<HTML> <HEAD> <TITLE> Prepared by MERRILL CORPORATION www.edgaradvantage.com </TITLE> </HEAD> <BODY BGCOLOR="#FFFFFF" LINK=BLUE VLINK=PURPLE> <FONT SIZE=3 ><A HREF="#00PAL1236_1">QuickLinks</A></FONT> <font size=3> -- Click here to rapidly navigate through this document</font> <HR NOSHADE> <HR NOSHADE> <BR> <P ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=5><B>SECURITIES AND EXCHANGE COMMISSION</B></FONT><BR><FONT SIZE=2><B>Washington, D.C. 20549</B></FONT></P> <HR NOSHADE WIDTH="120"> <BR> <P ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=5><B>FORM 10-K</B></FONT></P> <P ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=3><B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE<BR> SECURITIES EXCHANGE ACT OF 1934</B></FONT></P> <P ALIGN="CENTER"><FONT SIZE=2><B>For the fiscal year ended December 31, 1999</B></FONT></P> <P ALIGN="CENTER"><FONT SIZE=2><B>Commission File Number 0-28018</B></FONT></P> <HR NOSHADE WIDTH="120"> <BR> <P ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=5><B>YAHOO! INC.</B></FONT><BR><FONT SIZE=2>(Exact name of Registrant as specified in its charter)</FONT></P> <!-- User-specified TAGGED TABLE --> <CENTER><TABLE WIDTH="76%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="TOP"> <TD WIDTH="49%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=2><B>Delaware</B></FONT></TD> <TD WIDTH="2%"><FONT COLOR="#C226FF" SIZE=2> </FONT></TD> <TD WIDTH="49%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=2><B>77-0398689</B></FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2>(State or other jurisdiction of<BR> incorporation or organization)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2>(I.R.S. Employer<BR> Identification No.)</FONT></TD> </TR> </TABLE></CENTER> <!-- end of user-specified TAGGED TABLE --> <P ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=2><B>3420 Central Expressway<BR> Santa Clara, California 95051</B></FONT><BR><FONT SIZE=2>(Address of principal executive offices)</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>Registrant's telephone number, including area code: </FONT><FONT COLOR="#C226FF" SIZE=2><B>(408) 731-3300</B></FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>Securities registered pursuant to Section 12(b) of the Act:</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2><B>None</B></FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>Securities registered pursuant to Section 12(g) of the Act:</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2><B>Common Stock, $.001 par value<BR></B></FONT><FONT SIZE=2>(Title of Class)</FONT></P> <HR NOSHADE WIDTH="120"> <BR> <P><FONT SIZE=2>Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / /</FONT></P> <P><FONT SIZE=2>Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / /</FONT></P> <P><FONT SIZE=2>As of January 31, 2000, the aggregate market value of voting stock held by non-affiliates of the Registrant, based upon the closing sales price for the Registrant's Common Stock, as reported in the NASDAQ National Market System, was $50,866,522,264. Shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for any other purpose.</FONT></P> <P><FONT SIZE=2>The number of shares of the Registrant's Common Stock outstanding as of January 31, 2000 was 536,590,496.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2><B>DOCUMENTS INCORPORATED BY REFERENCE</B></FONT></P> <P><FONT SIZE=2>The following documents (or parts thereof) are incorporated by reference into the following parts of this Form 10-K:</FONT></P> <DL compact> <DT><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Proxy Statement for the 2000 Annual Meeting of Stockholders<BR> – Items 10, 11, 12 and 13.</FONT></DD></DL> <BR> <HR NOSHADE> <HR NOSHADE> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=1,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=311230,FOLIO=blank,FILE='DISK004:[00PAL6.00PAL1236]BA1236A.;9',USER='KSEAMON',CD='26-MAR-2000;23:35 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <H2><FONT SIZE=2> </FONT></H2> <BR> <P><FONT SIZE=2><A NAME="de1236_part_i"> </A></FONT> <FONT COLOR="#C226FF" SIZE=4><B>Part I</B></FONT></P> <BR> <BR> <P><FONT SIZE=2><A NAME="de1236_item_1._business"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 1. Business</B></FONT></P> <P><FONT SIZE=2><I>Except for historical information, the following description of the Company's business contains forward-looking statements which involve risks and uncertainties. The Company's actual results could differ materially from those set forth in these forward-looking statements as a result of a number of factors, including those set forth in this Annual Report under the heading, "Risk Factors."</I></FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>OVERVIEW</B></FONT></P> <P><FONT SIZE=2>Yahoo! Inc. (including its subsidiaries, "Yahoo!" or the "Company") is a global Internet communications, commerce and media company that offers a comprehensive branded network of services to more than 120 million users each month worldwide. As the first online navigational guide to the World Wide Web (the "Web"), www.yahoo.com is the 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 also provides online business services designed to enhance Yahoo!'s clients' Web services, including audio and video streaming, store hosting and management, and Web site tools and services. The company's global Web network includes 21 World properties. Yahoo! has offices in Europe, the Asia Pacific, Latin America, Canada and the United States, and is headquartered in Santa Clara, California.</FONT></P> <P><FONT SIZE=2>Yahoo! was developed and first made available in 1994 by the Company's founders, David Filo and Jerry Yang, while they were graduate students at Stanford University. The Company was incorporated in California on March 5, 1995, and commenced operations on that date. On May 18, 1999 the Company reincorporated in Delaware. 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. During October 1997, the Company completed the acquisition of Four11 Corporation ("Four11"), a privately-held online communications and Internet directory company. In June 1998, the Company acquired Viaweb Inc. ("Viaweb"), a privately-held company providing highly ranked software and reporting tools for building and operating online commerce Web sites. In July 1998, the Company acquired WebCal Corporation ("WebCal"), developer and marketer of Web-based calendar and scheduling products, and publisher of EventCal, a comprehensive database of worldwide public events. During October 1998, the Company acquired Yoyodyne Entertainment, Inc. ("Yoyodyne"), a recognized leader in Internet direct marketing. During December 1998, the Company acquired HyperParallel, Inc. ("HyperParallel"), a direct marketing company specializing in data analysis. In January 1999, the Company acquired Log-Me-On.Com LLC ("Log-Me-On"), a developer of browser interface technology. In March 1999, the Company acquired Yahoo! Canada, including the URL </FONT><FONT SIZE=2><I>www.yahoo.ca.com.</I></FONT><FONT SIZE=2> In May 1999, the Company acquired GeoCities, a publicly traded Internet company specializing in publishing tools and communities, Encompass, Inc. ("Encompass"), a developer of client-side applications, and Online Anywhere, a developer of applications that translate Web pages to be read by non-PC devices. In July 1999, the Company acquired broadcast.com inc. ("broadcast.com"), a publicly traded Internet company specializing in audio and video broadcasts over the Web. In November 1999, the Company acquired Integrated Systems Services Group, Inc. ("ISSG"), a developer of Web-based communications solutions. Prior to the Company's acquisition of GeoCities, GeoCities acquired Starseed, Inc. ("Starseed"), a developer of Web site linking technology, completed in December 1998, and Futuretouch Corporation ("Futuretouch"), a development stage creator of Web page editing software, in March 1999. Prior to the Company's acquisition of broadcast.com, broadcast.com acquired SimpleNet, a provider of Web site hosting services to consumers and small businesses, in November 1998, and Net Roadshow, Inc. ("Net Roadshow"), a provider of Internet initial public offerings and other financial roadshow services, in March 1999.</FONT></P> <P><FONT SIZE=2>Under the Yahoo! brand, the Company provides broadcast media, communications, and commerce services. In December 1999, Internet users viewed an average of approximately 465 million Web pages per day on Yahoo!-branded online properties.</FONT></P> <P><FONT SIZE=2>The Company makes its properties available without charge to users, and generates revenue primarily through</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=2,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=297532,FOLIO=2,FILE='DISK004:[00PAL6.00PAL1236]DE1236A.;9',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT SIZE=2>the sale of advertisements, promotions, sponsorships, merchandising and direct marketing. The majority of advertising on Yahoo! properties is sold through the Company's internal advertising sales force. During 1999, approximately 5,200 customers advertised on Yahoo! properties.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>PRODUCTS AND MEDIA PROPERTIES</B></FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Yahoo! Main Site</B></FONT></P> <P><FONT SIZE=2>The Company's principal offering, www.yahoo.com, provides the flagship product for its global Internet media network. Yahoo! offers a comprehensive, intuitive and user-friendly online guide to Web navigation, aggregated informative content, communication services, a strong user community, and commerce. Yahoo! includes a hierarchical, subject-based directory of Web sites, which enables Web users to locate and access desired information and services through hypertext links included in the directory. Yahoo! organizes Web site listings under the following 14 principal categories: Arts and Humanities, Business and Economy, Computers and Internet, Education, Entertainment, Government, Health, News and Media, Recreation and Sports, Reference, Regional, Science, Social Science, and Society and Culture. Web sites are further organized under these major headings by hierarchical subcategories. Users can either browse the directory listings by subject matter, or use a rapid keyword search facility that scans the contents of the entire directory or any subcategory within Yahoo!. The basic Web site listings are in many cases supplemented with brief descriptive commentary, and a special symbol is used to indicate listings that, in the view of the Company's editorial staff, provide unique presentation or content within their topic area. Yahoo! also provides Web-wide text search results from the Inktomi search engine. These results are integrated into the directory search function so that Web-wide search results are presented in the absence of relevant listings from the Yahoo! directory.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Targeted Online Properties and Services</B></FONT></P> <P><FONT SIZE=2>The comprehensive subject-based, demographic and geographic listings in Yahoo! have provided a platform for the Company to develop and offer independent navigational tools and information services that are targeted to particular interests and Web users, and are presented within the familiar Yahoo! framework and style. The Company has developed Web-based media properties that allow the user to personalize and tailor the presentation of information and navigational resources. The Company has also developed a suite of communication and commerce services that facilitate interaction with the Yahoo! community, the greater Web community, and transactions among users and with merchants. The Company works with appropriate strategic partners who develop localized or targeted content and/or provide a service under a Yahoo! brand or co-brand. The Company believes that tight integration of these services, if implemented successfully, will further strengthen customer loyalty to the Yahoo! brand and create additional revenue opportunities through a broader end user and advertiser base and increasingly targeted advertising and commerce opportunities.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Media Properties</B></FONT></P> <P><FONT SIZE=2>Yahoo!'s Media properties focus on delivering information and entertainment conveniently to users from leading branded content providers, combined with other Yahoo! resources and related Web sites from the Yahoo! directory. Use of most properties is free, and many require registration.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Subject-Based Properties</B></FONT></P> <P><FONT SIZE=2>The Company has developed properties organized around subjects such as Sports, News, Weather, Music, and Finance. Yahoo! Entertainment aggregates information about recreation and leisure activities as well as interactive experiences through properties such as Yahoo! Movies, Music, TV, Games, and Chat Events. Yahoo!'s Full Coverage organizes hypertext links to Web sites featuring current events and issues of interest, such as elections, holidays, political issues and major weather conditions, organized in a topical format and updated regularly. Yahooligans!, a version of Yahoo! designed for children aged 7 to 12, includes content and a directory of Web sites selected by experienced educators who evaluate the sites for appropriate content and links, applicability to school curricula, and interest to the children.</FONT></P> <P><FONT SIZE=2>Content integrated into subject-based properties include real-time news (provided by numerous sources including Reuters New Media, Associated Press, Deutsche Presse Agentur, and Agence France Presse), stock quotes (Reuters), corporate earnings reports (Zacks), audio news (National Public Radio), mutual fund holdings (Morningstar), stock investing commentary (Motley Fool, CBS MarketWatch, The Street.com), sports scores (ESPN SportsTicker), sports commentary (The Sporting News), weather information (Weathernews, Inc. and the Weather</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>3</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=2,SEQ=3,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=183486,FOLIO=3,FILE='DISK004:[00PAL6.00PAL1236]DE1236A.;9',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT SIZE=2>Channel), and entertainment industry gossip (E! Online). Among new properties Yahoo! launched in 1999 are Yahoo! Health, Yahoo! Pets, Yahoo! Politics, and Yahoo! Entertainment.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Rich Media Integration and Services</B></FONT></P> <P><FONT SIZE=2>With its acquisition of broadcast.com, Yahoo! significantly accelerated its efforts to augment its properties with rich media in the form of audio and video content, and to offer services to its corporate customers for live and on demand online events. Yahoo! maintains the Yahoo! broadcast site (</FONT><FONT SIZE=2><I>broadcast.yahoo.com</I></FONT><FONT SIZE=2>), where a variety of audio and video content is made available to users, such as professional and amateur sports events, concerts, audio books, radio shows and company conference calls. In addition, this content is continuing to be licensed and integrated throughout the Yahoo! network. In 1999, Yahoo! launched Yahoo! Digital, giving users the ability to watch and listen to Internet broadcasts from top music talent, download and purchase both secure and open audio files, remix selected music tracks online, and view on-demand video channels.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Communications Properties</B></FONT></P> <P><FONT SIZE=2>Yahoo! has also established itself as a leading communications hub on the Internet. Yahoo!'s communications properties have become essential services to many Yahoo! users. Through its integrated Chat service, Messenger, Message Boards and Greetings, registered Yahoo! members can contact each other as well as communicate with the Web community at large. Yahoo! Mail, the Company's free email service, is one of the most popular on the Web. Yahoo! has also developed a suite of services which help users manage their personal information, such as Yahoo! Address Book, Yahoo! Calendar, Yahoo! Briefcase, and Yahoo! Phone Book. Users can access their personal information from the Web, as well as from their computer or devices such as personal digital assistants (PDA's), pagers and cell phones, through Yahoo! Mobile and TrueSync for Yahoo!.</FONT></P> <P><FONT SIZE=2>The Yahoo! community is most evident through Yahoo! Clubs, Yahoo! Personals, Yahoo! Photos, Yahoo! Member Directory, Yahoo! Message Boards and Yahoo! GeoCities. Members can create GeoCities Home Pages, and may take advantage of Yahoo! PageBuilder or Yahoo! Wizards to create them. Voice services were made available in 1999 through Yahoo! Chat (with HearMe), Yahoo! Personals (with Pagoo), and through PC to Phone Services (with Net2Phone).</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Personalized Information Services</B></FONT></P> <P><FONT SIZE=2>In July 1996, the Company launched My Yahoo!, a personalized Web information service. My Yahoo! allows users to create a personal profile which directly organizes and delivers to the user information of personal interest such as selected stock quotes, stock portfolio management, national headlines, local and national weather and sports news, as well as the user's favorite Web searches and Yahoo! categories. In addition, many Yahoo! properties can be personalized to suit the user's preferences. The Company has also developed a universal registration system that permits Yahoo! users to easily use many Yahoo! services under a single user name, including My Yahoo!, Yahoo! Chat, Yahoo! Mail, Yahoo! Portfolios, Yahoo! Message Boards, Yahoo! Shopping, Yahoo! Auctions, Yahoo! Clubs, Yahoo! Address Book, Yahoo! Calendar, and Yahoo! Classifieds. In 1999, Yahoo! launched a Points program to encourage loyalty by allowing users to earn points for using services such as Yahoo! Travel and Yahoo! Shopping, and redeem them for prizes. In addition, Yahoo! launched Yahoo! Wallet, which allows users to purchase products from the thousands of merchants in Yahoo! Shopping without having to re-enter their credit card, billing and shipping information.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Commerce Properties</B></FONT></P> <P><FONT SIZE=2>In addition, one of the Company's primary strategies is to provide a marketplace for commerce on the Web. Through sponsorship arrangements with premier merchants, Yahoo! offers its members the opportunity to purchase a wide variety of goods and services such as automotive services (Autoweb.com), books (Amazon.com), brokerage services (E*Trade, TD Waterhouse, and National Discount Brokers), flowers (FTD, Gerald Stevens), health care (Health Network, Healtheon/WebMD), mortgages (E-Loan), music (ARTISTdirect), traditional communications services (AT&T), and wedding-related products and services (WeddingNetwork, WeddingChannel.com). In addition to providing sponsorship opportunities, Yahoo! provides retail merchants the ability to build or seamlessly integrate their existing Web sites into the Yahoo! network, allowing merchants to more effectively utilize Yahoo!'s tools and commerce technologies.</FONT></P> <P><FONT SIZE=2>Yahoo! directly enables transactions through Yahoo! Shopping, Yahoo! Store and Yahoo! Auctions. Yahoo! Shopping</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>4</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=3,SEQ=4,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=615572,FOLIO=4,FILE='DISK004:[00PAL6.00PAL1236]DE1236A.;9',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT SIZE=2>is a consumer-focused site aggregating prominent merchants and their wares in categories ranging from books to apparel to unique gifts. As of December 1999, Yahoo! Shopping included over 7,500 stores, including Brooks Brothers, Coach, Eddie Bauer, The Gap, Guess?, Nordstrom, Patagonia, Macys, OfficeMax, Toys R Us, Victoria's Secret and Zales. Taking advantage of Yahoo! Store's technology, Yahoo! Shopping allows merchants large and small to build a commerce Web site. Consumers can compare and select items to purchase with a credit card, using the Yahoo! universal Shopping Cart and Wallet. Yahoo! Auctions enables consumers and businesses to auction items online in 12 different categories including Antiques and Collectibles, Business and Office, Computers, Home and Garden, Toys and Games, and Trading Cards. Yahoo! also facilitates transactions on a referral basis in Classifieds properties such as Autos, Real Estate and Employment.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Geographic Properties</B></FONT></P> <P><FONT SIZE=2>The Company seeks to build upon its global user base by developing Internet properties focused on geographic regions, which include foreign countries as well as domestic metropolitan areas. The Company has launched numerous geographically targeted Web properties. Additional information required by this item is incorporated herein by reference to Note 8 "Segment and Geographic Information" of the Notes to the Consolidated Financial Statements which appears in Item 8 of this Annual Report on Form 10-K.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>International Online Properties.</B></FONT><FONT SIZE=2> The Company has developed 21 international online properties in 12 languages, including localized versions of Yahoo! in Asia (English language), Australia & New Zealand, Brazil, Canada, China, Denmark, France, Germany, Hong Kong, Italy, Japan, Korea, Mexico, Norway, Singapore, Spain, Sweden, Taiwan, and the United Kingdom & Ireland and Yahoo! guides in Spanish and Mandarin Chinese languages. Outside the English-speaking markets, the Company has built independent directories of local language Web sites and other content, developed by native speakers of each language. The Company owns a majority or 100% of its non-US operations (except in Japan), and has established Yahoo! offices in 16 different locations internationally to ensure the development of their businesses. The Company has pursued a consistent strategy of content aggregation with best of breed third parties and intends to rollout the full range of its products and services for all these markets.</FONT></P> <P><FONT SIZE=2> </FONT><FONT COLOR="#C226FF" SIZE=1><B>Yahoo! Japan – </B></FONT><FONT SIZE=2>Yahoo!'s first geographic property was developed during 1996 through a joint venture with SOFTBANK, a holder of 23% of the Company's Common Stock at December 31, 1999 and Japan's largest distributor of computer software, peripherals and systems, as well as one of Japan's largest publishers of computer-related magazines and books. Yahoo! Japan was formed to establish and manage in Japan a Japanese version of Yahoo!, develop related Japanese online navigational services, and conduct other related business. Yahoo! Japan completed its initial public offering on the Japanese over-the-counter market in November 1997. At December 31, 1999, the Company owned approximately 34% of Yahoo! Japan.</FONT></P> <P><FONT SIZE=2> </FONT><FONT COLOR="#C226FF" SIZE=1><B>Yahoo! Europe – </B></FONT><FONT SIZE=2>During November 1996, the Company signed a joint venture agreement 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 Yahoo! for those countries, develop related online navigational services, and conduct other related business. The Company owns approximately 70% of each of these Yahoo! Europe entities.</FONT></P> <P><FONT SIZE=2> </FONT><FONT COLOR="#C226FF" SIZE=1><B>Yahoo! Korea – </B></FONT><FONT SIZE=2>During August 1997, the Company signed a joint venture agreement with SOFTBANK and other SOFTBANK affiliate companies to develop and operate Yahoo! Korea, a Korean version of Yahoo!, to develop related Korean online navigational services, and to conduct other related business. The Company owns approximately 60% of the joint venture.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Local Online Properties.</B></FONT><FONT SIZE=2> Yahoo! Get Local offers extensive information for all 50 states, 211 metropolitan areas and more than 30,000 counties and cities in the United States. The property provides users with comprehensive local Web programming, including sports, weather, news, yellow pages, white pages, entertainment, community information and more. Yahoo! Get Local is also integrated into the main directory of Yahoo!, which enhances the subcategories under the Regional category of the main Yahoo! hierarchy, giving individuals easy access to a wealth of local information.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Print and Other Offline Properties</B></FONT></P> <P><FONT SIZE=2>The Company seeks to extend the Yahoo! brand into print and other offline media, primarily for the purpose of promoting the brand and creating greater demand for the</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>5</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=4,SEQ=5,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=656248,FOLIO=5,FILE='DISK004:[00PAL6.00PAL1236]DE1236A.;9',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT SIZE=2>Company's online properties. The Company continued its agreement with Ziff-Davis Publishing Company, affiliated with SOFTBANK, for the publication of Yahoo! Internet Life, a monthly print magazine companion to the online magazine. The publication was recently sold to Willis Stein & Partners. In addition, the Company has entered into a multi-book arrangement with Byron Preiss to publish Yahoo! branded Internet reference guides. The Company also has licensing relationships for merchandise in various categories such as backpacks and computer bags with Gregory Mountain Products, computer accessories with Sakar International, and music compact discs with Rhino Records. Royalty revenues under these arrangements have been and are expected to continue to be nominal.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>ADVERTISING, ELECTRONIC COMMERCE, AND BUSINESS SERVICES</B></FONT></P> <P><FONT SIZE=2>The Company derives significant revenues from the sale of advertising elements including placement fees, promotions, banner advertisements, sponsorships, direct marketing, and transaction fees generated from the sale of merchandise on Yahoo! properties. The Company's advertising products currently consist of banner advertisements that appear on pages within Yahoo! properties, higher profile promotional sponsorships that are typically focused on a particular event, such as a sweepstakes, and merchant sponsorship buttons on targeted advertising inventory encouraging users to complete a transaction. Direct marketing revenues result from email campaigns targeted to certain members of the Yahoo! registered community that have indicated a willingness to receive such promotions. Hypertext links are embedded in each banner advertisement, button or directed email to provide the user with instant access to the advertiser's Web site, to obtain additional information, or to purchase products and services.</FONT></P> <P><FONT SIZE=2>Although a substantial amount of advertising purchases on Yahoo! properties are for general rotation on pages within the Yahoo! network, the Company seeks to offer increasingly targeted properties that will deliver greater value to advertisers through more focused audiences. By developing an extended family of Yahoo!-branded properties, the Company seeks to offer advertisers a wide range of placement options and promotional opportunities.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Advertising Organization Services</B></FONT></P> <P><FONT SIZE=2>In late 1996, the Company established an internal sales force. As of December 1999, sales professionals were employed in fourteen locations across the U.S.: Atlanta, Baltimore, Boston, Chicago, Dallas, Detroit, Houston, Los Angeles, Miami, New York, San Diego, the San Francisco Bay Area, Seattle, and Washington D.C. The Company's sales organization consults regularly with agencies and customers on design and placement of Web-based advertising, and provides clients with measurement and analysis of advertising effectiveness.</FONT></P> <P><FONT SIZE=2>In international markets, Yahoo!'s advertising sales are principally handled by the Company's internal sales representatives. In some countries, including several where the Company has not established full operational capacity and localized properties, sales agency relationships have been put in place.</FONT></P> <P><FONT SIZE=2>The Company offers many forms of advertising which have varying price ranges. There are targeted and general rotations of banner advertising. In addition to banner advertising, the Company offers premium positions on Yahoo! properties that typically are used in connection with promotions and special events. The Company's strategy is to use these sponsorship positions for high-profile promotions that can also result in additional visibility and awareness for Yahoo!. Yahoo! has also created special holiday- and event-oriented promotional spaces for holidays and events such as Back to School, Halloween and Christmas. Yahoo! also offers sponsorships, merchandising, placement, transaction fees, direct marketing, and other forms of carriage on its network of properties.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>E-Commerce Services</B></FONT></P> <P><FONT SIZE=2>With the acquisition of Viaweb and subsequent product development, Yahoo! offers a technology platform directed toward the complete deployment of a commerce enabled Web site with email, reporting, payment processing, and search functionality. Currently, this technology is available in the Yahoo! Shopping and Store properties enabling large and small merchants to transact online. The Company generates revenue from monthly hosting fees and through receiving a percentage of online sales from its merchant partners. Additionally, Yahoo! enables businesses and individuals to sell products and services online through Yahoo! Auctions. The Yahoo! Auctions service is currently free to both buyers and sellers. The Company generates auction revenues from advertising including featured auction listings.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>6</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=5,SEQ=6,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=802134,FOLIO=6,FILE='DISK004:[00PAL6.00PAL1236]DE1236A.;9',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT COLOR="#C226FF" SIZE=2><B>Business Services</B></FONT></P> <P><FONT SIZE=2>With the addition of broadcast.com, Yahoo! added to its business services offerings with streaming media services, creative design, event planning and promotion. The Company also offers an outsourced co-branded corporate portal, based on My Yahoo!, for employees, suppliers, vendors and customers. Yahoo! also provides hosting and commerce services with its Yahoo! Store and Yahoo! Site services. Additional information required by this item is incorporated herein by reference to Note 8 "Segment and Geographic Information" of the Notes to the Consolidated Financial Statements which appears in Item 8 of this Annual Report on Form 10-K.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>STRATEGIC ALLIANCES</B></FONT></P> <P><FONT SIZE=2>In order to serve users more effectively and to extend the Yahoo! brand to new media properties, the Company has entered into strategic relationships with business partners who offer content, technology, and distribution capabilities.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Content and Commerce Alliances</B></FONT></P> <P><FONT SIZE=2>Yahoo! has entered into strategic alliances with selected leading original content providers, including ESPN, SportsTicker, infoUSA.com, Muze, Primedia, Reuters, The Sporting News, The Wall Street Journal, Weathernews, and Ziff-Davis, which permit the Company to bring Yahoo!-branded, targeted media products to market more quickly, while avoiding the cost of producing original editorial content.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Distribution Alliances</B></FONT></P> <P><FONT SIZE=2>In order to broaden Yahoo!'s user base, the Company has established co-promotional relationships with commercial online services, Internet access providers, OEM's and operators of leading Web sites. The Company believes these arrangements are important to the promotion of Yahoo!, particularly among new Web users who may first access the Web through these services or Web sites. These co-promotional arrangements typically are terminable upon short or no notice.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Leading Web Sites.</B></FONT><FONT SIZE=2> The Company has relationships with content, co-marketing and distribution partners to provide Yahoo! branding and links from partners' sites. In addition, millions of Web pages on the Internet voluntarily link to Yahoo!.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Internet Access Providers.</B></FONT><FONT SIZE=2> The Company also has relationships with companies such as Covad Communications and NorthPoint Communications under which these Internet access providers feature Yahoo! as a key navigational tool and engage in certain promotional activities. Yahoo! also teamed up with Kmart's BlueLight.com and Spinway.com to deliver free Internet access to Kmart shoppers.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>OEMs.</B></FONT><FONT SIZE=2> Yahoo! has established distribution agreements with personal computer manufacturers including Hewlett Packard, IBM, Gateway, Toshiba and PeoplePC whereby links to Yahoo! services are offered on the desktop of new computers.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Other Devices.</B></FONT><FONT SIZE=2> In 1999, the Company significantly increased its efforts to distribute Yahoo! information and services to non-PC devices, beginning with the acquisition of Online Anywhere. The Company has entered into relationships to distribute a range of Yahoo! services including Yahoo! Mail, Yahoo! Address Book and Yahoo! Calendar. Among these relationships are Sprint for distribution on Sprint PCS phones, and Motorola for distribution on Internet connected wireless devices, and 3Com on the Palm.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Yahoo! Online Services.</B></FONT><FONT SIZE=2> The Company and AT&T continued a co-marketing and distribution agreement to provide a co-branded, co-marketed online service. The service, Yahoo! Online powered by AT&T, is designed to provide consumers with an integrated and simple solution to easily explore the Internet with nationwide dial-up access coverage. Yahoo! and British Telecommunications plc (BT) launched Yahoo! Click, a new service combining Internet access from BT with the navigational and aggregation expertise of Yahoo! UK & Ireland (http://www.yahoo.co.uk) for Web users in the United Kingdom.