$190 Million Operating Income, Excluding Restructuring and Other Charges, Exceeds Midpoint of Business Outlook;

$0.27 EPS, Excluding Restructuring and Other Charges, Grows 47% Year-Over-Year

SUNNYVALE, Calif.--(BUSINESS WIRE)--July 17, 2012--Yahoo! Inc. (NASDAQ:YHOO) today reported results for the quarter ended June 30, 2012.

Revenue excluding traffic acquisition costs (“Revenue ex-TAC”) was $1,081 million for the second quarter of 2012, flat compared to the second quarter of 2011. GAAP revenue was $1,218 million for the second quarter of 2012, a 1 percent decrease from the second quarter of 2011.

Non-GAAP income from operations of $190 million in the second quarter of 2012 was flat compared to $191 million in the second quarter of 2011. Non-GAAP income from operations excludes restructuring charges and deal-related expenses of less than $1 million in the second quarter of 2011 and $136 million in the second quarter of 2012. On a GAAP basis, income from operations decreased 71 percent to $55 million in the second quarter of 2012, compared to $191 million in the second quarter of 2011.

In the second quarter of 2012, non-GAAP net earnings per diluted share increased 47 percent year over year to $0.27. Non-GAAP net earnings per diluted share excludes restructuring charges and deal-related expenses of less than $1 million in the second quarter of 2011 and $136 million, as well as the related tax impact of $36 million, in the second quarter of 2012. On a GAAP basis, net earnings per diluted share was $0.18 in the second quarter of 2012.

“In the second quarter, non-GAAP earnings per share exceeded consensus and both display and search revenue ex-TAC showed modest growth,” said Tim Morse, chief financial officer. “We also moved aggressively with new strategic agreements with Alibaba and Facebook and announced several new partnerships including CNBC, Clear Channel and Spotify.”

Yahoo! will host a conference call to discuss second quarter 2012 results at 5 p.m. Eastern Time today. A live Webcast of the conference call, together with supplemental financial information, can be accessed through the Company's Investor Relations Website at http://investor.yahoo.com/results.cfm. In addition, an archive of the Webcast can be accessed through the same link. An audio replay of the call will be available for one week following the conference call by calling (888) 286-8010 or (617) 801-6888, reservation number: 98876440.

This press release and its attachments include the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission (“SEC”): revenue ex-TAC; free cash flow; non-GAAP income from operations; non-GAAP net income; and non-GAAP net income per diluted share. These measures may be different than non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles (“GAAP”). Explanations of the Company’s non-GAAP financial measures and reconciliations of these financial measures to the GAAP financial measures the Company considers most comparable are included in the accompanying “Note to Unaudited Condensed Consolidated Statements of Income,” “Supplemental Financial Data,” and “GAAP to Non-GAAP Reconciliations.”

Yahoo! is a technology-powered media company, creating deeply personal digital experiences that keep more than half a billion people connected to what matters most to them, across devices and around the globe. Yahoo!’s unique combination of Science + Art + Scale connects advertisers to the consumers who build their businesses. Yahoo! is headquartered in Sunnyvale, California. For more information, visit the pressroom (pressroom.yahoo.net) or the company's blog, Yodel Anecdotal (yodel.yahoo.com).

“Affiliates” refers to the third-party entities that have integrated Yahoo!’s advertising offerings into their Websites or other offerings (those Websites and other offerings, “Affiliate sites”).

“Search Agreement” refers to the Search and Advertising Services and Sales Agreement between Yahoo! and Microsoft Corporation, as amended.

“TAC” refers to traffic acquisition costs. TAC consists of payments to Affiliates and payments made to companies that direct consumer and business traffic to Yahoo! Properties.

“Yahoo! Properties” refers to the online properties and services that Yahoo! provides to users.

