8bd2a?page=102"> The payments had the effect of share repurchases </a> <a title="YHOO-20120605-AR-AM page 103" href="http://viewer.zmags.com/publication/f9a8bd2a?page=103"> Note 12 COMMITMENTS AND CONTINGENCIES Lease </a> <a title="YHOO-20120605-AR-AM page 104" href="http://viewer.zmags.com/publication/f9a8bd2a?page=104"> Affiliate Commitments. In connection with contrac</a> <a title="YHOO-20120605-AR-AM page 105" href="http://viewer.zmags.com/publication/f9a8bd2a?page=105"> On July 12, 2001, the first of several purported </a> <a title="YHOO-20120605-AR-AM page 106" href="http://viewer.zmags.com/publication/f9a8bd2a?page=106"> complaint purports to assert claims for relief fo</a> <a title="YHOO-20120605-AR-AM page 107" href="http://viewer.zmags.com/publication/f9a8bd2a?page=107"> The following tables present summarized informati</a> <a title="YHOO-20120605-AR-AM page 108" href="http://viewer.zmags.com/publication/f9a8bd2a?page=108"> December 31, 2010 2011 Proper</a> <a title="YHOO-20120605-AR-AM page 109" href="http://viewer.zmags.com/publication/f9a8bd2a?page=109"> See Note 4—“Investments in Equity Interests” for </a> <a title="YHOO-20120605-AR-AM page 110" href="http://viewer.zmags.com/publication/f9a8bd2a?page=110"> Q408 Restructuring Plan. During the fourth quarte</a> <a title="YHOO-20120605-AR-AM page 111" href="http://viewer.zmags.com/publication/f9a8bd2a?page=111"> Q410 Restructuring Plan. During the fourth quarte</a> <a title="YHOO-20120605-AR-AM page 112" href="http://viewer.zmags.com/publication/f9a8bd2a?page=112"> The activity in the Company's restructuring acc</a> <a title="YHOO-20120605-AR-AM page 113" href="http://viewer.zmags.com/publication/f9a8bd2a?page=113"> As of December 31, restructuring accruals by segm</a> <a title="YHOO-20120605-AR-AM page 114" href="http://viewer.zmags.com/publication/f9a8bd2a?page=114"> Under the Search Agreement, for each market, Micr</a> <a title="YHOO-20120605-AR-AM page 115" href="http://viewer.zmags.com/publication/f9a8bd2a?page=115"> The Agreement provides that Mr. Thompson will rec</a> <a title="YHOO-20120605-AR-AM page 116" href="http://viewer.zmags.com/publication/f9a8bd2a?page=116"> Schedule II—Valuation and Qualifying Accounts Yea</a> <a title="YHOO-20120605-AR-AM page 117" href="http://viewer.zmags.com/publication/f9a8bd2a?page=117"> Selected Quarterly Financial Data (Unaudited) </a> <a title="YHOO-20120605-AR-AM page 118" href="http://viewer.zmags.com/publication/f9a8bd2a?page=118">(7) Net income attributable to Yahoo! Inc. for t</a> <a title="YHOO-20120605-AR-AM page 119" href="http://viewer.zmags.com/publication/f9a8bd2a?page=119">target bonus percentage each year that is expresse</a> <a title="YHOO-20120605-AR-AM page 120" href="http://viewer.zmags.com/publication/f9a8bd2a?page=120">Item 13. Certain Relationships and Related Tran</a> <a title="YHOO-20120605-AR-AM page 121" href="http://viewer.zmags.com/publication/f9a8bd2a?page=121"> Signatures Pursuant to the requirements of Secti</a> <a title="YHOO-20120605-AR-AM page 122" href="http://viewer.zmags.com/publication/f9a8bd2a?page=122"> Signature </a> <a title="YHOO-20120605-AR-AM page 123" href="http://viewer.zmags.com/publication/f9a8bd2a?page=123"> EXHIBIT INDEX The following exhibits are include</a> <a title="YHOO-20120605-AR-AM page 124" href="http://viewer.zmags.com/publication/f9a8bd2a?page=124"> Exhibit Number Description 10.</a> <a title="YHOO-20120605-AR-AM page 125" href="http://viewer.zmags.com/publication/f9a8bd2a?page=125"> Exhibit Number Description 10.3</a> <a title="YHOO-20120605-AR-AM page 126" href="http://viewer.zmags.com/publication/f9a8bd2a?page=126"> Exhibit Number Description 10.14(B)+ </a> <a title="YHOO-20120605-AR-AM page 127" href="http://viewer.zmags.com/publication/f9a8bd2a?page=127"> Exhibit Number Description 10</a> <a title="YHOO-20120605-AR-AM page 128" href="http://viewer.zmags.com/publication/f9a8bd2a?page=128"> Exhibit Number Description 10.20(</a> <a title="YHOO-20120605-AR-AM page 129" href="http://viewer.zmags.com/publication/f9a8bd2a?page=129"> Exhibit 31.1 Certification of Chief Executive </a> <a title="YHOO-20120605-AR-AM page 130" href="http://viewer.zmags.com/publication/f9a8bd2a?page=130"> Exhibit 31.2 Certification of Chief Financial </a> <a title="YHOO-20120605-AR-AM page 131" href="http://viewer.zmags.com/publication/f9a8bd2a?page=131"> Exhibit 32 Certification of Chief Executive Offi</a> <a title="YHOO-20120605-AR-AM page 132" href="http://viewer.zmags.com/publication/f9a8bd2a?page=132"> [THIS PAGE INTENTIONALLY LEFT BLANK]</a> <a title="YHOO-20120605-AR-AM page 133" href="http://viewer.zmags.com/publication/f9a8bd2a?page=133"> [THIS PAGE INTENTIONALLY LEFT BLANK]</a> <a title="YHOO-20120605-AR-AM page 134" href="http://viewer.zmags.com/publication/f9a8bd2a?page=134"> [THIS PAGE INTENTIONALLY LEFT BLANK]</a> <a title="YHOO-20120605-AR-AM page 135" href="http://viewer.zmags.com/publication/f9a8bd2a?page=135"> BOARD OF DIRECTORS Alfred J. Amoroso Chairman of</a> <a title="YHOO-20120605-AR-AM page 136" href="http://viewer.zmags.com/publication/f9a8bd2a?page=136"> yahoo.com 002</a>