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>OPERATIONS AND TECHNOLOGY</B></FONT></P> <P><FONT SIZE=2>The Company makes Yahoo! available to users through a set of network servers operating with public domain server software that has been optimized internally to provide an efficient and responsive user experience. The Company has developed a set of proprietary database tools that it uses to maintain and update directory listings on Yahoo! and other directory properties. Substantially all of the listings on Yahoo! are submitted by Web site developers. The Company's "surfers" review submissions and categorize them into appropriate category headings. The Company also uses automated systems to regularly check Web</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>7</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=6,SEQ=7,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=319258,FOLIO=7,FILE='DISK004:[00PAL6.00PAL1236]DE1236A.;9',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT SIZE=2>sites in the Yahoo! directory listings, and to remove sites that are no longer available.</FONT></P> <P><FONT SIZE=2>Yahoo! includes an internally developed responsive keyword search function that is used to locate listings within the directory. This search function not only returns relevant Web site listings but also appropriate category headings, which link to further listings that may be relevant to the user's query. The Company has also internally developed an extensive classifieds system capable of listing and searching millions of items in multiple categories. Additionally, Yahoo! has internally developed a personalization system, My Yahoo!, to allow users to customize and localize the information they regularly view, such as stock quotes, news categories, sports scores, and weather. The Company utilizes the Web-wide searching technology and Web index from a third party, and has built or acquired technology to support its many and diverse properties including Yahoo! Mail, Yahoo! Shopping, Yahoo! Auctions, Yahoo! Store, and Yahoo! Calendar.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>COMPETITION</B></FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Yahoo!'s Markets are Highly Competitive</B></FONT></P> <P><FONT SIZE=2>The market for Internet products and services is highly competitive and we expect that competition will continue to intensify. Negative competitive developments could have a material adverse effect on our business and the trading price of our stock.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Multiple Providers of Competitive Services; Acquisitions Resulting in Consolidation</B></FONT></P> <P><FONT SIZE=2>We compete with many other providers of online navigation, information, entertainment, business, community, electronic commerce and broadcast services. As we expand the scope of our Internet offerings, we will compete directly with a greater number of Internet sites, media companies, and companies providing business services across a wide range of different online services, including:</FONT></P> <UL> <DL compact> <DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>companies offering communications services either on a stand alone basis or integrated into other products and media properties;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>vertical markets where competitors may have advantages in expertise, brand recognition, and other factors;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>manufacturers of personal computers who may develop their own Internet portals to which they would direct their customers;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>online merchant hosting services; and</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>online broadcasting of business events.</FONT></DD></DL> </UL> <BR> <P><FONT SIZE=2>In particular, we face significant competition from America Online and Microsoft (MSN) and, to a less significant extent, other companies that have combined a variety of services under one brand in a manner similar to Yahoo! including CMGI (Alta Vista), the Walt Disney Company (The GO Network), Excite@Home, and Lycos. In certain of these cases, our competition has a direct billing relationship with the user, which we generally lack. This relationship permits our competitors to have several potential advantages including the potential to be more effective than us in targeting services and advertisements to the specific taste of their users. America Online and Time Warner recently announced the proposed merging of their companies. If completed, the merger will provide America Online with content from Time Warner's movie and television, music, books and periodicals, news, sports and other media holdings; access to a network of cable and other broadband delivery technologies; and considerable resources for future growth and expansion. The proposed America Online and Time Warner combination will also provide America Online with access to a broad potential customer base consisting of Time Warner's current customers and subscribers of its various media properties. We also face competition from Web sites focused on vertical markets where expertise in a particular segment of the market may provide a competitive advantage. On an international level, we compete directly with local providers; they may have several advantages, including greater knowledge about the particular country or local market. We must continue to obtain more knowledge about our users and their preferences as well as increase our branding and other marketing activities in order to remain competitive.</FONT></P> <P><FONT SIZE=2>A large number of these Web sites and online services as well as high-traffic e-commerce merchants such as Amazon.com, Inc. also offer or are expected to offer informational and community features that may be competitive with the services that we offer. In order to effectively compete, we may need to expend significant internal engineering resources or acquire other technologies and companies to provide or enhance such capabilities. Any of these efforts could have a material adverse effect on our</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>8</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=7,SEQ=8,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=656544,FOLIO=8,FILE='DISK004:[00PAL6.00PAL1236]DE1236A.;9',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT SIZE=2>business, operating results and financial condition and be dilutive to our stockholders.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>PROPRIETARY RIGHTS</B></FONT></P> <P><FONT SIZE=2>We regard our copyrights, trademarks, trade dress, trade secrets, and similar intellectual property, including our rights to certain domain names, as critical to our success. We rely upon trademark and copyright law, trade secret protection and confidentiality or license agreements with our employees, customers, partners and others to protect our proprietary rights. For example, we have obtained the registration for certain of our trademarks, including "Yahoo!" and "Yahooligans!" Effective trademark, copyright, and trade secret protection may not be available in every country in which our products and media properties are distributed or made available through the Internet, and while we attempt to ensure that the quality of our brand is maintained by our licensees, our licensees may take actions that could materially and adversely affect the value of our proprietary rights or the reputation of our products and media properties. We are aware that third parties have, from time to time, copied significant portions of Yahoo! directory listings for use in competitive Internet navigational tools and services. Protection of the distinctive elements of Yahoo! may not be available under copyright law. We cannot guarantee that the steps we have taken to protect our proprietary rights will be adequate.</FONT></P> <P><FONT SIZE=2>Many parties are actively developing search, indexing, e-commerce and other Web-related technologies, as well as a variety of online business models and methods. We believe that these parties will continue to take steps to protect these technologies, including, but not limited to, seeking patent protection. As a result, disputes regarding the ownership of these technologies and rights associated with online business are likely to arise in the future. In addition to existing patents and intellectual property rights, we anticipate that additional third-party patents related to our services will be issued in the future. From time to time, parties assert patent infringement claims against us in the form of letters, lawsuits and other forms of communications. Currently, we are engaged in two lawsuits regarding patent issues and have been notified of a number of other potential disputes.</FONT></P> <P><FONT SIZE=2>In addition to patent claims, third parties have asserted and most likely will continue to assert claims against us alleging infringement of copyrights, trademark rights, trade secret rights or other proprietary rights, or alleging unfair competition or violations of privacy rights. In the event that we determine that licensing patents or other proprietary rights is appropriate, we cannot guarantee that we will be able to license such proprietary rights on reasonable terms or at all. We may incur substantial expenses in defending against third-party infringement claims regardless of the merit of such claims. In the event that there is a determination that we have infringed third-party proprietary rights or other third party rights such as publicity and privacy rights, we could incur substantial monetary liability or be prevented from using the rights, which could require us to change our business practices in the future.</FONT></P> <P><FONT SIZE=2>We are aware of lawsuits filed against two of our competitors regarding the presentment of advertisements in response to search requests on "keywords" that may be trademarks of third parties. Initial rulings in these lawsuits were in favor of our competitors, but the plaintiffs in these lawsuits have appealed these initial rulings. In addition, lawsuits have been filed against broadcast.com, a company we acquired in July 1999, alleging patent infringement relating to broadcast.com's use of streaming media products. It is not clear what, if any, impact an adverse ruling in these recently-filed lawsuits would have on us.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>EMPLOYEES</B></FONT></P> <P><FONT SIZE=2>As of December 31, 1999, the Company had 1,992 full-time employees. Yahoo!'s future success is substantially dependent on the performance of its senior management and key technical personnel, and its continuing ability to attract and retain highly qualified technical and managerial personnel.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>RISK FACTORS</B></FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Financial results for any particular period will not predict results for future periods.</B></FONT></P> <P><FONT SIZE=2>Because of the uncertain nature of the rapidly changing market we serve, period-to-period comparisons of operating results are not likely to be meaningful. In addition, you should not rely on the results for any period as an indication of future performance. In particular, although we experienced strong revenue growth in 1999, we do not believe that this level of revenue growth on a percentage basis will be sustained in future periods. In addition, we currently expect that our operating expenses will continue to increase significantly as we expand our sales and</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>9</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=8,SEQ=9,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=279821,FOLIO=9,FILE='DISK004:[00PAL6.00PAL1236]DE1236A.;9',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT SIZE=2>marketing operations, continue to develop and extend the Yahoo! brand, fund greater levels of product development, develop and commercialize additional media properties, and acquire complementary businesses and technologies. Further, we are subject to employer payroll taxes when our employees exercise their non-qualified stock options. The employer payroll taxes are assessed on each employee's gain, which is the difference between the price of our common stock on the date of exercise and the exercise price. During a particular period, these payroll taxes could be material. Assuming the fair market value of our Common Stock was $200 per share on January 1, 2000, employer payroll taxes on unrealized gains related to vested and unvested non-qualified stock options would be approximately $60.6 million and $184.9 million, respectively. These employer payroll taxes would be recorded as a charge to operations in the period such options are exercised based on actual gains realized by employees. Net proceeds that we would receive upon the exercise of such vested and unvested stock options would approximate $216.7 million and $3.2 billion, respectively. In addition, we would receive tax deductions for gains realized by employees on the exercise of non-qualified stock options for which the benefit is recorded as additional paid-in capital. However, because we are unable to predict our future stock price and the number of optionees who may exercise during any particular period, we cannot predict what, if any, expense will be recorded in a future period and the impact on our future financial results. In addition, if revenue growth levels do not meet our expectations, our financial results will be adversely affected.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>We rely heavily on revenues derived from Internet advertising, which may prove to be an ineffective means of advertising for our current and potential clients.</B></FONT></P> <P><FONT SIZE=2>Currently, the majority of our revenues come from advertisements displayed on our online properties. Our ability to continue to achieve substantial advertising revenue depends upon:</FONT></P> <UL> <DL compact> <DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>growth of our user base;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>our user base being attractive to advertisers;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>our ability to derive better demographic and other information from our users;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>acceptance by advertisers of the Web as an advertising medium; and</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>our ability to transition and expand into other forms of advertising.</FONT></DD></DL> </UL> <BR> <P><FONT SIZE=2>If we are unsuccessful in adapting to the needs of our advertisers, it could have a material adverse effect on our business, operating results and financial condition.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>We derive the majority of our revenues from the sale of advertisements under short-term contracts, which are difficult to forecast accurately.</B></FONT></P> <P><FONT SIZE=2>Most of our revenues are currently derived from agreements with advertisers or sponsorship arrangements. These agreements generally have terms no longer than three (3) years and, in many cases, the terms are much shorter. In cases where the advertiser is providing services, the agreements often have payments contingent on usage levels. Accordingly, it is difficult to accurately forecast these revenues. However, our expense levels are based in part on expectations of future revenues and, to a large extent, are fixed. We may be unable to adjust spending quickly enough to compensate for any unexpected revenue shortfall. Accordingly, the cancellation or deferral of advertising or sponsorship contracts could have a material adverse effect on our financial results. Because our operating expenses are likely to increase significantly over the near term, to the extent that our expenses increase but our revenues do not, our business, operating results, and financial condition may be materially and adversely affected.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>The rate structure of some of our sponsorship arrangements subjects us to financial risk.</B></FONT></P> <P><FONT SIZE=2>A key element of our strategy is to generate advertising revenues through sponsored services and placements by third parties in our online media properties in addition to banner advertising. We typically receive sponsorship fees or a portion of transaction revenues in return for minimum levels of user impressions to be provided by us. These arrangements expose us to potentially significant financial risks in the event our usage levels decrease, including the following:</FONT></P> <UL> <DL compact> <DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>the fees we are entitled to receive may be adjusted downwards;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>we may be required to "make good" on our obligations by providing alternative services;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>the sponsors may not renew the agreements or may renew at lower rates; and</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>the arrangements may not generate anticipated levels of shared transaction revenues, or sponsors may default on the payment commitments in such agreements as has occurred in the past.</FONT></DD></DL> </UL> <P ALIGN="CENTER"><FONT SIZE=2>10</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=9,SEQ=10,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=19424,FOLIO=10,FILE='DISK004:[00PAL6.00PAL1236]DE1236A.;9',USER='MMEYER',CD='29-MAR-2000;03:49 --> <UL> <UL> </UL> </UL> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <H2><FONT SIZE=2> </FONT></H2> <BR> <P><FONT SIZE=2>Accordingly, any leveling off or decrease of our user base or the failure to generate anticipated levels of shared transaction revenues could result in a significant decrease in our revenue levels.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>We have spent considerable amounts of money and resources to provide a variety of communications services, but such services may not prove to be successful.</B></FONT></P> <P><FONT SIZE=2>Currently, a substantial portion of the traffic on our online properties is directed at our communications services, such as email, instant messaging, calendaring and chat rooms, and we expect this trend to continue for the foreseeable future. We provide these and other basic communications services free of charge to our users, as is the case with most of our competitors, and have not yet determined an effective means of generating revenues from the provision of such services. In addition, alternative revenue models for our communications and electronic commerce services, such as subscription fees and commissions, are relatively unproven and may not generate sufficient revenues to be meaningful to us. As communications services become an increasingly important part of our total offering, we must continue to provide new communications applications which are compelling to users and utilize more sophisticated communications technologies to provide such applications to many types of access devices in addition to the personal computer, while developing an effective method for generating revenues for such services. In addition, the development of these technologies require long development cycles and a more significant investment by us. If we are unable to develop such applications or use such technologies, the size and rate of growth in our user base would be adversely affected. If we cannot develop a means by which we generate revenues from our communications services that are more than sufficient to offset the costs of providing such services, our business, operating results and financial condition would be materially adversely affected.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>We may not be successful in expanding the number of users of our electronic commerce services and our ability to effectively provide these services is limited because we do not have a direct billing relationship with our customers.</B></FONT></P> <P><FONT SIZE=2>We have focused, and intend to continue to focus, significant resources on the development and enhancement of our electronic commerce properties. These properties, such as Yahoo! Shopping, link users with a network of retailers with which we have relationships. However, we merely provide a means through which our users can access the sellers of the products such users may wish to purchase and do not establish a direct billing relationship with our users as a result of any such purchase. In addition, a large number of our users currently utilize our online shopping services simply to gather information for future offline purchases. We will need to effectively induce information gatherers to make purchases in order for our electronic commerce properties to be successful. The revenue that we derive from our electronic commerce services is typically in the form of a bounty or a commission paid by the retailer from whom our user purchased a product. If the user had a favorable buying experience with a particular retailer, the user may subsequently contact that retailer directly rather than through our service. If our users bypass our electronic commerce properties, such as Yahoo! Shopping, and contact retailers directly, we will not receive any revenue for purchases made through such direct contact. Competing providers of online shopping, including merchants with which we have relationships, may be able to provide a more convenient and comprehensive online shopping experience due to their singular focus on electronic commerce. As a result, we may have difficulty competing with those merchants for users of electronic commerce services. The inability of our electronic commerce properties to generate significant revenues could have a material adverse effect on our business.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>We will continue to expand into international markets in which we have limited experience.</B></FONT></P> <P><FONT SIZE=2>A key part of our strategy is to develop Yahoo!-branded online properties in international markets and we have developed, through joint ventures, subsidiaries and branch offices, Yahoo! properties localized for over 20 other countries. To date, we have only limited experience in developing localized versions of our products and marketing and operating our products and services internationally and we rely on the efforts and abilities of our foreign business partners in such activities.</FONT></P> <P><FONT SIZE=2>We believe that in light of substantial anticipated competition, we need to move quickly into international markets in order to effectively obtain market share. However, in a number of international markets, especially those in Europe, we face substantial competition from Internet Service Providers (ISPs) that offer or may offer their own navigational services. Many of these ISPs have a dominant market share in their territories. Further, foreign providers of competing online services may have a</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>11</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=11,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=120428,FOLIO=11,FILE='DISK004:[00PAL6.00PAL1236]DG1236A.;12',USER='DNICHOL',CD='29-MAR-2000;16:01 --> <BR> <P><FONT SIZE=2>substantial advantage over us in attracting users in their country due to more established branding in that country, greater knowledge with respect to the tastes and preferences of users residing in that country and/or their focus on a single market. We expect to continue to experience higher costs as a percentage of revenues in connection with the development and maintenance of international online properties. International markets we have selected may not develop at a rate that supports our level of investment. In particular, international markets typically have been slower than domestic markets in adopting the Internet as an advertising and commerce medium.</FONT></P> <P><FONT SIZE=2>In addition to uncertainty about our ability to continue to generate revenues from our foreign operations and expand our international presence, there are certain risks inherent in doing business on an international level, including:</FONT></P> <UL> <DL compact> <DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>trade barriers and unexpected changes in regulatory requirements;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>difficulties in developing, staffing and simultaneously managing a large number of unique foreign operations as a result of distance, language and cultural differences;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>higher costs of doing business in foreign countries;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>longer payment cycles and currency exchange rate fluctuations;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>political instability and export restrictions;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>seasonal reductions in business activity;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>risks related to government regulation including those more fully described below; and</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>potentially adverse tax consequences.</FONT></DD></DL> </UL> <BR> <P><FONT SIZE=2>One or more of these factors could have a material adverse effect on our future international operations and, consequently, on our business, operating results, and financial condition.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>We depend on key personnel who may not continue to work for us.</B></FONT></P> <P><FONT SIZE=2>We are substantially dependent on the continued services of our key personnel, including our two founders, our chief executive officer, president, chief financial officer, chief technical officer, and vice presidents. Each of these individuals has acquired specialized knowledge and skills with respect to Yahoo! and its operations. As a result, if any of these individuals were to leave Yahoo!, we could face substantial difficulty in hiring qualified successors and could experience a loss in productivity while any such successor obtains the necessary training and experience. Many of our management personnel have reached or will soon reach the four-year anniversary of their Yahoo! hiring date and, as a result, will have become or will shortly become fully vested in their initial stock option grants. While management personnel are typically granted additional stock options, which will usually vest over a period of four years, subsequent to their hire date to provide additional incentive to remain at Yahoo!, the initial option grant is typically the largest and an employee may be more likely to leave our employ upon completion of the vesting period for the initial option grant.</FONT></P> <P><FONT SIZE=2>We expect that we will need to hire additional personnel in all areas. The competition for qualified personnel is intense, particularly in the San Francisco Bay Area, where our corporate headquarters are located. At times, we have experienced difficulties in hiring personnel with the right training or experience, particularly in technical areas. We do not maintain key person life insurance for any of our personnel. If we do not succeed in attracting new personnel, or retaining and motivating existing personnel, our business will be adversely affected.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>We may have difficulty scaling and adapting our existing architecture to accommodate increased traffic and technology advances.</B></FONT></P> <P><FONT SIZE=2>Yahoo! is one of the most highly trafficked Web sites on the Internet and is regularly exceeding previous standards for numbers of simultaneous users, unique users and daily page views delivered. In addition, the services offered by Yahoo! and popular with users have changed significantly in the past and are expected to change rapidly in the future. Much of the architecture that we employ was not originally designed to accommodate levels or types of use that we currently experience on our online properties and it is unclear whether current or future anticipated levels of traffic will result in delays or interruptions in our service. In particular, the architecture utilized for our email and certain other communication services was not primarily designed for this purpose and may not provide satisfactory service in the future, especially as it becomes an increasingly important service offering. In the future, we may be required to make significant changes to our architecture, including moving to a completely new architecture. If we are required to switch architectures, we may incur substantial costs and experience delays or interruptions in our service. If we experience delays or</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>12</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=2,SEQ=12,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=838770,FOLIO=12,FILE='DISK004:[00PAL6.00PAL1236]DG1236A.;12',USER='DNICHOL',CD='29-MAR-2000;16:01 --> <BR> <P><FONT SIZE=2>interruptions in our service due to inadequacies in our current architecture or as a result of a change in architectures, users may become dissatisfied with our service and move to competing providers of online services. Further, to the extent that demand for our broadcast services content increases, we will need to expand our infrastructure, including the capacity of our hardware servers and the sophistication of our software. This expansion is likely to be expensive and complex and require additional technical expertise. Also, as we acquire users who rely upon us for a wide variety of services, it becomes more technologically complex and costly to retrieve, store and integrate data that will enable us to track each user's preferences. Any loss of traffic, increased costs, inefficiencies or failures to adapt to new technologies and the associated adjustments to our architecture would have a material adverse effect on our business.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Our competitors often provide Internet access or computer hardware to our customers and they could make it difficult for our customers to access our services.</B></FONT></P> <P><FONT SIZE=2>Our users must access our services through an Internet service provider, or ISP, with which the user establishes a direct billing relationship using a personal computer or other access device. To the extent that an access provider, such as America Online, or a computer or computing device manufacturer offers online services or properties that are competitive with those of Yahoo!, the user may find it more convenient to use the services or properties of that access provider or manufacturer. In addition, the access provider or manufacturer may make it difficult to access our services by not listing them in the access provider's or manufacturer's own directory. Also, because an access provider gathers information from the user in connection with the establishment of the billing relationship, an access provider may be more effective than Yahoo! in tailoring services and advertisements to the specific tastes of the user. To the extent that a user opts to use the services offered by his or her access provider or those offered by computer or computing device manufacturers rather than the services provided by Yahoo!, our business, operating results and financial condition will be materially adversely affected.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Our business services, while costly to develop, may fail to gain market acceptance.</B></FONT></P> <P><FONT SIZE=2>We have invested a significant amount of money and resources in the creation of our business services, such as the creation and hosting of streaming content of third parties, but such services are unproven and may fail to gain market acceptance. Because the market for these business services is new and evolving, it is difficult to predict the size of this market and its rate of growth, if any. In addition, it is uncertain whether businesses and other organizations will utilize the Internet to any significant degree as a means of broadcasting business conferences and other events. Potential business services customers must accept audio and video broadcast services over the Internet as a viable alternative to face-to-face meetings, television or audio, audio teleconferences and video conferencing. We cannot assure you that the market for business services will continue to develop or be sustainable. If the market fails to develop, develops more slowly than expected or becomes more competitive than is currently expected, our operating results could be adversely affected.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>More individuals are utilizing non-PC devices to access the Internet and we may not be successful in developing a version of our service that will gain widespread adoption by users of such devices.</B></FONT></P> <P><FONT SIZE=2>In the coming years, the number of individuals who access the Internet through devices other than a personal computer such as personal digital assistants, cellular telephones and television set-top devices is expected to increase dramatically. Our services are designed for rich, graphical environments such as those available on personal and laptop computers. The lower resolution, functionality and memory associated with alternative devices may make the use of our services through such devices difficult and we may be unsuccessful in our efforts to modify our online properties to provide a compelling service for users of alternative devices. As we have limited experience to date in operating versions of our service developed or optimized for users of alternative devices, it is difficult to predict the problems we may encounter in doing so and we may need to devote significant resources to the creation, support and maintenance of such versions. If we are unable to attract and retain a substantial number of alternative device users to our online services, we will fail to capture a sufficient share of an increasingly important portion of the market for online services. Further, as the majority of our revenues are derived through the sale of banner and other advertising optimized for a personal computer screen, we may not be successful at developing a viable strategy for deriving substantial revenues from online properties that are directed at the users of alternative devices. Any failure to develop revenue-</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>13</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=3,SEQ=13,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=906393,FOLIO=13,FILE='DISK004:[00PAL6.00PAL1236]DG1236A.;12',USER='DNICHOL',CD='29-MAR-2000;16:01 --> <BR> <P><FONT SIZE=2>generating online properties that are adopted by a significant number of handheld device users could have a material adverse effect on our business, operating results and financial condition.