This press release contains forward-looking statements concerning Yahoo!'s expected financial performance, as well as Yahoo!'s strategic and operational plans. Risks and uncertainties may cause actual results to differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, the impact of management and organizational changes; the implementation and results of Yahoo!'s ongoing strategic and cost initiatives; Yahoo!'s ability to compete with new or existing competitors; reduction in spending by, or loss of, advertising customers; risks related to Yahoo!’s regulatory environment; interruptions or delays in the provision of Yahoo!’s services; security breaches; acceptance by users of new products and services; risks related to joint ventures and the integration of acquisitions; risks related to Yahoo!'s international operations; failure to manage growth and diversification; adverse results in litigation, including intellectual property infringement claims and derivative and class actions; Yahoo!'s ability to protect its intellectual property and the value of its brands; dependence on key personnel; dependence on third parties for technology, services, content, and distribution; general economic conditions and changes in economic conditions; transition and implementation risks associated with the Search Agreement with Microsoft Corporation; and risks that the benefits of the agreement Yahoo! entered into with Alibaba regarding Yahoo!’s stake in Alibaba or the Framework Agreement Yahoo! entered into with Alibaba, Softbank Corporation and certain other parties regarding Alipay may not be realized. All information set forth in this press release and its attachments is as of July 17, 2012. Yahoo! does not intend, and undertakes no duty, to update this information to reflect subsequent events or circumstances. More information about potential factors that could affect the Company's business and financial results is included 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 year ended December 31, 2011, as amended, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, which are on file with the SEC and available on the SEC's website at www.sec.gov. Additional information will also be set forth in those sections in Yahoo!’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, which will be filed with the SEC in the third quarter of 2012.

Yahoo!, the Yahoo! logos, Axis and Genome are trademarks and/or registered trademarks of Yahoo! Inc. All other names are trademarks and/or registered trademarks of their respective owners.

Yahoo! Inc.

Unaudited Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

Three Months Ended

Six Months Ended

June 30,

2011

2012

2011

2012

Revenue

1,229,024

1,217,794

2,443,381

2,439,027

Operating expenses:

Cost of revenue - Traffic acquisition costs

152,896

137,025

302,927

281,116

Cost of revenue - Other

231,388

278,453

481,014

532,432

Sales and marketing

280,159

272,910

542,308

558,178

Product development

233,045

199,628

454,328

428,106

General and administrative

131,822

136,117

254,720

260,388

Amortization of intangibles

8,582

9,756

16,632

19,809

Restructuring charges, net

237

129,092

10,812

134,809

Total operating expenses

1,038,129

1,162,981

2,062,741

2,214,838

Income from operations

190,895

54,813

380,640

224,189

Other (expense) income, net

(5,666

)

20,175

(639

)

22,453

Income before income taxes and earnings in equity interests

185,229

74,988

380,001

246,642

Provision for income taxes

(55,629

)

(26,523

)

(107,749

)

(82,942

)

Earnings in equity interests

108,902

179,991

191,082

352,234

Net income

238,502

228,456

463,334

515,934

Less: Net income attributable to noncontrolling interests

(1,530

)

(1,825

)

(3,370

)

(2,960

)

Net income attributable to Yahoo! Inc.

236,972

226,631

459,964

512,974

Net income attributable to Yahoo! Inc. common stockholders per share - diluted ⁽¹⁾

0.18

0.35

0.42

Shares used in per share calculation - diluted

1,308,359

1,221,719

1,314,272

1,224,102

Stock-based compensation expense by function:

Cost of revenue - Other

875

2,614

1,523

5,508

Sales and marketing

19,373

18,981

26,070

40,078

Product development

25,531

17,808

43,203

37,279

General and administrative

13,269

10,168

23,368

22,672

Restructuring expense reversals, net

(526

)

(3,429

)

(1,278

)

(3,429

)

Supplemental Financial Data:

