Yahoo 1998 Annual Report Download - page 25

management’s discussion
and analysis of financial condition
and results of operations
Except for historical in form ation , the discu ssion in this Report (in clu d in g, w ith-
ou t lim itation , the discu ssion un d er the head ing “Resu lts of Operation s”) con tain s
forw ard -lookin g statem en ts that involve risks an d u n certain ties. The Com pan y’s
actu al resu lts could differ m aterially from those d iscu ssed herein . Factors that
cou ld cau se or con tribu te to su ch d ifferen ces in clu d e, bu t are not lim ited to, those
d iscu ssed below , an d the risks d iscussed u n d er the caption , “Risk Factors” in the
Com pan y’s An n u al Report on Form 10-K for the year end ed Decem ber 31, 1998 (a
copy of w hich is available at w w w .sec.gov or upon requ est from the Com pan y).
OVERVIEW
Yahoo! Inc. (“Yahoo!” or the “Company”) is a global Internet media company that
offers a branded network of comprehensive information, communication, and
shopping services to millions of users daily. As the first online navigational guide
to the World Wide Web (the “Web”), w w w .yahoo.com is a leading guide in terms
of traffic, advertising, household and business user reach, and is one of the most
recognized brands associated with the Internet. The Company was incorporated in
California on March 5, 1995 and commenced operations on that date. In August 1995,
the Company commenced selling advertisements on its Web pages and recognized its
initial revenues. In April 1996, the Company completed its initial public offering.
On October 20, 1997, the Company completed the acquisition of Four11 Corporation
(“Four11”), a privately-held online communications and Internet directory company.
Under the terms of the acquisition, which was accounted for as a pooling of inter-
ests, the Company exchanged 6,022,880 shares of Yahoo! Common Stock for all
of Four11’s outstanding shares and assumed 593,344 options and warrants to
purchase Yahoo! Common Stock. During the quarter ended December 31, 1997, the
Company recorded a one-time charge of $3.9 million for the acquisition. These costs
consisted of investment banking fees, legal and accounting fees, redundancy costs,
and certain other expenses directly related to the acquisition. The consolidated
financial statements for the three years ended December 31, 1998 and the accompa-
nying notes reflect the Company’s financial position and the results of operations
as if Four11 was a wholly-owned subsidiary of the Company since inception.
On June 10, 1998, the Company completed the acquisition of all outstanding shares
of Viaweb Inc. (“Viaweb”), a provider of software and services for hosting online
stores, through the issuance of 1,574,364 shares of Yahoo! Common Stock. All out-
standing options to purchase Viaweb common stock were converted into options to
purchase 244,504 shares of Yahoo! Common Stock. The acquisition was accounted
for as a purchase in accordance with the provisions of Accounting Principles Board
Opinion (“APB”) No. 16. Under the purchase method of accounting, the purchase
price is allocated to the assets acquired and liabilities assumed based on their
estimated fair values at the date of the acquisition. Results of operations for
Viaweb have been included with those of the Company for periods subsequent
to the date of acquisition.
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