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>We rely on the value of the Yahoo! brand and the costs of maintaining and enhancing our brand awareness are increasing.</B></FONT></P> <P><FONT SIZE=2>We believe that maintaining and expanding the Yahoo! brand is an important aspect of our efforts to attract and expand our user and advertiser base. We also believe that the importance of brand recognition will increase due to the growing number of Internet sites and the relatively low barriers to entry. We have spent considerable money and resources to date on the establishment and maintenance of the Yahoo! brand. However, because the number of Internet navigation, commerce, community and service companies continues to grow dramatically, it has become increasingly difficult and, due to increased competition, expensive, to obtain quality television, radio, magazine, Internet and other advertising space. Further, the proliferation of Internet-based companies has resulted and will continue to result in increased consumer confusion. Consequently, we will spend increasing amounts of money on, and devote greater resources to, advertising, marketing and other brand-building efforts to preserve and enhance consumer awareness of the Yahoo! brand during 2000. We may not be able to successfully maintain or enhance consumer awareness of our brand and, even if we are successful in our branding efforts, such efforts may not be cost-effective. If we are unable to maintain or enhance consumer awareness of the Yahoo! brand in a cost-effective manner, our business, operating results and financial condition would be materially and adversely affected.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>The successful operation of our business depends upon the supply of critical elements from other companies.</B></FONT></P> <P><FONT SIZE=2>We will depend upon third parties, to a substantial extent, for several critical elements of our business including various technology, infrastructure, content development, software and distribution components.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Technology and Infrastructure.</B></FONT><FONT SIZE=2> We rely on a private third-party provider, Frontier GlobalCenter, Inc., for our principal Internet connections. Email and other service Internet connections are provided to us by GTE. We rely on Network Appliances for key components of our email service. We also rely on Exodus Communications for the hosting of our users' homepages and Level 3 Communications for hosting and access to our broadcast services. Any disruption in the Internet access provided by these third-party providers or any failure of these third-party providers to handle current or higher volumes of use could have a material adverse effect on our business, operating results, and financial condition. We license technology and related databases from third parties for certain elements of our properties, including, among others, technology underlying the delivery of news, stock quotes and current financial information, chat services, street mapping and telephone listings, streaming capabilities and similar services. We have experienced and expect to continue to experience interruptions and delays in service and availability for such elements. Furthermore, we are dependent on hardware suppliers for prompt delivery, installation, and service of servers and other equipment to deliver our products and services. Any errors, failures, interruptions, or delays experienced in connection with these third-party technologies and information services could negatively impact our relationship with users and adversely affect our brand and our business, and could expose us to liabilities to third parties.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Distribution Relationships.</B></FONT><FONT SIZE=2> To increase traffic for our online properties and make them more available and attractive to advertisers and consumers, we have certain distribution agreements and informal relationships with leading Web browser providers such as Microsoft, operators of online networks and leading Web sites, software developers and computer manufacturers, such as Toshiba, Hewlett-Packard and Gateway, and telecommunications companies, such as Sprint PCS. These distribution arrangements typically are not exclusive and do not extend over a significant amount of time. Further, some of our distributors are competitors or potential competitors who may not renew their distribution contracts with us. Potential distributors may not offer distribution of our properties and services on reasonable terms, or at all. In addition, as new methods for accessing the Web become available, we may be required to enter into additional distribution relationships. Any failure to obtain distribution or to obtain distribution on terms that are reasonable, could have a material adverse effect on our business, results of operations, and financial condition.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Streaming media software.</B></FONT><FONT SIZE=2> We rely on the two leading providers of streaming media products, RealNetworks and Microsoft, to license the software necessary to broadcast streaming audio and video content to our users. There</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>14</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=4,SEQ=14,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=430059,FOLIO=14,FILE='DISK004:[00PAL6.00PAL1236]DG1236A.;12',USER='DNICHOL',CD='29-MAR-2000;16:01 --> <P><FONT SIZE=2>can be no assurance that these providers will continue to license these products to us on reasonable terms, or at all. Our users are currently able to electronically download copies of the software to play streaming media free of charge, but providers of streaming media products may begin charging users for copies of their player software or otherwise change their business model in a manner that slows the widespread acceptance of these products. In order for our broadcast services to be successful, there must be a large base of users of these streaming media products. We have limited or no control over the availability or acceptance of streaming media software, and to the extent that any of these circumstances occur, the broadcast services portion of our business will be materially adversely affected.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Our dependence on third party content providers subjects us to risks.</B></FONT></P> <P><FONT SIZE=2>The Company's future success depends upon its ability to aggregate compelling content and deliver that content through its online properties. Much of the content that attracts users to the Yahoo! online properties, such as news items, stock quotes, weather reports, maps and audio and video content, is licensed from third parties such as Reuters and TIBCO. In particular, Yahoo! Broadcast relies on major sports organizations, radio and television stations, record labels, cable networks, businesses, colleges and universities, film producers and distributors, and other organizations for a large portion of the content available on the site. Our ability to maintain and build relationships with third-party content providers will be critical to our success. We may be unable to enter into or preserve relationships with the third parties whose content we seek to obtain. Many of our current licenses for third-party content extend for a period of less than two years and there can be no guarantee that they will be renewed upon their expiration. In addition, as competition for compelling content increases both locally and abroad, Yahoo!'s content providers may increase the prices at which they offer their content to Yahoo! and potential content providers may not offer their content on terms agreeable to Yahoo!. An increase in the prices charged to us by third-party content providers could have a material adverse effect on our business, operating results and financial condition. Further, many of our content licenses with third parties are non-exclusive. Accordingly, other Webcasters may be able to offer similar or identical content. Likewise, most sports and entertainment content available on our online properties are also available on other media like radio or television. These media are currently, and for the foreseeable future will be, much more widely adopted for listening or viewing such content than the Web. These factors also increase the importance of our ability to deliver compelling editorial content and personalization of this content for users in order to differentiate ourselves. If we are unable to license or acquire compelling content, if other companies broadcast content that is similar to or the same as that provided by Yahoo!, or if we do not develop compelling editorial content or personalization services, the number of users on our online properties may not grow at all or at a slower rate than anticipated, which would decrease our advertising revenue.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>As we provide more audio and video content, particularly music, we may be required to spend significant amounts of money on content acquisition and content broadcasts.</B></FONT></P> <P><FONT SIZE=2>Until recently, the majority of the content that we provided to our users was in print, picture or graphical format and was either created internally or licensed to us by third parties for little or no charge. However, we have been providing recently and we intend to continue to provide increasing amounts of audio and video content to our users, such as the broadcast of music, film content, speeches, news footage, concerts and other special events, through our broadcast services division and our other media properties, and such content may require us to make substantial payments to third parties from whom we will license or acquire such content. For example, in order to broadcast music through our online properties, we are currently required to pay royalties both on the copyright in the musical compositions and the copyright in the actual sound recordings of the music to be broadcast. Through our broadcast services division, we currently have license agreements in place with ASCAP and BMI, and are in negotiations for a license agreement with SESAC, that permit us to license the copyright for the public performance of musical compositions for which they control the rights. With respect to the copyrights in the specific sound recordings that we desire to broadcast, we must either secure a license directly from the record labels that own the rights to such recordings, or pay a statutory license fee. The statutory license fee and other terms for these licenses have not yet been determined and, therefore, the costs of broadcasting music through our online properties remains unclear. If these royalty rates are above our expectations, if the royalty rates charged by the various performance rights societies increase or if any of</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>15</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=5,SEQ=15,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=116827,FOLIO=15,FILE='DISK004:[00PAL6.00PAL1236]DG1236A.;12',USER='DNICHOL',CD='29-MAR-2000;16:01 --> <P><FONT SIZE=2>these or other parties with music licensing rights impose terms that make it difficult or impossible to broadcast music, we may be unable to provide music content to our users in a cost-effective manner. We believe that users of Internet services such as the Yahoo! online properties will increasingly demand high-quality audio and video content. The revenue that we receive as a result of our audio and video broadcasts may not justify the costs of providing such broadcasts. Our inability to cost-effectively provide high-quality audio and/or video content to our users could have a material adverse effect on our business, operating results and financial condition.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>To successfully improve our rich media offerings, we must rely on the deployment of a true multicasting network.</B></FONT></P> <P><FONT SIZE=2>The streaming services that we acquired upon our acquisition of broadcast.com originally deployed unicasting (one user per company originated stream) technology to broadcast audio and video programming to users over the Internet. Recently, it began to deploy another broadcast technology, multicasting (multiple users per company originated stream). We believe that demand for multicasting will continue to expand and, as a result, we must continue to enhance this capability in the future.</FONT></P> <P><FONT SIZE=2>We will be required to test, deploy and successfully scale a multicast network infrastructure to serve mass audiences. There can be no assurance that we will be successful in doing so, that multicasting will be able to support a substantial audience, or that an alternative technology will not emerge that offers superior broadcasting technology as compared to multicasting. In the event that multicasting technology is not successfully deployed in a timely manner or such an alternative technology emerges, we may be required to expend significant resources to deploy a technology other than multicasting, which could adversely affect our results of operations. If Yahoo! Broadcast Services fails to scale its broadcasts to large audiences of simultaneous users, such failure could adversely affect that portion of our business.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>We must manage our growth successfully, including the integration of recently-acquired companies, in order to achieve our desired results.</B></FONT></P> <P><FONT SIZE=2>We have experienced dramatic growth in personnel in recent years and expect to continue to hire large numbers of additional personnel. As the number of Yahoo! employees grows, it will become increasingly difficult and more costly to manage our personnel. Further, as a result of recent acquisitions and international expansion, almost one-half of our employees are based outside of our Santa Clara headquarters. If we are unable to effectively manage a large and geographically dispersed group of employees, our business will be adversely affected.</FONT></P> <P><FONT SIZE=2>As part of our business strategy, we have completed several acquisitions, including our recent acquisitions of GeoCities and broadcast.com, and expect to enter into additional business combinations and acquisitions. Acquisition transactions are accompanied by a number of risks, including:</FONT></P> <UL> <DL compact> <DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>the difficulty of assimilating the operations and personnel of the acquired companies;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>the potential disruption of our ongoing business and distraction of management;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>the difficulty of incorporating acquired technology or content and rights into our products and media properties and unanticipated expenses related to such integration;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>the negative impact on reported earnings if any of these transactions that are expected to qualify for pooling of interest accounting treatment for financial reporting purposes fail to so qualify;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>the correct assessment of the relative percentages of in-process research and development expense that can be immediately written off as compared to the amount which must be amortized over the appropriate life of the asset;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>the failure to successfully develop an acquired in-process technology resulting in the impairment of amounts currently capitalized as intangible assets;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>the impairment of relationships with employees and customers as a result of any integration of new management personnel; and</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>the potential unknown liabilities associated with acquired businesses.</FONT></DD></DL> </UL> <BR> <P><FONT SIZE=2>We may not be successful in addressing these risks or any other problems encountered in connection with such acquisitions.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>We are subject to U.S. and foreign government regulation of the Internet, the impact of which is difficult to predict.</B></FONT></P> <P><FONT SIZE=2>There are currently few laws or regulations directly applicable to the Internet. The application of existing laws and regulations to Yahoo! relating to issues such as user</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>16</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=6,SEQ=16,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=853280,FOLIO=16,FILE='DISK004:[00PAL6.00PAL1236]DG1236A.;12',USER='DNICHOL',CD='29-MAR-2000;16:01 --> <P><FONT SIZE=2>privacy, defamation, pricing, advertising, taxation, gambling, sweepstakes, promotions, content regulation, quality of products and services, and intellectual property ownership and infringement can be unclear. In addition, we will also be subject to new laws and regulations directly applicable to our activities. Any existing or new legislation applicable to us could expose us to substantial liability, including significant expenses necessary to comply with such laws and regulations, and dampen the growth in use of the Web.</FONT></P> <P><FONT SIZE=2>Several recently passed federal laws could have an impact on our business. The Digital Millennium Copyright Act is intended to reduce the liability of online service providers for listing or linking to third-party Web sites that include materials that infringe copyrights or other rights of others. The Children's Online Protection Act and the Children's Online Privacy Protection Act are intended to restrict the distribution of certain materials deemed harmful to children and impose additional restrictions on the ability of online services to collect user information from minors. In addition, the Protection of Children From Sexual Predators Act of 1998 requires online service providers to report evidence of violations of federal child pornography laws under certain circumstances. Such legislation may impose significant additional costs on our business or subject us to additional liabilities.</FONT></P> <P><FONT SIZE=2>We post privacy policies concerning the use and disclosure of user data. In addition, GeoCities, a company we recently acquired, is required to comply with a consent order between it and the Federal Trade Commission (the "FTC"), which imposes certain obligations and restrictions with respect to information collected from users. Further, the FTC is conducting an inquiry into certain of our consumer information practices to determine whether we have complied with applicable FTC consumer protection regulations. In connection with this inquiry, the FTC has requested that we provide information about our practices and submit various documents and other materials to the FTC. Any failure by us to comply with our posted privacy policies, the consent order, FTC requirements (including the inquiry mentioned above) or other privacy-related laws and regulations could result in proceedings by the FTC or others which could potentially have an adverse effect on our business, results of operations and financial condition.</FONT></P> <P><FONT SIZE=2>Due to the global nature of the Web, it is possible that the governments of other states and foreign countries might attempt to regulate its transmissions or prosecute us for violations of their laws. We might unintentionally violate such laws, such laws may be modified and new laws may be enacted in the future. Any such developments could have a material adverse effect on our business, operating results and financial condition.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>We may be subject to legal liability for our online services.</B></FONT></P> <P><FONT SIZE=2>We host a wide variety of services that enable individuals to exchange information, generate content, conduct business and engage in various online activities, including public message posting and services relating to online auctions and homesteading. The law relating to the liability of providers of these online services for activities of their users is currently unsettled. Claims have been threatened and could be brought against us for defamation, negligence, copyright or trademark infringement, unlawful activity, tort, including personal injury, fraud, or other theories based on the nature and content of information that we provide links to or that may be posted online or generated by our users or with respect to auctioned materials. In addition, we are aware that governmental agencies are currently investigating the conduct of online auctions.</FONT></P> <P><FONT SIZE=2>We also periodically enter into arrangements to offer third-party products, services, or content under the Yahoo! brand or via distribution on various Yahoo! properties, including stock quotes and trading information. We may be subject to claims concerning these products, services or content by virtue of our involvement in marketing, branding, broadcasting or providing access to them, even if we do not ourselves host, operate, provide, or provide access to these products, services or content. While our agreements with these parties often provide that we will be indemnified against such liabilities, such indemnification may not be adequate.</FONT></P> <P><FONT SIZE=2>It is also possible that, if any information provided directly by us contains errors or is otherwise negligently provided to users, third parties could make claims against us. For example, we offer Web-based email services, which expose us to potential risks, such as liabilities or claims resulting from unsolicited email, lost or misdirected messages, illegal or fraudulent use of email, or interruptions or delays in email service. Investigating and defending any of these types of claims is expensive, even to the extent that the claims do not result in liability.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>17</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=7,SEQ=17,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=354485,FOLIO=17,FILE='DISK004:[00PAL6.00PAL1236]DG1236A.;12',USER='DNICHOL',CD='29-MAR-2000;16:01 --> <P><FONT COLOR="#C226FF" SIZE=2><B>Our stock price has been volatile historically, which may make it more difficult for you to resell shares when you want at prices you find attractive.</B></FONT></P> <P><FONT SIZE=2>The trading price of our common stock has been and may continue to be subject to wide fluctuations. During 1999, the closing sale prices of our common stock on the Nasdaq Stock Market ranged from $59.63 to $216.35 and the sale price of our common stock closed at $197.19 on March 22, 2000. Our stock price may fluctuate in response to a number of events and factors, such as quarterly variations in operating results, announcements of technological innovations or new products and media properties by us or our competitors, changes in financial estimates and recommendations by securities analysts, the operating and stock price performance of other companies that investors may deem comparable, and news reports relating to trends in our markets. In addition, the stock market in general, and the market prices for Internet-related companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. These broad market and industry fluctuations may adversely affect the price of our stock, regardless of our operating performance.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Management and one large stockholder beneficially own approximately 42% of our stock; their interests could conflict with yours; significant sales of stock held by them could have a negative effect on Yahoo!'s stock price.</B></FONT></P> <P><FONT SIZE=2>Yahoo!'s directors and executive officers and SOFTBANK beneficially own approximately 42% of our outstanding common stock as of December 31, 1999. Eric Hippeau is a member of our Board of Directors and is also the Chairman and CEO of Ziff-Davis, a subsidiary of SOFTBANK. As a result of their ownership and positions, our directors and executive officers and SOFTBANK collectively are able to significantly influence all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. Such concentration of ownership may also have the effect of delaying or preventing a change in control of Yahoo!. In addition, sales of significant amounts of shares held by Yahoo!'s directors and executive officers and SOFTBANK, or the prospect of these sales, could adversely affect the market price of Yahoo! common stock.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Our operations could be significantly hindered by the occurrence of a natural disaster or other catastrophic event.</B></FONT></P> <P><FONT SIZE=2>Our operations are susceptible to outages due to fire, floods, power loss, telecommunications failures, break-ins and similar events. In addition, the majority of our network infrastructure is located in Northern California, an area susceptible to earthquakes. We do not have multiple site capacity for all of our services in the event of any such occurrence. Despite our implementation of network security measures, our servers are vulnerable to computer viruses, break-ins, and similar disruptions from unauthorized tampering with our computer systems. In addition, we are vulnerable to coordinated attempts to overload our systems with data, resulting in denial or reduction of service to some or all of our users for a period of time. We have experienced a coordinated denial of service attack in the past, and may experience such attempts in the future. We do not carry sufficient business interruption insurance to compensate us for losses that may occur as a result of any of these events. Any such event could have a material adverse effect on our business, operating results, and financial condition.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Anti-takeover provisions could make it more difficult for a third party to acquire us.</B></FONT></P> <P><FONT SIZE=2>Our Board of Directors has the authority to issue up to 10,000,000 shares of preferred stock and to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. The rights of the holders of common stock may be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change of control of Yahoo! without further action by the stockholders and may adversely affect the voting and other rights of the holders of common stock. We have no present plans to issue shares of preferred stock. Further, certain provisions of our charter documents, including provisions eliminating the ability of stockholders to take action by written consent and limiting the ability of stockholders to raise matters at a meeting of stockholders without giving advance notice, may have the effect of delaying or preventing changes in control or management of Yahoo!, which could have an adverse effect on the market price of our stock. In addition, our charter documents do not permit cumulative voting, which may make it more difficult for a third party to gain control of our Board of Directors.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>18</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=8,SEQ=18,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=216000,FOLIO=18,FILE='DISK004:[00PAL6.00PAL1236]DG1236A.;12',USER='DNICHOL',CD='29-MAR-2000;16:01 --> <BR> <P><FONT SIZE=2><A NAME="dg1236_item_2._properties"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 2. Properties</B></FONT></P> <P><FONT SIZE=2>Yahoo!'s headquarters facility is located in five offices in Santa Clara and Sunnyvale, California. The Company occupies these leased facilities which aggregate approximately 306,000 square feet. Office space for the Company's international subsidiaries is leased in Buenos Aires, Copenhagen, Hong Kong, London, Madrid, Mexico City, Milan, Munich, Paris, Sao Paulo, Seoul, Singapore, Stockholm, Sydney, Taipei, and Toronto. The Company also leases sales offices in Atlanta, Baltimore, Boston, Chicago, Dallas, Detroit, Houston, Los Angeles, Miami, New York, San Diego, San Francisco, Seattle, and Washington D.C. The Company's principal Web server equipment and operations are maintained by GlobalCenter in Mountain View, California, by Exodus Communications in Santa Clara, California, and by GTE BBN in San Jose, California.</FONT></P> <P><FONT SIZE=2>The Company has entered into agreements for the development of an office complex in Sunnyvale, California, to be constructed in 2000 to 2003, and to serve as the Company's new headquarters. The Company believes that its existing facilities are adequate to meet current requirements, and that suitable additional or substitute space will be available as needed to accommodate any further physical expansion of corporate operations and for any additional sales offices.</FONT></P> <BR> <P><FONT SIZE=2><A NAME="dg1236_item_3._legal_proceedings"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 3. Legal Proceedings</B></FONT></P> <P><FONT SIZE=2>From time to time, the Company is subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks, copyrights and other intellectual property rights, and a variety of claims arising in connection with the Company's email, message boards, auction sites, shopping services, and other communications and community features, such as claims alleging defamation or invasion of privacy. In addition, from time to time, third parties assert patent infringement claims against the Company in the form of letters, lawsuits and other forms of communication. Currently, the Company is engaged in two lawsuits regarding patent issues and has been notified of a number of other potential patent disputes.</FONT></P> <P><FONT SIZE=2>In addition to intellectual property claims, the Company has also been advised that the FTC is conducting an inquiry into certain of the Company's consumer information practices to determine whether the Company has complied with applicable FTC consumer protection regulations. In connection with this inquiry, the FTC has requested that the Company provide information about its practices and submit various documents and other materials to the FTC.</FONT></P> <P><FONT SIZE=2>The Company is not currently aware of any legal proceedings or claims that the Company believes are likely to have a material adverse effect on the Company's financial position or results of operations. However, the Company may incur substantial expenses in defending against third party claims or any action by the FTC. In the event of a determination adverse to the Company, the Company may incur substantial monetary liability, and be required to change its business practices. Either of these could have a material adverse effect on the Company's financial position and results of operations.</FONT></P> <BR> <P><FONT SIZE=2><A NAME="dg1236_item_4._submission_of_m__dg102396"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 4. Submission of Matters to a Vote of Security Holders</B></FONT></P> <P><FONT SIZE=2>No matters were submitted to a vote of security holders during the fourth quarter of fiscal 1999.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>19</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=9,SEQ=19,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=224708,FOLIO=19,FILE='DISK004:[00PAL6.00PAL1236]DG1236A.;12',USER='DNICHOL',CD='29-MAR-2000;16:01 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <H2><FONT SIZE=2> </FONT></H2> <BR> <P><FONT SIZE=2><A NAME="di1236_part_ii"> </A></FONT> <FONT COLOR="#C226FF" SIZE=4><B>Part II</B></FONT></P> <P><FONT SIZE=2><A NAME="di1236_item_5._market_for_the_registr__ite03223"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters</B></FONT></P> <P><FONT SIZE=2>Yahoo! Inc. Common Stock is quoted on the NASDAQ National Market System under the symbol YHOO. The following table sets forth the range of high and low closing sales prices for each period indicated and reflects all stock splits effected by the Company:</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="94%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="39%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="24%" COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1>1999</FONT><HR NOSHADE></TH> <TH WIDTH="13%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="23%" COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1>1998</FONT><HR NOSHADE></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="39%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>High</B></FONT><BR></TH> <TH WIDTH="6%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="8%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>Low</B></FONT><BR></TH> <TH WIDTH="13%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="8%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>High</B></FONT><BR></TH> <TH WIDTH="6%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="8%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>Low</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="39%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="59%" COLSPAN=11 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>First quarter</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>103.85</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>62.00</FONT></TD> <TD WIDTH="13%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>11.64</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>7.26</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Second quarter</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>109.57</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>59.63</FONT></TD> <TD WIDTH="13%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>19.69</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>11.66</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Third quarter</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>92.35</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>60.50</FONT></TD> <TD WIDTH="13%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>32.88</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>17.25</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Fourth quarter</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>216.35</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>83.78</FONT></TD> <TD WIDTH="13%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>68.88</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>26.21</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=2>The Company had approximately 4,838 stockholders of record as of December 31, 1999. The Company has not declared or paid any cash dividends on its Common Stock and presently intends to retain its future earnings, if any, to fund the development and growth of its business and, therefore, does not anticipate paying any cash dividends in the foreseeable future.