Revenue ex-TAC

1,076,128

1,080,769

2,140,454

2,157,911

Free cash flow

95,601

93,390

152,076

289,213

Yahoo! Inc.
Note to Unaudited Condensed Consolidated Statements of Income

This press release and its attachments include the non-GAAP financial measures of revenue excluding traffic acquisition costs (“revenue ex-TAC”), free cash flow, non-GAAP income from operations, non-GAAP net income, and non-GAAP net income per diluted share, which are reconciled to revenue, cash flow from operating activities, income from operations, net income attributable to Yahoo! Inc., and net income attributable to Yahoo! Inc. common stockholders per share - diluted, which we believe are the most comparable GAAP measures. We use these non-GAAP financial measures for internal managerial purposes and to facilitate period-to-period comparisons. We describe limitations specific to each non-GAAP financial measure below. Management generally compensates for limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure or measures. Further, management uses non-GAAP financial measures only in addition to and in conjunction with results presented in accordance with GAAP. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business and operating costs. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, revenue, cash flow from operating activities, income from operations, net income attributable to Yahoo! Inc., and net income attributable to Yahoo! Inc. common stockholders per share - diluted calculated in accordance with GAAP.

Revenue ex-TAC is a non-GAAP financial measure defined as GAAP revenue less TAC. TAC consists of payments made to third-party entities that have integrated our advertising offerings into their Websites or other offerings (those Websites and other offerings, “Affiliate sites”) and payments made to companies that direct consumer and business traffic to Yahoo!’s online properties and services (“Yahoo! Properties”). Based on the terms of the Search Agreement with Microsoft, Microsoft retains a revenue share of 12 percent of the net (after TAC) search revenue generated on Yahoo! Properties and Affiliate sites in transitioned markets. Yahoo! reports the net revenue it receives under the Search Agreement as revenue and no longer presents the associated TAC. Accordingly, for transitioned markets Yahoo! reports GAAP revenue associated with the Search Agreement on a net (after TAC) basis rather than a gross basis. For markets that have not yet transitioned, revenue continues to be recorded on a gross basis, and TAC is recorded as a part of operating expenses. We present revenue ex-TAC to provide investors a metric used by the Company for evaluation and decision-making purposes during the Microsoft transition and to provide investors with comparable revenue numbers when comparing periods preceding, during and following the transition period. A limitation of revenue ex-TAC is that it is a measure which we have defined for internal and investor purposes that may be unique to the Company, and therefore it may not enhance the comparability of our results to other companies in our industry who have similar business arrangements but address the impact of TAC differently. Management compensates for these limitations by also relying on the comparable GAAP financial measures of revenue and total operating expenses, which includes TAC in non-transitioned markets.

Free cash flow is a non-GAAP financial measure defined as cash flow from operating activities (adjusted to include excess tax benefits from stock-based awards), less acquisition of property and equipment, net and dividends received from equity investees. We consider free cash flow to be a liquidity measure which provides useful information to management and investors about the amount of cash generated by the business 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. Management compensates for this limitation by also relying on the net change in cash and cash equivalents as presented in the Company’s unaudited condensed consolidated statements of cash flows prepared in accordance with GAAP which incorporates all cash movements during the period.

Non-GAAP income from operations is defined as income from operations excluding certain gains, losses, and expenses that we do not believe are indicative of our ongoing operating results. We consider non-GAAP income from operations to be a profitability measure which facilitates the forecasting of our operating results for future periods and allows for the comparison of our results to historical periods. A limitation of non-GAAP income from operations is that it does not include all items that impact our income from operations for the period. Management compensates for this limitation by also relying on the comparable GAAP financial measure of income from operations which includes the gains, losses, and expenses that are excluded from non-GAAP income from operations.

Non-GAAP net income is defined as net income attributable to Yahoo! Inc. excluding certain gains, losses, expenses, and their related tax effects that we do not believe are indicative of our ongoing results. We consider non-GAAP net income and non-GAAP net income per diluted share to be profitability measures which facilitate the forecasting of our results for future periods and allow for the comparison of our results to historical periods. A limitation of non-GAAP net income and non-GAAP net income per diluted share is that they do not include all items that impact our net income and net income per diluted share for the period. Management compensates for this limitation by also relying on the comparable GAAP financial measures of net income attributable to Yahoo! Inc. and net income attributable to Yahoo! Inc. common stockholders per share - diluted, both of which include the gains, losses, expenses and related tax effects that are excluded from non-GAAP net income and non-GAAP net income per diluted share.

