Yahoo 1998 Annual Report Download - page 51

issuing 975 previously unissued shares and raising total proceeds of approximately
$5.5 million. Accordingly, the Company increased its investment by $1.7 million,
recorded as additional paid-in capital, to reflect the increase in the Company’s
share of Yahoo! Japan Corporation’s net assets. The investment is being accounted
for using the equity method and the Company’s share of net income, to date, has
been immaterial. At December 31, 1998, the carrying value of the investment was
$2.9 million and is recorded in other assets. However, the fair value of the
Company’s 34% ownership in Yahoo! Japan, based on the quoted trading price,
was approximately $170 million at December 31, 1998.
Yahoo! Europe. On November 1, 1996, the Company signed a joint venture agree-
ment with a subsidiary of SOFTBANK whereby separate companies were formed in
Germany, the United Kingdom, and France (“Yahoo! Europe”) to establish and
manage versions of the Yahoo! Internet Guide for those countries, develop related
online navigational services, and conduct other related business. The parties have
invested a total of $6.0 million in proportion to their respective equity interests as
of December 31, 1998. The Company has a majority share of approximately 70% in
each of the Yahoo! Europe entities, and therefore, has consolidated their financial
results. During 1998, 1997, and 1996, Yahoo! Europe incurred losses from opera-
tions of $409,000, $1,807,000 and $842,000, respectively. SOFTBANK’s interest in
the net assets of Yahoo! Europe at December 31, 1998 and 1997, as represented by
the minority interest on the balance sheet, was $883,000 and $405,000, respectively.
Yahoo! Korea. During August 1997, the Company signed a joint venture agreement
with SOFTBANK and other SOFTBANK affiliate companies whereby Yahoo! Korea
was formed to develop and operate a Korean version of the Yahoo! Internet Guide,
develop related Korean online navigational services, and conduct other related
business. The parties have invested a total of $1.0 million in proportion to their
respective equity interests. The Company has a majority share of approximately
60% in the joint venture, and therefore, has consolidated the financial results,
which have been insignificant to date. SOFTBANK’s interest in the net assets of
Yahoo! Korea at December 31, 1998 and 1997, as represented by the minority
interest on the balance sheet, was $365,000 and $311,000, respectively.
Yahoo! Marketplace. On August 26, 1996, the Company entered into agreements
with Visa International Service Association (“VISA”) and another party (together,
the “Visa Group”) to establish a limited liability company, Yahoo! Marketplace
L.L.C., to develop and operate a navigational service focused on information and
resources for the purchase of consumer products and services over the Internet. As
of December 31, 1996, the parties had invested a total of $1.0 million. At December
31, 1996, the Company owned approximately 55% of the equity interest in Yahoo!
Marketplace. Yahoo! Marketplace incurred start-up losses of $246,000 in 1997 and
$637,000 in 1996. During July 1997, prior to the completion of significant business
activities and public launch of the property, the Company and VISA entered into
an agreement under which the Visa Group released the Company from certain
obligations and claims. In connection with this agreement, the Company issued
2,797,924 shares of Yahoo! Common Stock to the Visa Group, for which the Company
recorded a one-time, non-cash, pre-tax charge of $21.2 million in the second
quarter ended June 30, 1997. 56 57
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