</FONT></P> <P><FONT SIZE=2>Yahoo! Inc. made the following unregistered sales of the Company's Common Stock during the quarter ended December 31, 1999:</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="96%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="11%" ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>Transaction Date<BR></B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="16%" ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>Amount of<BR> Securities Sold<BR></B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>Name of Underwriter or Placement Agent<BR></B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="12%" ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>Consideration Received<BR></B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="21%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Persons or Class of Persons to Whom<BR> the Securities Were Sold<BR></B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="21%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Exemption from Registration Claimed</B></FONT><BR> <BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="100%" COLSPAN=11 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="TOP"> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>11/22/99</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>120,042 Shares</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>None</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(1</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="21%"><FONT SIZE=2>Stockholders of Innovative Systems Services Group, Inc</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="21%"><FONT SIZE=2>Section 4(2) of the Securities Act of 1933, as amended</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <DL compact> <DT><FONT SIZE=1>(1)</FONT></DT><DD><FONT SIZE=1>Pursuant to an Agreement and Plan of Reorganization dated as of 11/19/99, by and among Yahoo!, Universe Acquisition Corporation, and Innovative Systems Services Group, Inc., on November 22, 1999 (the effective date of the acquisition), all outstanding shares of ISSG were converted into 120,042 shares of Yahoo! Common Stock. The resale of these shares has been registered on a Registration Statement on Form S-3 filed with the Securities and Exchange Commission on December 23, 1999.</FONT></DD></DL> <P ALIGN="CENTER"><FONT SIZE=2>20</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=20,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=352401,FOLIO=20,FILE='DISK004:[00PAL6.00PAL1236]DI1236A.;9',USER='KSEAMON',CD='26-MAR-2000;23:39 --> <UL> </UL> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <H2><FONT SIZE=2> </FONT></H2> <BR> <P><FONT SIZE=2><A NAME="dk1236_item_6._selected_financial_data"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 6. Selected Financial Data</B></FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="101%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="30%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1> </FONT></TH> <TH WIDTH="67%" COLSPAN=14 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1>Year Ended December 31,</FONT><HR NOSHADE></TH> <TH WIDTH="1%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="30%" ROWSPAN=2 ALIGN="LEFT"><FONT SIZE=1>(in thousands, except per share amounts)<BR></FONT> <BR></TH> <TH WIDTH="1%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1997</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1996</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1995</B></FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="30%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="67%" COLSPAN=14 ALIGN="CENTER"><HR NOSHADE></TH> <TH WIDTH="1%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="30%"><FONT COLOR="#C226FF" SIZE=1><B>Statements of Operations Data:</B></FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="30%"><FONT SIZE=2>Net revenues</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>588,608</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>245,100</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>84,108</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>23,793</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,666</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="30%"><FONT SIZE=2>Gross profit</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>486,809</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>192,946</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>64,226</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>16,506</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,282</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="30%"><FONT SIZE=2>Net income (loss)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>61,133</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> (a)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(12,674</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>)(b)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(43,376</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>)(c)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(12,430</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(1,766</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="30%"><FONT SIZE=2>Net income (loss) per share – basic*</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>0.12</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> (a)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(0.03</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>)(b)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(0.11</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>)(c)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(0.04</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(0.01</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="30%"><FONT SIZE=2>Net income (loss) per share – diluted*</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>0.10</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> (a)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(0.03</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>)(b)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(0.11</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>)(c)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(0.04</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(0.01</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="30%"><FONT SIZE=2>Shares used in per share calculation – basic*</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>515,948</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>439,990</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>391,542</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>348,650</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>243,528</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="30%"><FONT SIZE=2>Shares used in per share calculation – diluted*</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>596,790</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>439,990</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>391,542</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>348,650</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>243,528</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="30%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="30%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="67%" COLSPAN=14 ALIGN="CENTER"><FONT SIZE=1>December 31,</FONT><HR NOSHADE></TH> <TH WIDTH="1%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="30%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1997</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1996</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1995</B></FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="30%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="67%" COLSPAN=14 ALIGN="CENTER"><HR NOSHADE></TH> <TH WIDTH="1%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="30%"><FONT COLOR="#C226FF" SIZE=1><B>Balance Sheets Data:</B></FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="30%"><FONT SIZE=2>Cash, cash equivalents, and short and long-term investments in marketable debt securities</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>961,116</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>626,804</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>136,581</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>111,311</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>6,310</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="30%"><FONT SIZE=2>Working capital</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>753,604</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>521,803</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>136,714</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>95,537</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>5,410</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="30%"><FONT SIZE=2>Total assets</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,469,821</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>781,019</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>203,351</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>125,939</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>8,270</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="30%"><FONT SIZE=2>Stockholders' equity</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,261,305</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>677,012</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>137,241</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>110,367</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>5,721</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="83%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="TOP"> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>Note:</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="94%"><FONT SIZE=1>The selected financial data for the five years ended December 31, 1999 has been restated to reflect the acquisitions of Net Roadshow, Encompass, GeoCities, Online Anywhere, and broadcast.com which were accounted for as poolings of interests.</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>*</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="94%"><FONT SIZE=1>Reflects the two-for-one stock split effective February 2000.</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>(a)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="94%"><FONT SIZE=1>Net income and net income per share include acquisition related charges of $76.6 million incurred in connection with the May 1999 acquisitions of Encompass, GeoCities, and Online Anywhere and the July 1999 acquisition of broadcast.com, $11.0 million of in-process research and development related to the January 1999 acquisition of Log-Me-On and the November 1999 acquisition of ISSG, employer payroll taxes on non-qualified stock option exercises of $10.3 million, and amortization of $23.3 million on intangible assets and purchased technology.</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>(b)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="94%"><FONT SIZE=1>Net loss and net loss per share include acquisition related charges of $3.6 million incurred in connection with the October 1998 acquisition of Yoyodyne Entertainment, Inc. and the November 1998 acquisition of SimpleNet, $17.6 million of in-process research and development primarily related to the June 1998 acquisition of Viaweb Inc. and the December 1998 acquisition of HyperParallel Inc., and amortization of $6.2 million on intangible assets and purchased technology.</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>(c)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="94%"><FONT SIZE=1>Net loss and net loss per share include nonrecurring charges of $21.2 million related to the Yahoo! Marketplace restructuring and $3.9 million incurred in connection with the October 1997 acquisition of Four11 Corporation.</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P ALIGN="CENTER"><FONT SIZE=2>21</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=21,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=1032274,FOLIO=21,FILE='DISK004:[00PAL6.00PAL1236]DK1236A.;7',USER='KSEAMON',CD='26-MAR-2000;23:41 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <H2><FONT SIZE=2> </FONT></H2> <BR> <P><FONT SIZE=2><A NAME="dm1236_item_7._management_s_discussio__ite03668"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations</B></FONT></P> <P><FONT SIZE=2><I>Except for historical information, the discussion in this report (including, without limitation, the discussion under the heading "Results of Operations") contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below, and the risks discussed under the caption "Risk Factors" in Item 1 of this Annual Report on Form 10-K.</I></FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>OVERVIEW</B></FONT></P> <P><FONT SIZE=2>Yahoo! Inc. ("Yahoo!" or the "Company") is a global Internet communications, commerce, and media company that offers a comprehensive branded network of services to millions of worldwide users daily. As the first online navigational guide to the World Wide Web (the "Web"), www.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 commenced operations on March 5, 1995. In August 1995, the Company commenced selling advertisements on its Web pages and recognized its initial revenues.</FONT></P> <P><FONT SIZE=2>As of December 31, 1999, the Company had completed sixteen acquisitions since its inception. The following table summarizes the acquisitions completed through December 31, 1999 that were accounted for as poolings of interests (shares issued in thousands).</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="47%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="37%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Company</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="41%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Acquisition Date</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="15%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Shares<BR> Issued</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="100%" COLSPAN=5 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>Four11 Corporation</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>October 20, 1997</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>12,046</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>WebCal Corporation</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>July 17, 1998</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,084</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>Yoyodyne Entertainment, Inc.</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>October 20, 1998</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,019</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>SimpleNet*</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>November 30, 1998</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,269</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>Net Roadshow, Inc.*</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>March 15, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,435</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>Encompass, Inc.</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>May 26, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,390</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>GeoCities</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>May 28, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>43,281</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>Online Anywhere</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>May 28, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>906</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>broadcast.com inc.</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>July 20, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>57,294</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=1>* Acquisitions completed by broadcast.com prior to the Company's acquisition of broadcast.com.</FONT></P> <P><FONT SIZE=2>For the year ended December 31, 1999, nonrecurring charges related to acquisition costs totaled $76.6 million and included investment banking, financial and legal advisory services, severance and contract termination costs related to the mergers. These costs were primarily attributable to the GeoCities and broadcast.com acquisition costs of $55.0 million and $20.0 million, respectively. For 1998 and 1997, nonrecurring charges related to acquisition costs were $3.6 million and $3.9 million, respectively. At December 31, 1999, $5.1 million of accrued acquisition costs were included in accrued expenses and other current liabilities. These accrued amounts consist of contract termination and severance costs and will be paid during the year ending December 31, 2000.</FONT></P> <P><FONT SIZE=2>The Company's consolidated financial statements for the three years ended December 31, 1999 reflect the Company's financial position and results of operations as if the above acquired entities, accounted for as poolings of interests, were wholly-owned subsidiaries of the Company since inception, with the exception of WebCal, whose historical operations were not material to the Company's financial position, results of operations, or cash flows.</FONT></P> <P><FONT SIZE=2>The following table summarizes the acquisitions completed through December 31, 1999 that were accounted for under the purchase method of accounting (purchase price in millions).</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="50%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="35%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Company</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="39%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Acquisition Date</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="19%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Purchase<BR> Price</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="100%" COLSPAN=6 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=2>Viaweb Inc.</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="39%"><FONT SIZE=2>June 10, 1998</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>48.6</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=2>Starseed, Inc.**</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="39%"><FONT SIZE=2>December 4, 1998</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>24.8</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=2>HyperParallel, Inc.</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="39%"><FONT SIZE=2>December 17, 1998</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>8.1</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=2>Log-Me-On.Com LLC</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="39%"><FONT SIZE=2>January 15, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>9.9</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=2>Yahoo! Canada</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="39%"><FONT SIZE=2>March 1, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>18.0</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=2>Futuretouch Corporation**</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="39%"><FONT SIZE=2>March 23, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>6.2</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=2>Innovative Systems Services Group, Inc.</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="39%"><FONT SIZE=2>November 22, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>14.1</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=1>** Acquisitions completed by GeoCities prior to the Company's acquisition of GeoCities.</FONT></P> <P><FONT SIZE=2>Under the purchase method of accounting, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date.</FONT></P> <P><FONT SIZE=2>The results of operations for entities acquired in 1999 and accounted for under the purchase method were not material to the Company. The results of operations of</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>22</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=22,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=28538,FOLIO=22,FILE='DISK004:[00PAL6.00PAL1236]DM1236A.;15',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT SIZE=2>these acquired entities are included with those of the Company for periods subsequent to the acquisition date.</FONT></P> <P><FONT SIZE=2>Viaweb was a provider of software and services for hosting online stores. In connection with the acquisition of Viaweb and pursuant to discussions with the Staff of the Securities and Exchange Commission (the "Staff"), approximately $15 million of the purchase price was assigned to in-process research and development and expensed upon the consummation of the acquisition. Various factors were considered in discussions with the Staff in determining the amount of the purchase price to be allocated to in-process research and development such as, estimating the stage of development of each in-process research and development project at the date of acquisition, estimating cash flows resulting from the expected revenues generated from such projects and discounting the net cash flows, in addition to other assumptions. The remaining identified intangibles, including the value of purchased technology and other intangibles, are being amortized on a straight-line basis over three and seven years, respectively.</FONT></P> <P><FONT SIZE=2>In addition, other factors were considered in discussions with the Staff in determining the value assigned to purchased in-process technology such as research projects in areas supporting the online store technology (including significant enhancement to the ability of the product to support multiple users and multiple servers), developing functionality to support the ability to process credit card orders, and enhancing the product's user interface by developing functionality that would allow the product to be used outside of the United States.</FONT></P> <P><FONT SIZE=2>Starseed was a developer of technology that enabled the linking of topically related Web sites. Approximately $1.2 million of the purchase price was allocated to purchased technology which is being amortized on a straight-line basis over one year and approximately $24.0 million was allocated to goodwill which is being amortized on a straight-line basis over three years.</FONT></P> <P><FONT SIZE=2>HyperParallel specialized in data analysis. Approximately $2.3 million of the total purchase price was allocated to in-process research and development. This amount was developed by estimating the stage of development of each in-process research and development project at the date of the acquisition, estimating incremental cash flows generated from such projects, and discounting the net cash flows back to their present value using a discount rate of 35%, which represents a premium to the Company's cost of capital to take into account the uncertainty surrounding the successful development of the purchased in-process technology. The projections were based on management's estimates of market size and growth, expected trends in advertising and technology, expected research and development and selling and general administrative expenditures, and the expected timing of new product introductions. Approximately $1.2 million of the total purchase price was allocated to existing technology which is being amortized over 3 years. The value of the existing technology was developed based on similar assumptions using a discount rate of 25%. The projections used in developing the values should not be considered an accurate predictor of future performance for several reasons, including the consideration of many factors outside the control of the Company. The remaining purchase price of approximately $4.6 million was allocated to goodwill which is being amortized over 7 years. Tangible assets acquired and liabilities assumed were not material to the Company's financial statements.</FONT></P> <P><FONT SIZE=2>Log-Me-On, founded in 1998, was a development stage entity with limited operations, no revenues, and four developers. As of the acquisition date, the Company's efforts had been focused solely on developing a browser technology that was approximately 30% complete and there was no other technology developed or in process at such date. Approximately $9.8 million of the purchase price was allocated to in-process research and development. This in-process research and development had not reached technological feasibility and had no alternative future use. Additional development subsequent to the acquisition date principally relates to development of browser and toolbar technology that would allow users into Yahoo! sites without typing URLs or retrieving bookmarks, creation of the user interface, development of customization screens and procedures, and establishment of data links. The Company expects the development of this technology to be completed in the third quarter of 2000. Future research and development costs are not expected to be material to Yahoo!'s financial position or results of operations. In addition, if this technology is not successfully developed, Yahoo!'s revenues and profitability would not be materially adversely affected. The remaining purchase price of approximately $100,000 was allocated to the work force in place and is being amortized over the employment contract period. Tangible assets acquired and liabilities assumed were not material to the Company's financial statements.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>23</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=2,SEQ=23,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=91058,FOLIO=23,FILE='DISK004:[00PAL6.00PAL1236]DM1236A.;15',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT SIZE=2>In February 1996, the Company and Rogers Media Inc. ("Rogers") signed the Yahoo! Canada Affiliation Agreement whereby Yahoo! licensed certain intellectual property and development rights to Rogers, which Rogers utilized to operate Yahoo! Canada. On March 1, 1999, this agreement was terminated, as were all licenses and other rights and obligations granted under the agreement. As part of this agreement, Yahoo! acquired the Yahoo! Canada business including the URL, www.yahoo.ca.com, and existing advertising relationships from Rogers. Total consideration was $9 million in cash and the issuance of a note payable for $9 million which was settled in April 1999. The Company recorded an intangible asset of approximately $18 million which is being amortized over 10 years. The results of operations of Yahoo! Canada are included in the statement of operations of Yahoo! beginning March 1, 1999.</FONT></P> <P><FONT SIZE=2>In connection with the acquisition of ISSG, approximately $1.2 million of the purchase price was allocated to in-process research and development. This in-process research and development had not reached technological feasibility and had no alternative future use. Additional development subsequent to the acquisition date principally relates to the development and further adaptation of the technology to enhance the Company's overall communications strategy. The Company expects the development of this technology to be completed in the second quarter of 2000. Future research and development costs are not expected to be material to Yahoo!'s financial position or results of operations. In addition, if this technology is not successfully developed, Yahoo!'s revenues and profitability would not be materially adversely affected. Of the remaining purchase price, $12.1 million was allocated to goodwill and other intangible assets and is being amortized on a straight-line basis over five years while $0.8 million was allocated to tangible assets acquired and liabilities assumed.</FONT></P> <P><FONT SIZE=2>The Company's revenues are derived principally from the sale of banner and sponsorship advertisements. 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 three 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 as "impressions", or times that an advertisement appears in pages viewed by users of the Company's online properties, are delivered. Furthermore, advertising revenue is recognized 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; 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.</FONT></P> <P><FONT SIZE=2>The Company also earns revenue from business services, electronic commerce transactions, and barter transactions. Business services revenues include fees for broadcasting live and on-demand events as well as hosting services and membership programs and are recognized in the month in which the service is performed, provided that no significant Company obligations remain and collection of the resulting receivable is probable. Revenues from electronic commerce transactions are recognized by the Company upon notification from the advertiser of revenues earned by Yahoo!. Revenues from barter transactions are recognized during the period in which the advertisements are displayed in Yahoo! properties. Barter transactions are recorded at the fair value of the goods or services provided or received, whichever is more readily determinable in the circumstances. In determining the value of the goods or services provided, the Company uses historical pricing of comparable cash transactions. To date, revenues from electronic commerce transactions and barter transactions have each been less than 10% of net revenues. Revenues from business services were 10% of net revenues in 1999 and 9% and 7% in 1998 and 1997, respectively. No one customer accounted for 10% or more of net revenues during 1999, 1998, and 1997.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Results of Operations</B></FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Net Revenues</B></FONT></P> <P><FONT SIZE=2>Net revenues were $588.6 million, $245.1 million, and $84.1 million for the years ended December 31, 1999, 1998, and 1997, respectively.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Advertising Revenue.</B></FONT><FONT SIZE=2> Of the total net revenues for the years ended December 31, 1999, 1998, and 1997, advertising revenue was $529.9 million, $223.5 million, and $78.4 million, respectively. The increases from year to year are due primarily to the increasing number of advertisers purchasing space on the Company's online media properties as well as larger and longer-term purchases by certain advertisers. Approximately 5,200 customers advertised on the Company's online media properties during 1999 as</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>24</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=3,SEQ=24,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=68069,FOLIO=24,FILE='DISK004:[00PAL6.00PAL1236]DM1236A.;15',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT SIZE=2>compared to approximately 4,300 and 2,900 in 1998 and 1997, respectively. No one customer accounted for 10% or more of net revenues during the years ended December 31, 1999, 1998 and 1997. Advertising purchases by SOFTBANK and its consolidated affiliates, a 23% stockholder of the Company at December 31, 1999, accounted for approximately 1% of net revenues during each of the years ended December 31, 1999 and 1998 and 3% during the year ended December 31, 1997. Contracted prices on these orders are comparable to those given to other similarly situated customers of the Company. International revenues accounted for 10%, 7% and 4% of net revenues during the years ended December 31, 1999, 1998, and 1997, respectively. Barter revenues represented less than 10% of net revenues during those same periods. There can be no assurance that customers will continue to purchase advertising on the Company's Web pages, that advertisers will not make smaller and shorter-term purchases, or that market prices for Web-based advertising will not decrease due to competitive or other factors. Additionally, while the Company has experienced strong revenue growth during the last three years, management does not believe that this level of revenue growth will be sustained in future periods.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Business Services Revenue.</B></FONT><FONT SIZE=2> Business services revenue consists of revenues generated from broadcasting live and on-demand audio and video events and subscription-based hosting services. Business services revenue comprised $56.4 million, $18.8 million, and $5.7 million of total net revenue for the years ended December 31, 1999, 1998, and 1997, respectively. The year-to-year increases are primarily attributable to the increasing number of events broadcasted by the Company and the increasing number of users of the various hosting services. The Company broadcasted approximately 3,600 events during 1999, as compared to 1,800 and 742 during 1998 and 1997, respectively. Yahoo! Store, which was launched during the first quarter of 1998, comprised the most significant portion of revenue from hosting services. Yahoo! Store members totaled 9,000 and 3,500 at December 31, 1999 and 1998, respectively.