Yahoo! Inc.

Supplemental Financial Data

(in thousands)

Three Months Ended

Six Months Ended

June 30,

2011

2012

2011

2012

Revenue for groups of similar services:

Display

523,537

534,972

1,046,160

1,046,189

Search

466,674

460,969

921,795

931,366

Other

238,813

221,853

475,426

461,472

Total revenue

1,229,024

1,217,794

2,443,381

2,439,027

Revenue excluding traffic acquisition costs ("revenue ex-TAC") for groups of similar services:

GAAP display revenue

523,537

534,972

1,046,160

1,046,189

TAC associated with display revenue

(56,890

)

(61,552

)

(108,739

)

(118,978

)

Display revenue ex-TAC

466,647

473,420

937,421

927,211

GAAP search revenue

466,674

460,969

921,795

931,366

TAC associated with search revenue for non-transitioned markets

(95,866

)

(75,473

)

(194,048

)

(162,138

)

Search revenue ex-TAC

370,808

385,496

727,747

769,228

Other GAAP revenue

238,813

221,853

475,426

461,472

TAC associated with other GAAP revenue

(140

)

(140

)

Other revenue ex-TAC

238,673

221,853

475,286

461,472

Revenue ex-TAC:

GAAP revenue

1,229,024

1,217,794

2,443,381

2,439,027

TAC

(152,896

)

(137,025

)

(302,927

)

(281,116

)

Revenue ex-TAC

1,076,128

1,080,769

2,140,454

2,157,911

Revenue ex-TAC by segment:

Americas:

GAAP revenue

808,038

821,751

1,626,969

1,657,784

TAC

(39,404

)

(45,910

)

(77,545

)

(88,865

)

Revenue ex-TAC

768,634

775,841

1,549,424

1,568,919

EMEA:

GAAP revenue

162,601

128,099

316,651

262,061

TAC

(57,648

)

(34,187

)

(115,160

)

(79,849

)

Revenue ex-TAC

104,953

93,912

201,491

182,212

Asia Pacific:

GAAP revenue

258,385

267,944

499,761

519,182

TAC

(55,844

)

(56,928

)

(110,222

)

(112,402

)

Revenue ex-TAC

202,541

211,016

389,539

406,780

Total revenue ex-TAC

1,076,128

1,080,769

2,140,454

2,157,911

Direct costs by segment ⁽²⁾:

Americas

171,042

181,510

333,940

360,735

EMEA

42,768

41,277

81,374

81,498

Asia Pacific

57,728

56,248

109,050

107,739

Global operating costs ⁽³⁾⁽⁴⁾

393,037

410,519

808,663

832,417

Restructuring charges, net

237

129,092

10,812

134,809

Depreciation and amortization

161,373

157,739

321,811

310,987

Stock-based compensation expense

59,048

49,571

94,164

105,537

Income from operations

190,895

54,813

380,640

224,189

Reconciliation of cash flow from operating activities to free cash flow:

Cash flow from operating activities

330,620

274,560

536,306

572,013

Acquisition of property and equipment, net

(171,515

)

(106,131

)

(339,064

)

(215,922

)

Dividends received from equity investees

(75,391

)

(83,648

)

(75,391

)

(83,648

)

Excess tax benefits from stock-based awards

11,887

8,609

30,225

16,770

Free cash flow

95,601

93,390

152,076

289,213


⁽²⁾	Direct costs for each segment include cost of revenue (excluding TAC) and other operating expenses that are directly attributable to the segment such as employee compensation expense (excluding stock-based compensation expense), local sales and marketing expenses, and facilities expenses. Beginning in 2012, marketing and customer advocacy costs are managed locally and included as direct costs for each segment. Prior period amounts have been revised to conform to the current presentation.

⁽³⁾	Global operating costs include product development, service engineering and operations, general and administrative, and other corporate expenses that are managed on a global basis and that are not directly attributable to any particular segment. Prior to 2012, marketing and customer advocacy costs were managed on a global basis and included as global operating costs. Prior period amounts have been revised to conform to the current presentation.

