SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: January 14, 2004
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YAHOO! INC..
(Exact name of registrant as specified in its charter)
0-28018
(Commission File Number)
DELAWARE 77-0398689
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
701 FIRST AVE.
SUNNYVALE, CALIFORNIA 94089
(Address of principal executive offices, with zip code)
(408) 349-3300
(Registrant's telephone number, including area code)
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press release dated January 14, 2004 by Yahoo! Inc.
Item 12. Results of Operations and Financial Condition
This Report on Form 8-K is being filed under the Securities Exchange Act of
1934, as amended.
On January 14, 2004, Yahoo! Inc., a Delaware corporation ("Yahoo!"),
announced its financial results for the fiscal quarter and year ended December
31, 2003 and certain other information. A copy of Yahoo!'s press release
announcing these financial results and certain other information is attached as
Exhibit 99.1 hereto and incorporated by reference herein.
The press release filed as an exhibit to this report includes "safe harbor"
language pursuant to the Private Securities Litigation Reform Act of 1995, as
amended, indicating that certain statements about the Company's business and
other matters contained in the press release are "forward-looking" rather than
"historic." The press release also states that a more thorough discussion of
certain factors which may affect the Company's operating results is included,
among other sections, under the captions "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002
and the Quarterly Report on Form 10-Q for the quarter ended September 30, 2003,
which are on file with the Securities and Exchange Commission ("SEC") and
available at the Securities and Exchange Commission's website
(http://www.sec.gov), and will also be included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2003 to be filed with the
Securities and Exchange Commission in the first quarter of 2004.
The press release also discloses certain financial measures, such as
revenues excluding traffic acquisition costs ("TAC"), operating income before
depreciation and amortization and free cash flow, that are considered non-GAAP
financial measures. Generally, a non-GAAP financial measure is a numerical
measure of a company's performance, financial position, or cash flows that
either excludes or includes amounts that are not normally excluded or included
in the most directly comparable measure calculated and presented in accordance
with generally accepted accounting principles. We believe these financial
measures provide useful information to both management and investors by
excluding certain expenses, gains and losses that may not be indicative of our
core operating results. We believe these financial measures are useful to
investors in allowing for greater transparency to supplemental information used
by management in its financial and operational decision-making. In addition, we
have historically reported similar financial measures to our investors and
believe that the inclusion of comparative numbers provides consistency in our
financial reporting at this time.
The Company believes that the non-GAAP financial measures revenues
excluding TAC, operating income before depreciation and amortization and free
cash flow are helpful, when presented in conjunction with the comparable GAAP
measures of gross profit, income from operations, and cash flow from operating
activities.
Revenues excluding TAC is defined as gross profit before other cost of
revenues. We believe this performance measure is useful to management and
investors as it is more comparable to our historical profitability, as traffic
acquisition costs paid to affiliates of Overture Services, Inc., ("Overture"),
which the Company acquired on October 7, 2003, are a significant percentage of
revenues generated from Overture's sponsored search services. A limitation of
revenues excluding TAC is that other cost of revenues are excluded and therefore
does not represent the actual gross profit for the period.
Operating income before depreciation and amortization is defined as income
(loss) from operations before depreciation and amortization. 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 and amortization 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.
In our business outlook, we define operating income before depreciation and
amortization as income (loss) from operations before depreciation, amortization
of intangible assets and amortization of stock compensation expense. In our
business outlook, this measure now also eliminates the effect of amortization of
stock compensation expense from period to period as this expense is also not
directly attributable to the underlying performance of the Company's business
operations. As a result, a further limitation associated with this measure is
that it does not include all expenses related to our workforce. Management
compensates for this limitation by providing supplemental information about
stock compensation expense on the face of our consolidated statements of
operations.
Free cash flow is defined as cash flow from operating activities less
capital expenditures and change in long-term deferred revenue, and includes
Overture receivable settled through acquisition. Change in long-term deferred
revenue represents cash payments received in advance of revenue recognized.
Overture receivable settled through acquisition represents a Yahoo! accounts
receivable balance from Overture that was settled as part of the acquisition.
Free cash flow is considered a liquidity measure and provides useful information
to management and investors about the amount of cash generated after the
acquisition of property and equipment, change in long-term deferred revenue, and
Overture receivable settled through acquisition, 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.
In addition, management refers to these financial measures to facilitate
internal and external comparisons to the Company's historical operating results,
in making operating decisions, for budget planning purposes, and to form the
basis upon which management is compensated. These measures should be considered
in addition to, not as a substitute for, or superior to, gross profit, income
from operations, cash flow from operating activities, or other measures of
financial performance prepared in accordance with generally accepted accounting
principles. The non-GAAP measures included in our press release have been
reconciled to the most directly comparable GAAP measure as is required under SEC
rules regarding the use of non-GAAP financial measures.
As used herein, "GAAP" refers to accounting principles generally accepted
in the United States.
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 thereunto duly authorized.
YAHOO! INC.
Date: January 14, 2004 By: /s/ Susan Decker
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Susan Decker
Executive Vice President, Finance and
Administration, and Chief Financial Officer
YAHOO! INC.
INDEX TO EXHIBITS
Exhibit Number Description
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99.1 Press Release dated January 14, 2004.