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Cost of Revenues</B></FONT></P> <P><FONT SIZE=2>Cost of revenues consists of the expenses associated with the production and usage of Yahoo! and the Company's other online media properties. These costs primarily consist of fees paid to third parties for content included on the Company's online media properties, Internet connection charges, amortization of purchased technology, equipment depreciation, and compensation related expenses. The Company does not allocate any cost of revenues or operating costs to its business services segment as management does not use this information to measure the performance of the operating segment. Management does not believe that allocating these expenses is material in evaluating the segment's performance. Cost of revenues were $101.8 million for the year ended December 31, 1999, or 17% of net revenues, as compared to $52.2 million, or 21% of net revenues, and $19.9 million, or 24% of net revenues, for the years ended December 31, 1998 and 1997, respectively. The absolute dollar increases in cost of revenues from year to year are primarily attributable to an increase in the quantity of content available on the Company's online media properties, the increased usage of these properties, and the amortization of purchased technology. Unamortized purchase technology totaled $11.6 million at December 31, 1999 and will be amortized through the fourth quarter of 2001. The Company anticipates that its content and Internet connection expenses will increase with the quantity and quality of content available on Yahoo! online media properties, and increased usage of these properties. As measured in page views (defined as electronic page displays), the Company delivered an average of approximately 465 million page views per day in December 1999 compared with an average of approximately 207 million page views per day in December 1998 and an average of approximately 84 million page views per day in December 1997. Yahoo! Japan, an unconsolidated joint venture of the Company, is included in these page views figures and accounted for an average of approximately 39 million per day in December 1999, an average of approximately 13 million per day in December 1998, and an average of approximately 5 million per day in December 1997. The Company anticipates that its content and Internet connection expenses will continue to increase in absolute dollars for the foreseeable future.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Sales and Marketing</B></FONT></P> <P><FONT SIZE=2>Sales and marketing expenses were $214.9 million for the year ended December 31, 1999, or 37% of net revenues. For the years ended December 31, 1998 and 1997, sales and marketing expenses were $124.7 million and $58.5 million, or 51% and 70% of net revenues, respectively. Sales and marketing expenses consist primarily of advertising and other marketing related expenses (which include distribution costs), compensation and employee related expenses (which include employer payroll taxes assessed on non-qualified stock option exercises), sales commissions, and travel costs. The year-to-year increases in absolute</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>25</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=4,SEQ=25,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=376621,FOLIO=25,FILE='DISK004:[00PAL6.00PAL1236]DM1236A.;15',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT SIZE=2>dollars are primarily attributable to an increase in advertising and distribution costs associated with the Company's aggressive brand-building strategy, increases in compensation expense associated with growth in its direct sales force and marketing personnel, expansion in the international subsidiaries with the addition of subsidiaries in Sweden, Australia, Singapore, Korea, Denmark, and Norway during 1997, Italy, Hong Kong, and Spain as well as Yahoo! guides in Spanish and Mandarin Chinese languages during 1998, and Taiwan, Brazil, China, and Mexico during 1999, and an increase in sales commissions associated with the increase in revenues. The Company anticipates that sales and marketing expenses in absolute dollars will increase in future periods as it continues to pursue an aggressive brand-building strategy through advertising and distribution, continues to expand its international operations, and continues to build its global direct sales organization.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Product Development</B></FONT></P> <P><FONT SIZE=2>Product development expenses were $67.5 million, or 11% of net revenues for the year ended December 31, 1999 compared to $33.9 million and $16.7 million, or 14% and 20% of net revenues for the years ended December 31, 1998 and 1997, respectively. Product development expenses consist primarily of payroll and related expenses (which include employer payroll taxes assessed on non-qualified stock option exercises) incurred for enhancements to and maintenance of the Company's Web site, classification and organization of listings within Yahoo! properties, research and development expenses, amortization of capitalized Web site development costs, and other operating costs. The year-to-year increases in absolute dollars are primarily attributable to increases in the number of engineers that develop and enhance Yahoo! online media properties and increased amortization expense. The Company believes that significant investments in product development are required to remain competitive. Consequently, the Company expects to incur increased product development expenditures in absolute dollars in future periods.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>General and Administrative</B></FONT></P> <P><FONT SIZE=2>General and administrative expenses were $36.3 million, or 6% of net revenues for the year ended December 31, 1999 compared to $24.2 million and $12.9 million, or 10% and 15% of net revenues for the years ended December 31, 1998 and 1997, respectively. General and administrative expenses consist primarily of compensation (which includes employer payroll taxes assessed on non-qualified stock option exercises) and fees for professional services, and the year-to-year increases in absolute dollars are primarily attributable to increases in these areas. The Company believes that the absolute dollar level of general and administrative expenses will increase in future periods, as a result of an increase in personnel and increased fees for professional services.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Amortization of Intangibles</B></FONT></P> <P><FONT SIZE=2>Amortization expense was $13.8 million for the year ended December 31, 1999 as compared to $2.6 million for the year ended December 31, 1998. There was no amortization expense in 1997. The year-to-year increase is principally attributable to goodwill amortization resulting from the March 1999 Yahoo! Canada acquisition which resulted in $18.0 million in additional goodwill, the November 1999 ISSG acquisition which resulted in $12.1 million of goodwill and other intangible assets and the June 1998 Viaweb acquisition and the December 1998 Starseed acquisition which resulted in a combined $48.3 million of additional goodwill and other intangible assets. Unamortized goodwill and other intangible assets totaled $66.5 million at December 31, 1999 and will be amortized through the first quarter of 2009.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Other – Nonrecurring Costs</B></FONT></P> <P><FONT SIZE=2>For the year ended December 31, 1999, the Company recorded nonrecurring costs of $87.5 million. These costs were primarily attributable to acquisition related expenses of $76.6 million in connection with the acquisitions of Encompass, GeoCities, Online Anywhere, and broadcast.com. The Company also recorded nonrecurring charges of $9.8 million and $1.2 million in connection with the Log-Me-On and ISSG acquisitions, respectively, for in-process research and development that had not yet reached technological feasibility and had no alternative future use.</FONT></P> <P><FONT SIZE=2>For the year ended December 31, 1998, the Company recorded nonrecurring costs of $21.2 million. These costs were primarily attributable to $17.6 million of in-process research and development that had not yet reached technological feasibility and had no alternative future use and were recorded in connection with the acquisitions of Viaweb and HyperParallel. The Company also recorded non-recurring costs of $3.6 million for acquisition related expenses in connection with the acquisitions of Yoyodyne and SimpleNet.</FONT></P> <P><FONT SIZE=2>For the year ended December 31, 1997, the Company recorded nonrecurring costs of $25.1 million, of which $21.2 million related to a one-time, non-cash charge to</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>26</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=5,SEQ=26,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=594888,FOLIO=26,FILE='DISK004:[00PAL6.00PAL1236]DM1236A.;15',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT SIZE=2>release the Company from obligations associated with an agreement with VISA and $3.9 million in acquisition related charges in connection with the acquisition of Four11.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Investment Income, Net</B></FONT></P> <P><FONT SIZE=2>Investment income, net of expense, was $37.7 million for the year ended December 31, 1999 compared to $18.8 million and $4.8 million for the years ended December 31, 1998 and 1997, respectively. The year-to-year increases are primarily attributable to a higher average investment balance. Investment income in future periods may fluctuate as a result of fluctuations in average cash balances maintained by the Company and changes in the market rates of its investments.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Minority Interests in Operations of Consolidated Subsidiaries</B></FONT></P> <P><FONT SIZE=2>Minority interests in income from operations of consolidated subsidiaries was $2.5 million for the year ended December 31, 1999 as compared to minority interests in loss from operations of consolidated subsidiaries of $68,000 and $727,000 for the years ended December 31, 1998 and 1997, respectively. The change from loss from operations of consolidated subsidiaries in 1998 to income from operations of consolidated subsidiaries in 1999 was attributable to profitable results recorded in the European and Korean joint ventures for 1999. The decrease from 1997 to 1998 is primarily attributable to near break-even results in the European and Korean joint ventures in the aggregate. The Company expects that minority interests in operations of consolidated subsidiaries in the aggregate will continue to fluctuate in future periods as a function of the results from consolidated subsidiaries. If the consolidated subsidiaries remain profitable, the minority interests adjustment on the statement of operations will continue to reduce the Company's net income by the minority partners' share of the subsidiaries' net income.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Income Taxes</B></FONT></P> <P><FONT SIZE=2>The provision for income taxes for the year ended December 31, 1999 differs from the amount computed by applying the statutory federal rate principally due to nondeductible costs related to the Company's acquisitions (primarily broadcast.com and GeoCities), nondeductible amortization charges related to other acquisitions, and a change in income tax regulations resulting in the recognition of certain acquired loss carryforward benefits.</FONT></P> <P><FONT SIZE=2>The provision for income taxes for the year ended December 31, 1998 differs from the amount computed by applying the statutory federal rate principally due to changes in the valuation allowance related to limitations on net operating losses of acquired companies and nondeductible acquisition related charges.</FONT></P> <P><FONT SIZE=2>No provision for income taxes was recorded for the year ended December 31, 1997 as the Company had net operating losses.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Net Income (Loss)</B></FONT></P> <P><FONT SIZE=2>The Company recorded net income of $61.1 million or $0.10 per share diluted for the year ended December 31,1999 compared to net losses of $12.7 million and $43.4 million, or $0.03 and $0.11 per share diluted for the years ended December 31, 1998 and 1997, respectively. The results for 1999 include nonrecurring charges of $87.5 million incurred in connection with various 1999 acquisitions, employer payroll taxes on option exercises of $10.3 million and amortization of purchased technology and intangible assets acquired in certain acquisitions of $9.5 million and $13.8 million, respectively. The results for 1998 include nonrecurring charges of $21.2 million incurred in connection with various 1998 acquisitions and amortization of $3.5 million and $2.6 million from the purchased technology and intangible assets acquired in certain of those acquisitions. The results for 1997 include the one-time, non-cash, pre-tax charge of $21.2 million recorded during the second quarter of 1997 for the restructuring of the Yahoo! Marketplace agreements with the Visa Group and the one-time charge of $3.9 million recorded during the fourth quarter of 1997 for costs incurred for the acquisition of Four11.</FONT></P> <P><FONT SIZE=2>The Company is subject to employer payroll taxes on employee exercises of non-qualified stock options. Assuming the fair market value of the Company's Common Stock was $200 per share on January 1, 2000, employer payroll taxes on unrealized gains related to vested and unvested non-qualified stock options would be approximately $60.6 million and $184.9 million, respectively. These employer payroll taxes would be recorded as a charge to operations in the period such options are exercised based on actual gains realized by employees. Net proceeds that the Company would receive upon the exercise of such vested and unvested stock options would approximate $216.7 million and $3.2 billion, respectively. In addition, the Company would receive tax deductions for gains realized by employees on the exercise of non-qualified stock options for which the benefit is recorded as additional paid-in capital. The Company's quarterly results</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>27</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=6,SEQ=27,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=145493,FOLIO=27,FILE='DISK004:[00PAL6.00PAL1236]DM1236A.;15',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT SIZE=2>of operations and cash flows could vary significantly depending on the actual period that the stock options are exercised by employees and, consequently, the amount of employer payroll taxes assessed.</FONT></P> <P><FONT SIZE=2><A NAME="dm1236_liquidity_and_capital_resources"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Liquidity and Capital Resources</B></FONT></P> <P><FONT SIZE=2>Yahoo! invests excess cash predominantly in debt instruments that are highly liquid, of high-quality investment grade, and predominantly have maturities of less than one year with the intent to make such funds readily available for operating purposes. At December 31, 1999, the Company had cash and cash equivalents and investments in marketable debt securities totaling $961.1 million compared to $626.8 million and $136.6 million at December 31, 1998 and 1997, respectively.</FONT></P> <P><FONT SIZE=2>For the year ended December 31, 1999, cash provided by operating activities of $216.3 million was primarily attributable to earnings of $61.1 million, depreciation and amortization of $42.3 million, purchased in-process research and development of $11.0 million, tax benefits from stock options of $37.1 million, an increase in deferred revenue of $49.1 million, and an increase in accrued expenses and other liabilities of $50.0 million. The increase in cash provided by operating activities was offset by an increase in prepaid expenses and other assets of $21.2 million and an increase in accounts receivable of $20.3 million. The increase in deferred revenue relates principally to overall significant growth in revenue and increases in advanced payments on several new and relatively longer sponsorship agreements. For the year ended December 31, 1998, cash provided by operating activities of $82.2 million was primarily due to a net loss of $12.7 million and an increase in accounts receivable of $19.6 million, offset by purchased in-process research and development of $17.6 million, depreciation and amortization of $16.5 million, tax benefits from stock option plans of $17.8 million, an increase in deferred revenue of $34.1 million, and an increase in accrued expenses and other liabilities of $22.7 million. For the year ended December 31, 1997, cash used in operating activities of $14.7 million was primarily due to the net loss of $43.4 million and increases in accounts receivable of $8.5 million and prepaid expenses and other assets of $7.2 million, partially offset by a non-cash charge of $23.0 million, depreciation and amortization of $4.6 million, and increases in accrued expenses and other current liabilities of $9.3 million, accounts payable of $4.7 million, and deferred revenue of $3.4 million.</FONT></P> <P><FONT SIZE=2>Cash used in investing activities was $448.6 million for the year ended December 31, 1999. Purchases (net of sales and maturities) of investments in marketable securities, acquisitions, and other investments during the period were $399.1 million and capital expenditures totaled $49.5 million. Capital expenditures have generally been comprised of purchases of computer hardware and software as well as leasehold improvements related to leased facilities, and are expected to increase in future periods. Cash used in investing activities was $383.5 million for the year ended December 31, 1998. Purchases (net of sales and maturities) of investments in marketable securities and other assets during the period were $360.7 million and capital expenditures totaled $22.9 million. Cash provided by investing activities was $14.8 million for the year ended December 31, 1997. Sales and maturities (net of purchases) of investments in marketable securities during the period were $25.6 million and capital expenditures totaled $10.8 million.</FONT></P> <P><FONT SIZE=2>Cash provided by financing activities was $235.5 million for the year ended December 31, 1999 primarily due to proceeds from the issuance of Common Stock pursuant to stock option exercises. For the year ended December 31, 1998, cash provided by financing activities of $439.9 million was due primarily to the issuance of Common Stock to SOFTBANK in the net amount of $250 million during July 1998, the issuance of common stock as part of the broadcast.com July 1998 initial public offering in the net amount of $43.2 million, the issuance of Common Stock as part of the GeoCities August 1998 initial public offering in the amount of $84.3 million, the receipt of $25.0 million in connection with the sale of Mandatory Redeemable Convertible Preferred Stock, and the issuance of Common Stock pursuant to the exercise of stock options. For the year ended December 31, 1997, cash provided by financing activities of $53.5 million was due primarily to the receipt of $7.9 million in connection with the sale of Preferred Stock and the issuance of Common Stock pursuant to the exercise of stock options.</FONT></P> <P><FONT SIZE=2>During 1999, the Company entered into agreements for the development of an office complex in Sunnyvale, California, to be constructed in 2000 to 2003, and to serve as the Company's new headquarters. Upon substantial completion of the buildings, the Company will collateralize a lease facility with deposited funds equal to the amount of the funds drawn on the facility by the lessors, estimated to range from $300 to $350 million. Rent obligations for the buildings will bear a direct</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>28</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=7,SEQ=28,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=576082,FOLIO=28,FILE='DISK004:[00PAL6.00PAL1236]DM1236A.;15',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT SIZE=2>relationship to the lessors' carrying costs. The amount of the rent obligation is contingent upon future events.</FONT></P> <P><FONT SIZE=2>The Company currently has no material commitments other than those under operating lease agreements. The Company has experienced a substantial increase in its capital expenditures and operating lease arrangements since its inception, which is consistent with increased staffing, and anticipates that this will continue in the future. Additionally, the Company will continue to evaluate possible acquisitions of, or investments in businesses, products, and technologies that are complementary to those of the Company, which may require the use of cash. Management believes existing cash and investments will be sufficient to meet the Company's operating requirements for at least the next twelve months; however, the Company may sell additional equity or debt securities or obtain credit facilities to further enhance its liquidity position. The sale of additional securities could result in additional dilution to the Company's stockholders.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=2><B>Year 2000 Update</B></FONT></P> <P><FONT SIZE=2>In order to reduce the risks of the Year 2000 compliance problem, Yahoo! established a Year 2000 Team which undertook a formal assessment of the impact of the Year 2000 problem. The formal process involved assessment of the following Yahoo! systems:</FONT></P> <UL> <DL compact> <DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>internal infrastructure systems</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>hardware systems, including servers and systems used for date storage;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>software systems, including applications, development tools and proprietary code;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>infrastructure systems, including routers, hubs and networks;</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>facility systems, including general building functions, security, HVAC and related operations</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>Yahoo! products, including Yahoo!'s Web site and related services; and</FONT></DD><DT><FONT SIZE=2>•</FONT></DT><DD><FONT SIZE=2>the systems of Yahoo! business partners, including content providers and ISPs.</FONT></DD></DL> </UL> <BR> <P><FONT SIZE=2>Yahoo! conducted its formal assessment of Year 2000 compliance by gathering information on each aspect of Yahoo!'s internal infrastructure, including all applications and hardware in use by Yahoo!, reviewing each component or application for date usage, and examining date representations. Yahoo! has not experienced any significant Year 2000 issues associated with its systems.</FONT></P> <P><FONT SIZE=2>Yahoo! focused on identifying and resolving any Year 2000 issues existing within the Yahoo! Web site and Yahoo!'s related services. As of March 10, 2000, Yahoo! was not aware of any significant Year 2000 issues directly related to a failure of its products to be Year 2000 ready.</FONT></P> <P><FONT SIZE=2>With respect to vendor-supplied items and services, Yahoo! conducted an extensive review of product compliance information on such items and services available online, in vendor literature and through trade group information resources, contacted its vendors for compliance information, and maintained documentation of assessments that have been performed by such vendors or outside sources. As of March 10, 2000, Yahoo! has not been negatively affected by the Year 2000 issue associated with these suppliers.</FONT></P> <P><FONT SIZE=2>Yahoo! did not incur material costs in this formal assessment process, and currently does not believe that the cost of any additional actions will have a material effect on its results of operations or financial condition.</FONT></P> <P><FONT SIZE=2>The year 2000 is a leap year, and February 29, 2000 is a date frequently associated with the Year 2000 issue. In addition, some Year 2000 issues may not be discovered until well after January 1, 2000. As such, Yahoo! believes that risks associated with the Year 2000 issue may continue to exist after January 1, 2000. Yahoo! believes its most likely worst-case scenarios after January 1, 2000 will relate to undiscovered problems associated with its products, due to the inability to anticipate every possible Year 2000 problem, or due to problems associated with the interaction between Yahoo!'s products and its vendors' applications. A failure in Yahoo!'s products could result in claims against Yahoo! and could materially and adversely affect Yahoo!'s financial condition and results of operations. Finally, Yahoo! believes that it has taken steps to identify and address Year 2000 issues within its various readiness programs. However, if efforts to identify and address Year 2000 issues in Yahoo!'s internal infrastructure, product readiness, and vendor base were unsuccessful, including those issues associated with the leap year, Yahoo! may experience unanticipated problems that could materially and adversely affect its financial condition and results of operations.</FONT></P> <P><FONT SIZE=2><A NAME="dm1236_item_7a._quantitative_and_qual__ite02669"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 7a. Quantitative and Qualitative Disclosures about Market Risk</B></FONT></P> <P><FONT SIZE=2>The Company is exposed to the impact of interest rate changes, foreign currency fluctuations, and change in the market values of its investments.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>29</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=8,SEQ=29,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=1026640,FOLIO=29,FILE='DISK004:[00PAL6.00PAL1236]DM1236A.;15',USER='MMEYER',CD='29-MAR-2000;03:49 --> <P><FONT COLOR="#C226FF" SIZE=1><B>Interest Rate Risk.</B></FONT><FONT SIZE=2> The Company's exposure to market rate risk for changes in interest rates relates primarily to the Company's investment portfolio. The Company has not used derivative financial instruments in its investment portfolio. The Company invests its excess cash in debt instruments of the U.S. Government and its agencies, and in high-quality corporate issuers and, by policy, limits the amount of credit exposure to any one issuer. The Company protects and preserves its invested funds by limiting default, market and reinvestment risk.</FONT></P> <P><FONT SIZE=2>Investments in both fixed rate and floating rate interest earning instruments carries a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, the Company's future investment income may fall short of expectations due to changes in interest rates or the Company may suffer losses in principal if forced to sell securities which have declined in market value due to changes in interest rates.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Foreign Currency Risk.</B></FONT><FONT SIZE=2> International revenues from the Company's foreign subsidiaries were 10% of total revenues in 1999. International sales are made mostly from the Company's foreign sales subsidiaries in their respective countries and are typically denominated in the local currency of each country. These subsidiaries also incur most of their expenses in the local currency. Accordingly, all foreign subsidiaries use the local currency as their functional currency.</FONT></P> <P><FONT SIZE=2>The Company's international business is subject to risks typical of an international business, including, but not limited to differing economic conditions, changes in political climate, differing tax structures, other regulations and restrictions, and foreign exchange rate volatility. Accordingly, the Company's future results could be materially adversely impacted by changes in these or other factors.</FONT></P> <P><FONT SIZE=2>The Company's exposure to foreign exchange rate fluctuations arises in part from intercompany accounts in which costs incurred in the United States are charged to the Company's foreign sales subsidiaries. These intercompany accounts are typically denominated in the functional currency of the foreign subsidiary in order to centralize foreign exchange risk with the parent company in the United States. The Company is also exposed to foreign exchange rate fluctuations as the financial results of foreign subsidiaries are translated into U.S. dollars in consolidation. As exchange rates vary, these results, when translated, may vary from expectations and adversely impact overall expected profitability. The effect of foreign exchange rate fluctuations on the Company in 1999 was not material.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Investment Risk.</B></FONT><FONT SIZE=2> The Company invests in equity instruments of privately-held companies for business and strategic purposes. These investments are included in other long-term assets and are accounted for under the cost method when ownership is less than 20% and the Company does not have the ability to exercise significant influence over operations. For these investments in privately-held companies, the Company's policy is to regularly review the assumptions underlying the operating performance and cash flow forecasts in assessing the carrying values. The Company identifies and records impairment losses when events and circumstances indicate that such assets might be impaired. To date, no such impairment has been recorded. Since the Company's initial investment, certain of these investments in privately-held companies have become marketable securities upon the investees completing initial public offerings. Such investments, most of which are in the Internet industry, are subject to significant fluctuations in fair market value due to the volatility of the stock market, and are recorded as long-term investments.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>30</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=9,SEQ=30,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=522263,FOLIO=30,FILE='DISK004:[00PAL6.00PAL1236]DM1236A.;15',USER='MMEYER',CD='29-MAR-2000;03:49 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <H2><FONT SIZE=2> </FONT></H2> <BR> <P><FONT SIZE=2><A NAME="do1236_item_8._financial_statements_and_supplementary_data"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 8. Financial Statements and Supplementary Data</B></FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="83%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="93%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="5%" ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>Page</B></FONT><BR> <HR NOSHADE></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="93%"><FONT SIZE=2><I>Index To Consolidated Financial Statements</I></FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="93%"><FONT SIZE=2> <BR> Consolidated Financial Statements:</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="93%"><FONT SIZE=2> <BR> Report of Independent Accountants</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 32</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="93%"><FONT SIZE=2> <BR> Consolidated Balance Sheets at December 31, 1999 and 1998</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 33</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="93%"><FONT SIZE=2> <BR> Consolidated Statements of Operations for each of the three years in the period ended December 31, 1999</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 34</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="93%"><FONT SIZE=2> <BR> Consolidated Statements of Stockholders' Equity for each of the three years in the period ended<BR> December 31, 1999</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 35</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="93%"><FONT SIZE=2> <BR> Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 1999</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 36</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="93%"><FONT SIZE=2> <BR> Notes to Consolidated Financial Statements</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 37</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="93%"><FONT SIZE=2> <BR> Financial Statement Schedules:</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="93%"><FONT SIZE=2> <BR> II – Valuation and Qualifying Accounts for each of the three years in the period ended December 31, 1999</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 50</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="93%"><FONT SIZE=2> <BR> All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto.</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="93%"><FONT SIZE=2> <BR> Supplementary Financial Data:</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="93%"><FONT SIZE=2> <BR> Quarterly Financial Data (unaudited) for the two years ended December 31, 1999</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 51</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P ALIGN="CENTER"><FONT SIZE=2>31</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=31,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=683256,FOLIO=31,FILE='DISK004:[00PAL6.00PAL1236]DO1236A.;8',USER='ATOBAK',CD='28-MAR-2000;19:45 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <BR> <P><FONT COLOR="#C226FF" SIZE=4><B>Report of Independent Accountants</B></FONT></P> <P><FONT SIZE=2>To the Board of Directors and Stockholders of Yahoo! Inc.</FONT></P> <P><FONT SIZE=2>In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Yahoo! Inc. and its subsidiaries at December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999 in conformity with accounting principles generally accepted in the United States. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.</FONT></P> <P><FONT SIZE=2>/s/ PricewaterhouseCoopers LLP</FONT></P> <P><FONT SIZE=2>San Jose, California<BR> January 7, 2000, except as to the stock split described in Note 1<BR> and Note 11, which are as of March 9, 2000</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>32</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=32,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=577171,FOLIO=32,FILE='DISK004:[00PAL6.00PAL1236]FA1236A.;7',USER='DMANDLE',CD='29-MAR-2000;17:06 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <BR> <P><FONT COLOR="#C226FF" SIZE=4><B>Consolidated Balance Sheets</B></FONT><FONT SIZE=4> </FONT><FONT SIZE=1>YAHOO! INC.