⁽⁴⁾	The net cost reimbursements from Microsoft are primarily included in global operating costs.

Yahoo! Inc.

GAAP to Non-GAAP Reconciliations

(in thousands, except per share amounts)

Three Months Ended

June 30,

2011

2012

GAAP Income from operations

190,895

54,813

(a)

Restructuring charges, net

237

129,092

(b)

Deal-related expenses ⁽⁵⁾

6,500

Non-GAAP Income from operations

191,132

190,405

GAAP Net income attributable to Yahoo! Inc.

236,972

226,631

(a)

Restructuring charges, net

237

129,092

(b)

Deal-related expenses ⁽⁵⁾

6,500

(c)

To adjust the provision for income taxes to exclude the tax impact of items (a) and (b) above for the three months ended June 30, 2011 and 2012

(75

)

(35,674

)

Non-GAAP Net income

237,134

326,549

GAAP Net income attributable to Yahoo! Inc. common stockholders per share - diluted ⁽¹⁾

0.18

Non-GAAP Net income per share - diluted

0.18

0.27

Shares used in per share calculation - diluted

1,308,359

1,221,719

Six Months Ended

June 30,

2011

2012

GAAP Income from operations

380,640

224,189

(a)

Restructuring charges, net

10,812

134,809

(b)

Deal-related expenses ⁽⁵⁾

6,500

Non-GAAP Income from operations

391,452

365,498

GAAP Net income attributable to Yahoo! Inc.

459,964

512,974

(a)

Restructuring charges, net

10,812

134,809

(b)

Deal-related expenses ⁽⁵⁾

6,500

(c)

To adjust the provision for income taxes to exclude the tax impact of items (a) and (b) above for the six months ended June 30, 2011 and 2012

(3,437

)

(37,721

)

Non-GAAP Net income

467,339

616,562

GAAP Net income attributable to Yahoo! Inc. common stockholders per share - diluted

0.35

0.42

Non-GAAP Net income per share - diluted ⁽⁶⁾

0.35

0.50

Shares used in per share calculation - diluted

1,314,272

1,224,102

Yahoo! Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

Three Months Ended

Six Months Ended

June 30,

2011

2012

2011

2012

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

238,502

228,456

463,334

515,934

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

136,724

131,789

275,901

254,539

Amortization of intangible assets

29,492

28,864

58,993

60,209

Stock-based compensation expense, net

58,522

46,142

92,886

102,108

Non-cash restructuring charges

38,638

Tax benefits from stock-based awards

(125

)

(4,949

)

12,483

(3,935

)

Excess tax benefits from stock-based awards

(11,887

)

(8,609

)

(30,225

)

(16,770

)

Deferred income taxes

23,250

(14,075

)

45,831

(18,474

)

Earnings in equity interests

(108,902

)

(179,991

)

(191,082

)

(352,234

)

Dividends received from equity investee

75,391

83,648

75,391

83,648

Gain from sale of investments, assets, and other, net

14,577

(19,995

)

22,792

(24,507

)

Changes in assets and liabilities, net of effects of acquisitions:

Accounts receivable, net

(19,875

)

(112,549

)

86,692

(9,908

)

Prepaid expenses and other

(6,584

)

33,381

53,293

111,242

Accounts payable

21,041

6,728

(10,821

)

(35,714

)

Accrued expenses and other liabilities

(109,522

)

20,190

(386,044

)

(110,434

)

Deferred revenue

(9,984

)

(3,108

)

(33,118

)

(22,329

)

Net cash provided by operating activities

330,620

274,560

536,306

572,013

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of property and equipment, net

(171,515

)

(106,131

)

(339,064

)

(215,922

)

Purchases of marketable debt securities

(508,547

)

(469,046

)

(1,124,596

)

(645,266

)

Proceeds from sales of marketable debt securities

443,681

414,478

882,229

548,439

Proceeds from maturities of marketable debt securities

294,755

120,798

657,916

198,498

Proceeds from the sale of investments

26,132

Purchases of intangible assets

(7,618

)

(1,286

)

(10,960

)

