Yahoo 1998 Annual Report Download - page 42

Stock Splits. During July 1998, the Company’s Board of Directors approved a two-
for-one Common Stock split. Shareholders of record on July 17, 1998 (the record
date) received one additional share for every share held on that date. The shares
were distributed on J uly 31, 1998 and the stock split was effective on August 3, 1998.
During January 1999, the Company’s Board of Directors approved a two-for-one
Common Stock split. Shareholders of record on J anuary 22, 1999 (the record date)
received one additional share for every share held on that date. The shares were
distributed on February 5, 1999 and the stock split was effective on February 8, 1999.
All share numbers in these consolidated financial statements and notes thereto
for all periods presented have been adjusted to reflect the two-for-one common
stock splits.
Principles of Consolidation. The consolidated financial statements include the
accounts of Yahoo! Inc. and its majority-owned subsidiaries. All significant inter-
company accounts and transactions have been eliminated. The equity and net loss
attributable to the minority shareholder interests that related to the Company’s
subsidiaries, are shown separately in the consolidated balance sheets and
consolidated statements of operations, respectively. Losses in excess of the minority
interest equity would be charged against the Company. Investments in entities
owned 20% or more but less than majority owned and not otherwise controlled by
the Company are accounted for under the equity method.
Reclassifications. Certain prior years’ balances have been reclassified to conform
with the current year’s presentation.
Revenue Recognition. The Company’s revenues are derived principally from the sale
of banner and sponsorship advertisements. The Company’s standard rates for banner
advertising currently range from approximately $6.00 per thousand impressions
for run of network to approximately $90.00 per thousand impressions for highly
targeted audiences and properties. To date, the duration of the Company’s banner
advertising commitments has ranged from one week to two years. Sponsorship
advertising contracts have longer terms (ranging from three months to two years)
than standard banner advertising contracts and also involve more integration with
Yahoo! services, such as the placement of buttons that provide users with direct
links to the advertiser’s Web site. Advertising revenues on both banner and
sponsorship contracts are recognized ratably over the period in which the adver-
tisement is displayed, provided that no significant Company obligations remain at
the end of a period and collection of the resulting receivable is probable. Company
obligations typically include guarantees of minimum number of “impressions,” or
times that an advertisement appears in pages viewed by users of the Company’s
online properties. To the extent minimum guaranteed impressions are not met, the
Company defers recognition of the corresponding revenues until the remaining
guaranteed impression levels are achieved.
The Company also earns revenue on sponsorship contracts from fees relating to the
design, coordination, and integration of customers’ content and links into Yahoo!
online media properties. These development fees are recognized as revenue once
the related activities have been performed and the customer’s Web links are avail-
able on Yahoo! online media properties. A number of the Company’s agreements
provide that Yahoo! receive revenues from electronic commerce transactions.
Currently, these revenues are recognized by the Company upon notification from
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