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
DATE OF REPORT: April 7, 2004
-----------
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 April 7, 2004 by Yahoo! Inc.
Item 12. 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 7, 2004, Yahoo! Inc., a Delaware corporation ("Yahoo!"), announced
its financial results for the fiscal quarter ended March 31, 2004 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 attached 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, 2003, which is 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
Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 to be filed
with the Securities and Exchange Commission in the second 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, because
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 it 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, 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
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. In addition for the quarters ended June 30, 2002 and
December 31, 2003, free cash flow also included change in long-term deferred
revenue and Overture receivable settled through acquisition, respectively.
Change in long-term deferred revenue represented cash payments received in
advance of revenue recognized. Overture receivable settled through acquisition
represented a Yahoo! accounts receivable balance owed from Overture that was
settled as part of the acquisition. We consider free cash flow to be a liquidity
measure which provides useful information to management and investors about the
amount of cash generated 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.
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 in some cases
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: April 7, 2004 By: /s/ Susan Decker
-------------------------------------------
Susan Decker
Executive Vice President, Finance and
Administration, and Chief Financial Officer
YAHOO! INC.
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
99.1 Press Release dated April 7, 2004.