(3,088

)

Acquisitions, net of cash acquired

(37,022

)

(68,812

)

Other investing activities, net

(2,141

)

149

(9,421

)

Net cash provided by (used in) investing activities

13,734

(17,196

)

(3,138

)

(100,628

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock, net

75,839

66,248

98,547

77,871

Repurchases of common stock

(471,651

)

(455,507

)

(609,019

)

(526,007

)

Excess tax benefits from stock-based awards

11,887

8,609

30,225

16,770

Tax withholdings related to net share settlements of restricted stock awards and restricted stock units

(7,366

)

(6,990

)

(33,669

)

(38,494

)

Other financing activities, net

(6,799

)

(1,209

)

(7,521

)

(2,222

)

Net cash used in financing activities

(398,090

)

(388,849

)

(521,437

)

(472,082

)

Effect of exchange rate changes on cash and cash equivalents

15,396

(49,214

)

42,679

(22,424

)

Net change in cash and cash equivalents

(38,340

)

(180,699

)

54,410

(23,121

)

Cash and cash equivalents, beginning of period

1,619,177

1,719,968

1,526,427

1,562,390

Cash and cash equivalents, end of period

1,580,837

1,539,269

1,580,837

1,539,269

Yahoo! Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

December 31,

June 30,

2011

2012

ASSETS

Current assets:

Cash and cash equivalents

1,562,390

1,539,269

Short-term marketable debt securities

493,189

371,204

Accounts receivable, net

1,037,474

1,040,893

Prepaid expenses and other current assets

359,483

318,932

Total current assets

3,452,536

3,270,298

Long-term marketable debt securities

474,338

490,570

Property and equipment, net

1,730,888

1,663,665

Goodwill

3,900,752

3,887,360

Intangible assets, net

254,600

196,729

Other long-term assets

220,628

209,669

Investments in equity interests

4,749,044

4,939,938

Total assets

14,782,786

14,658,229

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

166,595

132,105

Accrued expenses and other current liabilities

846,044

768,080

Deferred revenue

194,722

176,960

Total current liabilities

1,207,361

1,077,145

Long-term deferred revenue

43,639

38,757

Capital lease and other long-term liabilities

134,905

130,149

Deferred and other long-term tax liabilities, net

815,534

895,941

Total liabilities

2,201,439

2,141,992

Total Yahoo! Inc. stockholders' equity

12,541,067

12,472,997

Noncontrolling interests

40,280

43,240

Total equity

12,581,347

12,516,237

Total liabilities and equity

14,782,786

14,658,229

CONTACTS:
Yahoo!
Media Relations:
Dana Lengkeek, 408-349-1130
danal@yahoo-inc.com
Investor Relations:
Joon Huh, 408-349-3382
investorrelations@yahoo-inc.com

Financials at a Glance

Quarterly Results (in millions, except percentages and per share amounts)
	Q2 2011	Q2 2012	Percent Change
Revenue ex-TAC	$1,076	$1,081	0%
GAAP revenue	$1,229	$1,218	(1)%
Non-GAAP income from operations	$191	$190	0%
Income from operations	$191	$55	(71)%
Non-GAAP net earnings per diluted share	$0.18	$0.27	47%
Net earnings per diluted share	$0.18	$0.18	2%

⁽¹⁾	The impact of outstanding stock awards of entities in which the Company holds equity interests that are accounted for using the equity method reduced the Company's diluted earnings per share by $0.01 for the three months ended June 30, 2012.


⁽¹⁾	The impact of outstanding stock awards of entities in which the Company holds equity interests that are accounted for using the equity method reduced the Company's diluted earnings per share by $0.01 for the three months ended June 30, 2012.

⁽⁵⁾	Deal-related expenses relate to, among other matters, the agreement Yahoo! entered into with Alibaba regarding Yahoo!’s stake in Alibaba.

⁽⁶⁾	The impact of outstanding stock awards of entities in which the Company holds equity interests that are accounted for using the equity method reduced the Company's non-GAAP diluted earnings per share by $0.01 for the six months ended June 30, 2011.