<BR> (in thousands, except par value)</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="90%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="70%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="26%" COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1>December 31,</FONT><HR NOSHADE></TH> <TH WIDTH="1%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="70%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="13%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="70%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="26%" COLSPAN=5 ALIGN="CENTER"><HR NOSHADE></TH> <TH WIDTH="1%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT COLOR="#C226FF" SIZE=1><B>ASSETS</B></FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Current assets:</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Cash and cash equivalents</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>233,951</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>230,961</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Short-term investments in marketable securities</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>638,508</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>341,822</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Accounts receivable, net of allowance of $11,322 and $5,947, respectively</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>54,426</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>34,089</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Prepaid expenses and other current assets</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>19,038</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>10,860</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="70%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="26%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Total current assets</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>945,923</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>617,732</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2> <BR> Long-term investments in marketable securities</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 339,623</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 55,931</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Property and equipment, net</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>58,111</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>31,007</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Other assets</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>126,164</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>76,349</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="70%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="26%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Total assets</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,469,821</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>781,019</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="70%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="26%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2> <BR></FONT> <FONT COLOR="#C226FF" SIZE=1><B>LIABILITIES AND STOCKHOLDERS' EQUITY</B></FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Current liabilities:</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Accounts payable</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>13,457</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>9,986</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Accrued expenses and other current liabilities</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>88,154</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>46,147</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Deferred revenue</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>90,708</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>39,796</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="70%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="26%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Total current liabilities</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>192,319</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>95,929</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2> <BR> Other liabilities</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 12,407</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 6,830</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Minority interests in consolidated subsidiaries</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>3,790</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1,248</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2> <BR> Commitments and contingencies (Note 10)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2> <BR> Stockholders' equity:</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Preferred Stock, $0.001 par value; 10,000 shares authorized;<BR> none issued or outstanding</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>–</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Common Stock, $0.001 par value; 900,000 shares authorized;<BR> 532,798 and 497,998 issued and outstanding, respectively</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>533</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>498</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Additional paid-in capital</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,143,646</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>747,517</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Accumulated deficit</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(11,553</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(71,861</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Accumulated other comprehensive income</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>128,679</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>858</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="70%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="26%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Total stockholders' equity</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,261,305</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>677,012</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="70%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="26%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="70%"><FONT SIZE=2>Total liabilities and stockholders' equity</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,469,821</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>781,019</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="70%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="26%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P ALIGN="CENTER"><FONT SIZE=2>The accompanying notes are an integral part of these consolidated financial statements.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>33</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=33,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=513065,FOLIO=33,FILE='DISK004:[00PAL6.00PAL1236]FB1236A.;13',USER='ATOBAK',CD='28-MAR-2000;19:36 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <BR> <P><FONT COLOR="#C226FF" SIZE=4><B>Consolidated Statements of Operations</B></FONT><FONT SIZE=4> </FONT><FONT SIZE=1>YAHOO! INC.<BR> (in thousands, except per share amounts)</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="93%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="61%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="36%" COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1>Years Ended December 31,</FONT><HR NOSHADE></TH> <TH WIDTH="1%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="61%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1997</B></FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="61%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="36%" COLSPAN=8 ALIGN="CENTER"><HR NOSHADE></TH> <TH WIDTH="1%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2>Net revenues</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>588,608</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>245,100</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>84,108</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2>Cost of revenues</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>101,799</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>52,154</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>19,882</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="36%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2>Gross profit</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>486,809</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>192,946</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>64,226</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="36%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2>Operating expenses:</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2>Sales and marketing</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>214,887</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>124,734</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>58,467</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2>Product development</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>67,511</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>33,917</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>16,699</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2>General and administrative</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>36,321</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>24,154</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>12,877</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2>Amortization of intangibles</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>13,815</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>2,628</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2>Other – nonrecurring costs</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>87,542</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>21,234</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>25,095</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="36%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2>Total operating expenses</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>420,076</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>206,667</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>113,138</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="36%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> <BR> Income (loss) from operations</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 66,733</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> (13,721</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> (48,912</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2>Investment income, net</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>37,699</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>18,806</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>4,809</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2>Minority interests in operations of consolidated subsidiaries</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(2,542</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>68</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>727</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="36%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> <BR> Income (loss) before income taxes</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 101,890</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 5,153</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> (43,376</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> <BR> Provision for income taxes</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 40,757</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 17,827</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> –</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="36%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> <BR> Net income (loss)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 61,133</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> (12,674</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> (43,376</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="36%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> <BR> Net income (loss) per share – basic</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 0.12</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> (0.03</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> (0.11</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="36%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2>Net income (loss) per share – diluted</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.10</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(0.03</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(0.11</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="36%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> <BR> Shares used in per share calculation – basic</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 515,948</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 439,990</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 391,542</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="36%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2>Shares used in per share calculation – diluted</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>596,790</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>439,990</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>391,542</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="61%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="36%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P ALIGN="CENTER"><FONT SIZE=2>The accompanying notes are an integral part of these consolidated financial statements.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>34</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=34,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=77263,FOLIO=34,FILE='DISK004:[00PAL6.00PAL1236]FC1236A.;11',USER='ATOBAK',CD='28-MAR-2000;19:36 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <BR><BR> <P><FONT COLOR="#C226FF" SIZE=4><B>Consolidated Statements of Stockholders' Equity</B></FONT><FONT SIZE=4> </FONT><FONT SIZE=1>YAHOO! INC.<BR> (in thousands)</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="28%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH> <TH WIDTH="1%" ROWSPAN=2><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="14%" COLSPAN=4 ROWSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Capital Stock</B></FONT><HR NOSHADE></TH> <TH WIDTH="1%" ROWSPAN=3><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="9%" COLSPAN=2 ROWSPAN=3 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>Additional Paid-in Capital</B></FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="11%" COLSPAN=2 ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="1%" ROWSPAN=3><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="12%" COLSPAN=2 ROWSPAN=3 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Accumulated<BR> Other<BR> Comprehensive<BR> Income (Loss)</B></FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="9%" COLSPAN=2 ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="12%" COLSPAN=2 ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="28%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="1%" ROWSPAN=2><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="11%" COLSPAN=2 ROWSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>Accumulated Deficit</B></FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="9%" COLSPAN=2 ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="1%" ROWSPAN=2><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="12%" COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Comprehensive<BR> Income (Loss)</B></FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="28%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="6%" ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>Shares</B></FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="7%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>Amount</B></FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>Total</B></FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="28%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="1%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="69%" COLSPAN=19 ALIGN="CENTER"><HR NOSHADE></TH> <TH WIDTH="1%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Balance at December 31, 1996</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>372,616</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>766</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>123,904</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(14,206</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>(63</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>110,401</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Comprehensive income (loss):</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Net loss</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(43,376</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(43,376</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>(43,376</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Other comprehensive income (loss), net of tax:</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Foreign currency translation adjustment</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>(380</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="28%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Other comprehensive income (loss)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>(380</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(380</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>(380</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="28%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Comprehensive income (loss)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>(43,756</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="28%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Accretion of Mandatory Redeemable Convertible Preferred Stock</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(832</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(832</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Conversion of Convertible Preferred Stock to Mandatory Redeemable Convertible Preferred Stock</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(2,400</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(396</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(396</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Sale of Common Stock, net of issuance costs</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>10,444</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>10</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>32,724</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>32,734</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Issuance of Common Stock pursuant to employee stock plans, exercise of warrants and other</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>23,280</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>23</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>7,544</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>7,567</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Issuance of Common Stock for acquisitions and investments</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>922</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>6,399</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>6,400</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Issuance of Common Stock pursuant to Visa Group Agreement</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>5,596</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>6</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>21,044</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>21,050</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Write-up of investment in Yahoo! Japan</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1,700</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1,700</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Compensation and other expense on option grants and warrant issuances</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>2,373</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>2,373</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="28%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="56%" COLSPAN=16 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Balance at December 31, 1997</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>410,458</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>410</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>194,856</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(57,582</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>(443</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>137,241</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Comprehensive income (loss):</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Net loss</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(12,674</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(12,674</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>(12,674</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Other comprehensive income (loss), net of tax:</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Net unrealized gains on securities</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>1,013</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Foreign currency translation adjustment</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>288</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="28%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Other comprehensive income (loss)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>1,301</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1,301</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>1,301</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="28%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Comprehensive income (loss)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>(11,373</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="28%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Accretion of Mandatory Redeemable Convertible Preferred Stock</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(1,396</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(1,396</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Conversion of Mandatory Redeemable Convertible Preferred Stock to Common Stock</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>29,180</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>29</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>34,400</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>34,429</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Issuance of Common Stock pursuant to employee stock plans, exercise of warrants and other</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>23,286</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>23</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>31,820</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>31,843</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Issuance of Common Stock for acquisitions</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>5,504</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>6</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>77,136</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>77,142</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Sale of Common Stock, net of issuance costs</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>29,570</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>30</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>385,283</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>385,313</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Compensation expense on option grants</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>2,163</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>2,163</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Tax benefits from stock options</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>23,255</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>23,255</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Other</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(1,605</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(1,605</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="28%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="56%" COLSPAN=16 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Balance at December 31, 1998</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>497,998</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>498</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>747,517</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(71,861</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>858</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>677,012</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Comprehensive income (loss):</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Net income</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>61,133</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>61,133</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>61,133</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Other comprehensive income (loss), net of tax:</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Net unrealized gains on securities</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>128,063</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Foreign currency translation adjustment</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>(242</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="28%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Other comprehensive income (loss)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>127,821</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>127,821</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>127,821</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="28%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Comprehensive income (loss)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>188,954</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="28%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Issuance of Common Stock pursuant to employee stock plans and exercise of warrants</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>34,420</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>34</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>237,815</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>237,849</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Compensation expense on option grants</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>2,985</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>2,985</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Issuance of Common Stock for acquisitions and investment</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>380</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>31,901</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>31,902</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Other</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>825</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(825</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Tax benefits from stock options</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>122,603</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>122,603</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="28%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="56%" COLSPAN=16 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%"><FONT SIZE=1>Balance at December 31, 1999</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>532,798</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>533</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1,143,646</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(11,553</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>128,679</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1,261,305</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="28%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="56%" COLSPAN=16 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=2>The accompanying notes are an integral part of these consolidated financial statements.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>35</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=35,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=929119,FOLIO=35,FILE='DISK004:[00PAL6.00PAL1236]FD1236A.;13',USER='ATOBAK',CD='28-MAR-2000;19:36 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <BR> <P><FONT COLOR="#C226FF" SIZE=4><B>Consolidated Statements of Cash Flows</B></FONT><FONT SIZE=4> </FONT><FONT SIZE=1>YAHOO! INC.<BR> (in thousands)</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="94%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="60%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="37%" COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1>Years Ended December 31,</FONT><HR NOSHADE></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="60%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1997</B></FONT><BR></TH> <TH WIDTH="1%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="60%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="37%" COLSPAN=8 ALIGN="CENTER"><HR NOSHADE></TH> <TH WIDTH="1%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT COLOR="#C226FF" SIZE=1><B>CASH FLOWS FROM OPERATING ACTIVITIES:</B></FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Net income (loss)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>61,133</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(12,674</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(43,376</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Depreciation and amortization</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>42,330</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>16,472</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>4,644</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Tax benefits from stock options</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>37,147</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>17,827</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Minority interests in operations of consolidated subsidiaries</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>2,542</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(68</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(727</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Purchased in-process research and development</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>10,975</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>17,600</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>–</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Other non-cash charges</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>2,985</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>2,429</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>23,041</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Changes in assets and liabilities:</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Accounts receivable, net</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(20,272</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(19,596</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(8,524</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Prepaid expenses and other assets</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(21,219</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>2,308</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(7,239</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Accounts payable</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1,700</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1,141</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>4,700</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Accrued expenses and other liabilities</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>49,953</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>22,667</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>9,347</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Deferred revenue</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>49,062</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>34,126</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>3,395</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="60%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="37%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Net cash provided by (used in) operating activities</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>216,336</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>82,232</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(14,739</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="60%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="37%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2> <BR></FONT> <FONT COLOR="#C226FF" SIZE=1><B>CASH FLOWS FROM INVESTING ACTIVITIES:</B></FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Acquisition of property and equipment</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(49,548</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(22,863</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(10,824</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Purchases of marketable securities</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(998,309</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(511,526</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(58,753</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Proceeds from sales and maturities of marketable securities</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>644,057</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>159,850</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>86,678</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Acquisitions and other investments</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(44,817</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(9,008</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(2,294</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="60%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="37%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Net cash provided by (used in) investing activities</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(448,617</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(383,547</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>14,807</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="60%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="37%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2> <BR></FONT> <FONT COLOR="#C226FF" SIZE=1><B>CASH FLOWS FROM FINANCING ACTIVITIES:</B></FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Proceeds from issuance of Common Stock and Convertible Preferred Stock, net</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>237,849</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>442,209</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>52,009</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Other</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(2,336</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(2,328</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,498</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="60%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="37%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Net cash provided by financing activities</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>235,513</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>439,881</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>53,507</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="60%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="37%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2> <BR> Effect of exchange rate changes on cash and cash equivalents</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> (242</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 288</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2> <BR> (380</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="60%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="37%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2> <BR> Net change in cash and cash equivalents</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 2,990</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 138,854</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2> <BR> 53,195</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Cash and cash equivalents at beginning of year</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>230,961</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>92,107</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>38,912</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="60%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="37%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%"><FONT SIZE=2>Cash and cash equivalents at end of year</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>233,951</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>230,961</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>92,107</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="60%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="37%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="1%"><FONT SIZE=2> </FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P ALIGN="CENTER"><FONT SIZE=2>The accompanying notes are an integral part of these consolidated financial statements.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>36</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=36,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=817448,FOLIO=36,FILE='DISK004:[00PAL6.00PAL1236]FE1236A.;12',USER='ATOBAK',CD='28-MAR-2000;19:36 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <BR> <P><FONT COLOR="#C226FF" SIZE=4><B>Notes to Consolidated Financial Statements</B></FONT><FONT SIZE=4> </FONT><FONT SIZE=1>YAHOO! INC.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=3><B>Note 1</B></FONT><FONT SIZE=2>THE COMPANY AND SUMMARY OF<BR> SIGNIFICANT ACCOUNTING POLICIES</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>The Company.</B></FONT><FONT SIZE=2> Yahoo! Inc. ("Yahoo!" or the "Company") is a global Internet communications, commerce, and media company that offers a comprehensive branded network of services to millions of worldwide users daily. The Company was incorporated in California on March 5, 1995 and commenced operations on that date. On May 18, 1999, the Company reincorporated in Delaware and changed the par value of its Common Stock to $0.001. The consolidated financial statements and notes thereto for all periods presented have been adjusted to reflect the reincorporation.</FONT></P> <P><FONT SIZE=2>The Company consummated acquisitions of broadcast.com inc. in July 1999, GeoCities in May 1999, as well as various other acquisitions during 1999, 1998, and 1997, that were accounted for as poolings of interests. The consolidated financial statements for the three years ended December 31, 1999 and the accompanying notes reflect the Company's financial position and the results of operations as if the acquired entities were wholly-owned subsidiaries of the Company since inception.</FONT></P> <P><FONT SIZE=2>Components of the consolidated results of operations of Yahoo! and the acquired companies, prior to their acquisitions by Yahoo!, are as follows (in thousands):</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="55%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="31%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="64%" COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1>Years Ended December 31,</FONT><HR NOSHADE></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="31%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="18%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT><BR></TH> <TH WIDTH="6%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="18%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="18%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1997</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="31%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="64%" COLSPAN=8 ALIGN="CENTER"><HR NOSHADE></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2>Net revenues:</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="14%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2>Yahoo!</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>543,732</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>198,981</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>65,340</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2>broadcast.com</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>28,748</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>17,392</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>6,776</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2>GeoCities</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>12,984</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>18,227</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>4,462</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2>Others</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>3,144</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>10,500</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>7,530</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="64%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>588,608</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>245,100</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>84,108</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="64%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2> <BR> Net income (loss):</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="15%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="15%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="14%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2>Yahoo!</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>86,766</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>30,216</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(19,973</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2>broadcast.com</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(7,617</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(14,290</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(6,474</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2>GeoCities</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(17,249</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(19,759</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(8,903</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2>Others</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(767</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(8,841</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(8,026</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="64%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>61,133</FONT></TD> <TD WIDTH="6%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(12,674</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(43,376</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="64%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT COLOR="#C226FF" SIZE=1><B>Stock Split.</B></FONT><FONT SIZE=2> During January 2000, the Company's Board of Directors approved a two-for-one Common Stock split which was effective on February 14, 2000. Stockholders' equity has been restated to give retroactive recognition to the stock split for all periods presented by reclassifying from additional paid-in capital to common stock, the par value of additional shares issued as a result of the splits. In addition, all references to the number of shares, per share amounts, stock option data, and market prices in the financial statements and notes thereto for all periods presented have been restated to reflect the stock split.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Principles of Consolidation.</B></FONT><FONT SIZE=2> The consolidated financial statements include the accounts of Yahoo! and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The equity and net income or loss attributable to the minority stockholder interests which related to the Company's subsidiaries, are shown separately in the consolidated balance sheets and consolidated statements of operations, respectively. Investments in entities in which the Company can exercise significant influence, but less than majority owned and not otherwise controlled by the Company, are accounted for under the equity method.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Reclassifications.</B></FONT><FONT SIZE=2> Certain prior years' balances have been reclassified to conform to the current year's presentation.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Revenue Recognition.</B></FONT><FONT SIZE=2> The Company's revenues are derived principally from the sale of banner and sponsorship advertisements. 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 three 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 as "impressions", or times that an advertisement appears in pages viewed by users of the Company's online properties, are delivered. Furthermore, advertising revenue is recognized provided that no significant Company obligations remain at the end of a period and collection of the resulting receivable is probable. Company obligations</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>37</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=37,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=167527,FOLIO=37,FILE='DISK004:[00PAL6.00PAL1236]FI1236A.;27',USER='DNICHOL',CD='29-MAR-2000;17:20 --> <P><FONT SIZE=2>typically include guarantees of minimum number of impressions; 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.</FONT></P> <P><FONT SIZE=2>The Company also earns revenue from business services, electronic commerce transactions, and barter transactions. Business services revenues include fees for broadcasting live and on-demand events as well as hosting services and membership programs and are recognized in the month in which the service is performed, provided that no significant Company obligations remain and collection of the resulting receivable is probable. Revenues from electronic commerce transactions are recognized by the Company upon notification from the advertiser of revenues earned by Yahoo!. Revenues from barter transactions are recognized during the period in which the advertisements are displayed in Yahoo! properties. Barter transactions are recorded at the fair value of the goods or services provided or received, whichever is more readily determinable in the circumstances. In determining the value of the goods or services provided, the Company uses historical pricing of comparable cash transactions. To date, revenues from electronic commerce transactions, barter transactions, and business services have each been less than 10% of net revenues. No one customer accounted for 10% or more of net revenues during 1999, 1998, and 1997.</FONT></P> <P><FONT SIZE=2>Deferred revenue is primarily comprised of billings in excess of recognized revenue relating to advertising contracts and payments received pursuant to sponsorship advertising contracts in advance of revenue recognition.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Product Development.</B></FONT><FONT SIZE=2> Product development costs consist primarily of payroll and related expenses incurred for enhancements to and maintenance of the Company's Web site, classification and organization of listings within Yahoo! properties, research and development expenses, amortization of capitalized Web site development costs, and other operating costs.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Internal Use Software Costs.</B></FONT><FONT SIZE=2> Effective January 1, 1999, the Company adopted Statement of Position 98-1 ("SOP 98-1"), "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." In accordance with SOP 98-1, the Company has capitalized certain internal use software and Web site development costs totaling $3.2 million during the year ended December 31, 1999. The estimated useful life of costs capitalized is evaluated for each specific project and range from one to two years. During the year ended December 31, 1999, the amortization of capitalized costs totaled $0.7 million.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Advertising Costs.</B></FONT><FONT SIZE=2> Advertising production costs are recorded as expense the first time an advertisement appears. All other advertising costs are expensed as incurred. Advertising expense totaled approximately $79.5 million, $39.2 million, and $14.1 million for 1999, 1998, and 1997, respectively.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Benefit Plan.</B></FONT><FONT SIZE=2> The Company maintains a 401(k) Profit Sharing Plan (the "Plan") for its full-time employees. Each participant in the Plan may elect to contribute from 1% to 17% of his or her annual compensation to the Plan. The Company matches employee contributions at a rate of 25%. Employee contributions are fully vested, whereas vesting in matching Company contributions occurs at a rate of 33.3% per year of employment. During 1999, 1998, and 1997, the Company's contributions amounted to $1.4 million, $0.6 million, and $0.3 million, respectively.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Cash and Cash Equivalents, Short and Long-Term Investments.</B></FONT><FONT SIZE=2> The Company invests its excess cash in debt instruments of the U.S. Government and its agencies, and in high-quality corporate issuers. All highly liquid instruments with an original maturity of three months or less are considered cash equivalents, those with original maturities greater than three months and current maturities less than twelve months from the balance sheet date are considered short-term investments, and those with maturities greater than twelve months from the balance sheet date are considered long-term investments.</FONT></P> <P><FONT SIZE=2>The Company's marketable securities are classified as available-for-sale and are reported at fair value, with unrealized gains and losses, net of tax, recorded in stockholders' equity. Realized gains or losses and permanent declines in value, if any, on available-for-sale securities are reported in other income or expensed as incurred. At December 31, 1999 and 1998, the Company recorded net unrealized gains on its marketable debt and equity securities, net of income tax, of approximately $129.1 million and $1.0 million, respectively.</FONT></P> <P><FONT SIZE=2>The Company also invests in equity instruments of privately-held companies for business and strategic purposes. These investments are included in other long-term assets and are accounted for under the cost method when</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>38</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=2,SEQ=38,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=237022,FOLIO=38,FILE='DISK004:[00PAL6.00PAL1236]FI1236A.;27',USER='DNICHOL',CD='29-MAR-2000;17:20 --> <P><FONT SIZE=2>ownership is less than 20% and the Company does not have the ability to exercise significant influence over operations. For these investments in privately-held companies, the Company's policy is to regularly review the assumptions underlying the operating performance and cash flow forecasts in assessing the carrying values. The Company identifies and records impairment losses when events and circumstances indicate that such assets might be impaired. To date, no such impairment has been recorded. Since the Company's initial investment, certain of these investments in privately-held companies have become marketable securities upon the investees completing initial public offerings. Such investments, most of which are in the Internet industry, are subject to significant fluctuations in fair market value due to the volatility of the stock market, and are recorded as long-term investments.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Concentration of Credit Risk.</B></FONT><FONT SIZE=2> Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash, cash equivalents, short and long-term investments, and accounts receivable. Substantially all of the Company's cash, cash equivalents, short and long-term investments are managed by five financial institutions. Accounts receivable are typically unsecured and are derived from revenues earned from customers primarily located in the United States. The Company performs ongoing credit evaluations of its customers and maintains reserves for potential credit losses; historically, such losses have been within management's expectations. At December 31, 1999 and 1998, no one customer accounted for 10% or more of the accounts receivable balance.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Depreciation and Amortization.</B></FONT><FONT SIZE=2> Property and equipment, including leasehold improvements, are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally two to five years. Goodwill and other intangible assets are included in other assets and are carried at cost less accumulated amortization, which is being provided on a straight-line basis over the economic lives of the respective assets, generally three to ten years. The Company periodically evaluates the recoverability of its long-lived assets based on expected undiscounted cash flows and recognizes impairments, if any, based on expected discounted future cash flows.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Income Taxes.</B></FONT><FONT SIZE=2> Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Stock-Based Compensation.</B></FONT><FONT SIZE=2> The Company accounts for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees," and complies with the disclosure provisions of Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation." Under APB No. 25, compensation cost is recognized over the vesting period based on the difference, if any, on the date of grant between the fair value of the Company's stock and the amount an employee must pay to acquire the stock.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Foreign Currency.</B></FONT><FONT SIZE=2> The functional currency of the Company's international subsidiaries is the local currency. The financial statements of these subsidiaries are translated to United States dollars using year-end rates of exchange for assets and liabilities, and average rates of exchange for the year for revenues, costs, and expenses. Translation gains (losses) are deferred and accumulated in accumulated other comprehensive income as a component of stockholders' equity. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations and were not significant during the periods presented.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Basic and Diluted Net Income (Loss) per Share.</B></FONT><FONT SIZE=2> Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted average number of common and, if dilutive, common equivalent shares outstanding during the period. Common equivalent shares consist of the incremental common shares issuable upon conversion of the convertible preferred stock (using the if-converted method) and shares issuable upon the exercise of stock options and warrants (using the treasury stock method). During the years ended December 31, 1998 and 1997, options to purchase approximately 129.2 million shares and 105.0 million shares, respectively, were outstanding but were not included in the computation because they are antidilutive. For the year ended December 31, 1999, common</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>39</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=3,SEQ=39,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=929653,FOLIO=39,FILE='DISK004:[00PAL6.00PAL1236]FI1236A.;27',USER='DNICHOL',CD='29-MAR-2000;17:20 --> <P><FONT SIZE=2>equivalent shares approximated 80.8 million shares and related to shares issuable upon the exercise of stock options. Net income (loss) for the years ended December 31, 1998 and 1997 was adjusted to reflect accretion related to the mandatory redeemable convertible preferred stock in the amount of $1.4 million and $0.8 million, respectively, in computing basic and diluted net loss per share.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Use of Estimates.</B></FONT><FONT SIZE=2> The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Comprehensive Income.</B></FONT><FONT SIZE=2> Comprehensive income as defined includes all changes in equity (net assets) during a period from non-owner sources. Accumulated other comprehensive income, as presented on the accompanying consolidated balance sheets, consists of the net unrealized gains on available-for-sale securities, net of tax, and the cumulative translation adjustment.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Recent Accounting Pronouncements.</B></FONT><FONT SIZE=2> In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes methods of accounting for derivative financial instruments and hedging activities related to those instruments as well as other hedging activities, and is effective for fiscal years beginning after June 15, 2000, as amended by SFAS No. 137. The Company believes that adoption of this pronouncement will have no material impact on the Company's final position and results from operations. In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition," which outlines the basic criteria that must be met to recognize revenue and provides guidance for presentation of revenue and for disclosure related to revenue recognition policies in financial statements filed with the SEC. The Company believes the adoption of SAB 101 will not have a material impact on the Company's financial position and results of operations.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=3><B>Note 2</B></FONT><FONT SIZE=2>BALANCE SHEET COMPONENTS (IN THOUSANDS)</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="47%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="48%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="4%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="45%" COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1>December 31,</FONT><HR NOSHADE></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="48%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="21%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="20%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="48%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="4%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="45%" COLSPAN=5 ALIGN="CENTER"><HR NOSHADE></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Property and equipment:</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Computers and equipment</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>61,130</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>35,504</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Furniture and fixtures</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>15,877</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>6,538</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Leasehold improvements</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>13,287</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>5,116</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="48%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="45%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>90,294</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>47,158</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Less: accumulated depreciation</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>(32,183</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>(16,151</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="48%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="45%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>58,111</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>31,007</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="48%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="45%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Other assets:</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Intangible assets</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>78,085</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>66,063</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Investments in privately-held companies</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>20,750</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>5,445</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Other</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>27,329</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>4,841</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="48%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="45%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>126,164</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>76,349</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="48%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="45%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Accrued expenses and other current liabilities:</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Accrued compensation and related expenses</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>28,242</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>13,246</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Accrued content, connect, and other costs</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>15,849</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>10,276</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Accrued sales and marketing related expenses</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>17,595</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>6,847</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Accrued professional service expenses</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>6,869</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>5,973</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Accrued acquisition costs</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>5,132</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>1,129</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Accrued income taxes payable</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>4,757</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>2,109</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2>Other</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>9,710</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>6,567</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="48%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="45%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>88,154</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>46,147</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="48%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="45%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P ALIGN="CENTER"><FONT SIZE=2>40</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=4,SEQ=40,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=556134,FOLIO=40,FILE='DISK004:[00PAL6.00PAL1236]FI1236A.;27',USER='DNICHOL',CD='29-MAR-2000;17:20 --> <P><FONT COLOR="#C226FF" SIZE=3><B>Note 3</B></FONT><FONT SIZE=2>INVESTMENTS</FONT></P> <P><FONT SIZE=2>The following tables summarize the Company's investments in available-for-sale securities (in thousands):</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="64%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="19%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="78%" COLSPAN=11 ALIGN="CENTER"><FONT SIZE=1>December 31, 1999</FONT><HR NOSHADE></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="19%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="17%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Gross<BR> Amortized<BR> Costs</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="17%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Gross<BR> Unrealized<BR> Gains</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="17%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Gross<BR> Unrealized<BR> Losses</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="18%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Estimated<BR> Fair Value</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="19%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="78%" COLSPAN=11 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="19%"><FONT SIZE=1>U.S. Government and agencies</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>691,490</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(1,972</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>689,518</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="19%"><FONT SIZE=1>Municipal bonds</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>26,714</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(76</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>26,638</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="19%"><FONT SIZE=1>Corporate debt securities</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>9,284</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(26</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>9,258</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="19%"><FONT SIZE=1>Corporate equity securities</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>33,760</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>218,924</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(1,717</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>250,967</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="19%"><FONT SIZE=1>Other</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>1,756</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(6</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>1,750</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="19%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="78%" COLSPAN=11 ALIGN="RIGHT"><HR NOSHADE></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="19%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>763,004</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>218,924</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(3,797</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>978,131</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="19%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="78%" COLSPAN=11 ALIGN="RIGHT"><HR NOSHADE></TD> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="19%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="78%" COLSPAN=11 ALIGN="CENTER"><FONT SIZE=1>December 31, 1998</FONT><HR NOSHADE></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="19%" ALIGN="CENTER"><FONT SIZE=1> <BR></FONT> <FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1><B> <BR> </B></FONT></TH> <TH WIDTH="17%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B> <BR> Gross<BR> Amortized<BR> Costs</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1><B> <BR> </B></FONT></TH> <TH WIDTH="17%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B> <BR> Gross<BR> Unrealized<BR> Gains</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1><B> <BR> </B></FONT></TH> <TH WIDTH="17%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B> <BR> Gross<BR> Unrealized<BR> Losses</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1><B> <BR> </B></FONT></TH> <TH WIDTH="18%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B> <BR> Estimated<BR> Fair Value</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="19%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="78%" COLSPAN=11 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="19%"><FONT SIZE=1>U.S. Government and agencies</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>352,531</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>611</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>353,142</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="19%"><FONT SIZE=1>Municipal bonds</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>12,893</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>81</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>12,974</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="19%"><FONT SIZE=1>Corporate debt securities</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>26,701</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>26</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>26,727</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="19%"><FONT SIZE=1>Corporate equity securities</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>1,000</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>910</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>1,910</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="19%"><FONT SIZE=1>Other</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>3,020</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(20</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>3,000</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="19%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="78%" COLSPAN=11 ALIGN="RIGHT"><HR NOSHADE></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="19%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>396,145</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>1,628</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(20</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>397,753</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="19%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="78%" COLSPAN=11 ALIGN="RIGHT"><HR NOSHADE></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=2>The contractual maturities of available-for-sale debt securities are as follows (in thousands):</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="47%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="49%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="4%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="47%" COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1>December 31,</FONT><HR NOSHADE></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="49%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="49%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH> <TH WIDTH="4%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="47%" COLSPAN=5 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="49%"><FONT SIZE=2>Due within one year</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>638,508</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>341,822</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="49%"><FONT SIZE=2>Due after one year through two years</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>88,656</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>54,021</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="49%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="47%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="49%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>727,164</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>395,843</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="49%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="47%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT COLOR="#C226FF" SIZE=3><B>Note 4</B></FONT><FONT SIZE=2>RELATED PARTY TRANSACTIONS</FONT></P> <P><FONT SIZE=2>During 1999, 1998, and 1997, the Company recognized net revenues of approximately $6.8 million, $2.9 million, and $2.7 million, respectively, on advertising contracts and publication, development, and licensing arrangements with SOFTBANK, a holder of approximately 23% of the Company's Common Stock at December 31, 1999, and its consolidated affiliates. Prices on these contracts were comparable to those given to other similarly situated customers of the Company.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=3><B>Note 5</B></FONT><FONT SIZE=2>ACQUISITIONS</FONT></P> <P><FONT SIZE=2>As of December 31, 1999, the Company had completed sixteen acquisitions since its inception. The following table summarizes the acquisitions completed through December 31, 1999 that were accounted for as poolings of interests (shares issued in thousands):</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="47%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="37%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Company</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="41%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Acquisition Date</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="15%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Shares<BR> Issued</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="100%" COLSPAN=5 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>Four11 Corporation</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>October 20, 1997</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>12,046</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>WebCal Corporation</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>July 17, 1998</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,084</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>Yoyodyne Entertainment, Inc.</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>October 20, 1998</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,019</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>SimpleNet*</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>November 30, 1998</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,269</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>Net Roadshow, Inc.*</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>March 15, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,435</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>Encompass, Inc.</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>May 26, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,390</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>GeoCities</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>May 28, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>43,281</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>Online Anywhere</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>May 28, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>906</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="37%"><FONT SIZE=2>broadcast.com inc.</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="41%"><FONT SIZE=2>July 20, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>57,294</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=1>* Acquisitions completed by broadcast.com prior to the Company's acquisition of broadcast.com.</FONT></P> <P><FONT SIZE=2>For the year ended December 31, 1999, nonrecurring charges related to acquisition costs totaled $76.6 million and included investment banking, financial and legal advisory services, severance and contract termination costs related to the mergers. These costs were primarily attributable to the GeoCities and broadcast.com acquisition costs of $55.0 million and $20.0 million, respectively. For 1998 and 1997, nonrecurring charges related to acquisition costs were $3.6 million and $3.9 million, respectively. At December 31, 1999, $5.1 million of accrued acquisition costs were included in accrued expenses and other current liabilities. These accrued amounts consist of contract termination and severance costs and will be paid during the year ending December 31, 2000.</FONT></P> <P><FONT SIZE=2>The Company's consolidated financial statements for the three years ended December 31, 1999 reflect the Company's financial position and results of operations as if the above acquired entities, accounted for as poolings of interests, were wholly-owned subsidiaries of the Company</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>41</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=5,SEQ=41,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=368949,FOLIO=41,FILE='DISK004:[00PAL6.00PAL1236]FI1236A.;27',USER='DNICHOL',CD='29-MAR-2000;17:20 --> <P><FONT SIZE=2>since inception, with the exception of WebCal, whose historical operations were not material to the Company's financial position, results of operations, or cash flows.</FONT></P> <P><FONT SIZE=2>The following table summarizes the acquisitions completed through December 31, 1999 that were accounted for under the purchase method of accounting (purchase price in millions):</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="50%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="35%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Company</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="39%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Acquisition Date</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="19%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Purchase<BR> Price</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="100%" COLSPAN=6 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=2>Viaweb Inc.</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="39%"><FONT SIZE=2>June 10, 1998</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>48.6</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=2>Starseed, Inc.**</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="39%"><FONT SIZE=2>December 4, 1998</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>24.8</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=2>HyperParallel, Inc.</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="39%"><FONT SIZE=2>December 17, 1998</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>8.1</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=2>Log-Me-On.Com LLC</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="39%"><FONT SIZE=2>January 15, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>9.9</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=2>Yahoo! Canada</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="39%"><FONT SIZE=2>March 1, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>18.0</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=2>Futuretouch Corporation**</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="39%"><FONT SIZE=2>March 23, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>6.2</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=2>Innovative Systems Services Group, Inc.</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="39%"><FONT SIZE=2>November 22, 1999</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>14.1</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=1>** Acquisitions completed by GeoCities prior to the Company's acquisition of GeoCities.</FONT></P> <P><FONT SIZE=2>Under the purchase method of accounting, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date.</FONT></P> <P><FONT SIZE=2>The results of operations for entities acquired in 1999 and accounted for under the purchase method were not material to the Company. The results of operations of these acquired entities are included with those of the Company for periods subsequent to the acquisition date.</FONT></P> <P><FONT SIZE=2>Viaweb was a provider of software and services for hosting online stores. In connection with the acquisition of Viaweb and pursuant to discussions with the Staff of the Securities and Exchange Commission (the "Staff"), approximately $15 million of the purchase price was assigned to in-process research and development and expensed upon the consummation of the acquisition. Various factors were considered in discussions with the Staff in determining the amount of the purchase price to be allocated to in-process research and development such as, estimating the stage of development of each in-process research and development project at the date of acquisition, estimating cash flows resulting from the expected revenues generated from such projects and discounting the net cash flows, in addition to other assumptions. The remaining identified intangibles, including the value of purchased technology and other intangibles, are being amortized on a straight-line basis over three and seven years, respectively.</FONT></P> <P><FONT SIZE=2>In addition, other factors were considered in discussions with the Staff in determining the value assigned to purchased in-process technology such as research projects in areas supporting the online store technology (including significant enhancement to the ability of the product to support multiple users and multiple servers), developing functionality to support the ability to process credit card orders, and enhancing the product's user interface by developing functionality that would allow the product to be used outside of the United States.</FONT></P> <P><FONT SIZE=2>Starseed was a developer of technology that enabled the linking of topically related Web sites. Approximately $1.2 million of the purchase price was allocated to purchased technology which is being amortized on a straight-line basis over one year and approximately $24.0 million was allocated to goodwill which is being amortized on a straight-line basis over three years.</FONT></P> <P><FONT SIZE=2>HyperParallel specialized in data analysis. Approximately $2.3 million of the total purchase price was allocated to in-process research and development. This amount was developed by estimating the stage of development of each in-process research and development project at the date of the acquisition, estimating incremental cash flows generated from such projects, and discounting the net cash flows back to their present value using a discount rate of 35%, which represents a premium to the Company's cost of capital to take into account the uncertainty surrounding the successful development of the purchased in-process technology. The projections were based on management's estimates of market size and growth, expected trends in advertising and technology, expected research and development and selling and general administrative expenditures, and the expected timing of new product introductions. Approximately $1.2 million of the total purchase price was allocated to existing technology which is being amortized over 3 years. The value of the existing technology was developed based on similar assumptions using a discount rate of 25%. The projections used in developing the values should not be considered an accurate predictor of future performance for several reasons, including the consideration of many factors outside the control of the Company. The remaining purchase price of approximately $4.6 million was allocated to goodwill which is being amortized over 7 years.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>42</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=6,SEQ=42,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=698210,FOLIO=42,FILE='DISK004:[00PAL6.00PAL1236]FI1236A.;27',USER='DNICHOL',CD='29-MAR-2000;17:20 --> <P><FONT SIZE=2>Tangible assets acquired and liabilities assumed were not material to the Company's financial statements.</FONT></P> <P><FONT SIZE=2>Log-Me-On, founded in 1998, was a development stage entity with limited operations, no revenues, and four developers. As of the acquisition date, the Company's efforts had been focused solely on developing a browser technology that was approximately 30% complete and there was no other technology developed or in process at such date. Approximately $9.8 million of the purchase price was allocated to in-process research and development. This in-process research and development had not reached technological feasibility and had no alternative future use. Additional development subsequent to the acquisition date principally relates to development of browser and toolbar technology that would allow users into Yahoo! sites without typing URLs or retrieving bookmarks, creation of the user interface, development of customization screens and procedures, and establishment of data links. The Company expects the development of this technology to be completed in the third quarter of 2000. Future research and development costs are not expected to be material to Yahoo!'s financial position or results of operations. In addition, if this technology is not successfully developed, Yahoo!'s revenues and profitability would not be materially adversely affected. The remaining purchase price of approximately $100,000 was allocated to the work force in place and is being amortized over the employment contract period. Tangible assets acquired and liabilities assumed were not material to the Company's financial statements.</FONT></P> <P><FONT SIZE=2>In February 1996, the Company and Rogers Media Inc. ("Rogers") signed the Yahoo! Canada Affiliation Agreement whereby Yahoo! licensed certain intellectual property and development rights to Rogers, which Rogers utilized to operate Yahoo! Canada. On March 1, 1999, this agreement was terminated, as were all licenses and other rights and obligations granted under the agreement. As part of this agreement, Yahoo! acquired the Yahoo! Canada business including the URL, www.yahoo.ca.com, and existing advertising relationships from Rogers. Total consideration was $9 million in cash and the issuance of a note payable for $9 million which was settled in April 1999. The Company recorded an intangible asset of approximately $18 million which is being amortized over 10 years.</FONT></P> <P><FONT SIZE=2>In connection with the acquisition of ISSG, approximately $1.2 million of the purchase price was allocated to in-process research and development. This in-process research and development had not reached technological feasibility and had no alternative future use. Additional development subsequent to the acquisition date principally relates to the development and further adaptation of the technology to enhance the Company's overall communications strategy. The Company expects the development of this technology to be completed in the second quarter of 2000. Future research and development costs are not expected to be material to Yahoo!'s financial position or results of operations. In addition, if this technology is not successfully developed, Yahoo!'s revenues and profitability would not be materially adversely affected. Of the remaining purchase price, $12.1 million was allocated to goodwill and other intangible assets and is being amortized on a straight-line basis over five years while $0.8 million was allocated to tangible assets acquired and liabilities assumed.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=3><B>Note 6</B></FONT><FONT SIZE=2>JOINT VENTURES</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Yahoo! Japan.</B></FONT><FONT SIZE=2> During April 1996, the Company signed a joint venture agreement with SOFTBANK whereby Yahoo! Japan Corporation ("Yahoo! Japan") was formed to establish and manage in Japan a Japanese version of the Yahoo! Internet Guide, develop related Japanese online navigational services, and conduct other related business. The Company's ownership interest in the joint venture upon inception was 40%. During November 1997, Yahoo! Japan completed its initial public offering 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's net assets. During March 1999, Yahoo! Japan completed a secondary public offering and the Company invested an additional $5.9 million in Yahoo! Japan common stock in order to maintain its 34% ownership. The investment is being accounted for using the equity method and the Company's share of net income, to date, has not been significant. At December 31, 1999, the carrying value of the investment was $10.6 million and is recorded in other assets. The fair value of the Company's 34% ownership in Yahoo! Japan, based on the quoted trading price, was approximately $8.4 billion at December 31, 1999.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>GeoCities Japan.</B></FONT><FONT SIZE=2> During November 1997, the Company and SOFTBANK formed a joint venture called GeoCities Japan Corporation ("GeoCities Japan") to create and manage a Japanese version of the GeoCities Web site. In</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>43</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=7,SEQ=43,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=329540,FOLIO=43,FILE='DISK004:[00PAL6.00PAL1236]FI1236A.;27',USER='DNICHOL',CD='29-MAR-2000;17:20 --> <P><FONT SIZE=2>accordance with the joint venture agreement, the Company purchased 40% of GeoCities Japan for approximately $645,000 and licensed certain intellectual properties for the purpose of localizing the Japanese version of GeoCities to GeoCities Japan. The joint venture agreement remains in effect perpetually, provided that, if as of April 1, 2001, or any April 1 thereafter; (i) GeoCities Japan has sustained net losses for the four consecutive fiscal quarters, and (ii) the Company and SOFTBANK differ with respect to the future business plan of GeoCities Japan, then each party shall have the right to terminate the Joint Venture with 90-days notice. The investment is being accounted for using the equity method and the Company's share of net loss, to date, has been immaterial. See Note 11.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Broadcast.com Japan.</B></FONT><FONT SIZE=2> During January 1999, the Company and SOFTBANK formed a joint venture called broadcast.com japan k.k. ("broadcast.com japan") to aggregate and broadcast Japanese language-based audio and video programming to Internet users and sell the Company's Internet and intranet broadcasting services to business customers in Japan. In accordance with the joint venture agreement, the Company purchased 40% of broadcast.com japan for approximately $2.0 million and licensed certain intellectual properties for the purpose of localizing the Japanese version of broadcast.com to broadcast.com japan. During December 1999, the Company invested an additional $13.3 million in broadcast.com japan in order to maintain its 40% ownership. The investment is being accounted for using the equity method and the Company's share of net loss, to date, has been immaterial. See Note 11.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Yahoo! Europe.</B></FONT><FONT SIZE=2> On November 1, 1996, the Company signed a joint venture agreement 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, 1999. The Company has a majority share of approximately 70% in each of the Yahoo! Europe entities, and therefore, has consolidated their financial results. During 1999, Yahoo! Europe generated income from operations of $7.3 million while during 1998 and 1997, Yahoo! Europe incurred losses from operations of $0.4 million and $1.8 million, respectively. SOFTBANK's interest in the net assets of Yahoo! Europe at December 31, 1999 and 1998, as represented by the minority interest on the balance sheet, was $3.1 million and $0.9 million, respectively.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Yahoo! Korea.</B></FONT><FONT SIZE=2> 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, 1999 and 1998, as represented by the minority interest on the balance sheet, was $0.7 million and $0.4 million, respectively. See Note 11.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Yahoo! Marketplace.</B></FONT><FONT SIZE=2> During August 1996, Yahoo! 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. During May 1997, Yahoo! received a letter from VISA formally expressing its concerns with respect to breach of contract, Yahoo! support obligations, and exclusivity. Yahoo! signed a settlement agreement with the Visa Group in July 1997, prior to the completion of significant business activities and public launch of the property. In connection with this settlement, Yahoo! issued 5,595,848 shares of Yahoo! Common Stock to the Visa Group, for which Yahoo! recorded a one-time, non-cash, pre-tax charge of $21.2 million in the second quarter ended June 30, 1997.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=3><B>Note 7</B></FONT><FONT SIZE=2>STOCKHOLDERS' EQUITY</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Common Stock.</B></FONT><FONT SIZE=2> On July 14, 1998, the Company received proceeds of $250 million in exchange for 10,907,520 newly issued shares of Common Stock through a private placement with SOFTBANK. The shares purchased by SOFTBANK are subject to a pre-existing agreement, entered into in 1996, that prohibits SOFTBANK from purchasing additional shares of the Company's capital stock if such purchase would result in SOFTBANK</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>44</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=8,SEQ=44,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=791576,FOLIO=44,FILE='DISK004:[00PAL6.00PAL1236]FI1236A.;27',USER='DNICHOL',CD='29-MAR-2000;17:20 --> <BR> <P><FONT SIZE=2>owning more than 35% of the Company's capital stock (assuming the exercise of all outstanding options and warrants to purchase capital stock).</FONT></P> <P><FONT SIZE=2>Prior to their acquisitions by Yahoo!, GeoCities and broadcast.com completed initial public offerings and private placements selling the equivalent of 15,696,000 and 8,778,000 shares of Yahoo! Common Stock in 1998 and 1997 for total net proceeds of $127.5 million and $25.7 million, respectively</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Mandatory Redeemable Convertible Preferred Stock.</B></FONT><FONT SIZE=2> Prior to the merger with Yahoo!, GeoCities had six series of mandatory redeemable convertible preferred stock outstanding. Redemption, at the option of the holder, could be elected beginning on January 1, 2000 at an amount equal to the original issue price plus seven percent per annum. The Company has recorded accretion on this preferred stock through the date of the GeoCities initial public offering at which time the preferred stock converted to common stock.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Stock Option Plans.</B></FONT><FONT SIZE=2> Pursuant to the consummation of various acquisitions, the Company has assumed thirteen stock option plans. These assumed stock option plans along with the Company's 1995 Stock Option Plan are collectively referred to as "the Plans". As of December 31, 1999, the Company had fourteen stock-based compensation plans.</FONT></P> <P><FONT SIZE=2>The Plans allow for the issuance of incentive stock options, non-qualified stock options, and stock purchase rights to purchase a maximum of 275 million shares of the Company's Common Stock. Under the Plans, incentive stock options may be granted to employees, directors, and officers of the Company and non-qualified stock options and stock purchase rights may be granted to consultants, employees, directors, and officers of the Company. Options granted under the Plans are for periods not to exceed ten years, and must be issued at prices not less than 100% and 85%, for incentive and nonqualified stock options, respectively, of the fair market value of the stock on the date of grant as determined by the Board of Directors. Options granted to stockholders who own greater than 10% of the outstanding stock are for periods not to exceed five years and must be issued at prices not less than 110% of the fair market value of the stock on the date of grant as determined by the Board of Directors. Options granted under the Plans generally vest 25% after the first year of service and ratably each month over the remaining thirty-six month period.</FONT></P> <P><FONT SIZE=2>The 1996 Directors' Stock Option Plan (the "Directors' Plan") provides for the issuance of up to 2.4 million non-statutory stock options to non-employee directors of the Company. Each person who becomes a non-employee director of the Company will automatically be granted a non-statutory option (the "First Option") to purchase shares of Common Stock upon the date on which such person first becomes a director. Thereafter, each director of the Company will be granted an annual option (the "Annual Option") to purchase shares of Common Stock. Options under the Directors' Plan will be granted at the fair market value of the stock on the date of grant as determined by the Board of Directors and will vest in equal monthly installments over four years, in the case of the First Option, or at the end of four years in the case of the Annual Option. Options granted under the Directors' Plan are for periods not to exceed 10 years.</FONT></P> <P><FONT SIZE=2>Activity under the Company's stock option plans is summarized as follows (in thousands, except per share amounts):</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="49%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="38%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="15%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Available<BR> for<BR> Grant</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="20%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Options<BR> Outstanding</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="20%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Weighted<BR> Average Price<BR> per Share</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="38%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="59%" COLSPAN=6 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Balance at December 31, 1996</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>45,808</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>79,518</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>0.48</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Additional shares reserved</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>55,178</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Options granted</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>(46,403</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>46,403</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>3.98</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Options exercised</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(19,374</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>0.27</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Options canceled</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>1,591</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(1,591</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>0.96</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="38%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="59%" COLSPAN=6 ALIGN="RIGHT"><HR NOSHADE></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Balance at December 31, 1997</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>56,174</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>104,956</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>2.05</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Additional shares reserved</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>16,490</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Options granted</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>(53,331</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>53,331</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>22.92</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Options exercised</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(22,695</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>1.37</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Options canceled</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>6,389</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(6,389</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>5.42</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="38%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="59%" COLSPAN=6 ALIGN="RIGHT"><HR NOSHADE></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Balance at December 31, 1998</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>25,722</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>129,203</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>10.61</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Additional shares reserved</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>80,000</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Options granted</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>(37,428</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>37,428</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>82.07</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Options exercised</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(33,355</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>6.99</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Options canceled</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>8,706</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(8,706</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>11.20</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Options forfeited</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>(7,340</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="38%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="59%" COLSPAN=6 ALIGN="RIGHT"><HR NOSHADE></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%"><FONT SIZE=1>Balance at December 31, 1999</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>69,660</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>124,570</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=1>32.45</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="38%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="59%" COLSPAN=6 ALIGN="RIGHT"><HR NOSHADE></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=2>For the year ended December 31, 1999, the options forfeited totaling 7.3 million shares represent stock options granted to former employees from various entities that were acquired by the Company. Prior to their respective acquisition date, these acquired entities had</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>45</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=9,SEQ=45,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=69385,FOLIO=45,FILE='DISK004:[00PAL6.00PAL1236]FI1236A.;27',USER='DNICHOL',CD='29-MAR-2000;17:20 --> <P><FONT SIZE=2>granted options to their employees from their respective stock option plans. As employees terminated their employment subsequent to the respective acquisitions, the employees' outstanding stock options were canceled, and simultaneously forfeited, since these options are no longer available for grant.</FONT></P> <P><FONT SIZE=2>The following table summarizes information concerning outstanding and exercisable options at December 31, 1999 (in thousands, except per share amounts):</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="93%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="16%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Range of<BR> Exercise Prices</B></FONT><BR></TH> <TH WIDTH="7%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="11%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Number<BR> Outstanding</B></FONT><BR></TH> <TH WIDTH="7%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Average Remaining<BR> Contractual Life<BR> (in years)</B></FONT><BR></TH> <TH WIDTH="7%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Weighted Average<BR> Exercise Price</B></FONT><BR></TH> <TH WIDTH="7%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Number<BR> Exercisable</B></FONT><BR></TH> <TH WIDTH="7%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Weighted Average<BR> Exercise Price</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="100%" COLSPAN=13 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="TOP"> <TD WIDTH="16%"><FONT SIZE=2>Less than $0.01</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>12,009</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>5.6</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>0.00</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>11,977</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>0.00</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="16%"><FONT SIZE=2>$0.02 - $0.84</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>12,805</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>6.2</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>0.43</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10,851</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>0.43</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="16%"><FONT SIZE=2>$0.84 - $1.67</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>8,160</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>6.6</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1.34</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>4,139</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1.35</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="16%"><FONT SIZE=2>$1.67 - $6.74</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>21,220</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>7.7</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>4.64</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>5,634</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>4.81</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="16%"><FONT SIZE=2>$6.74 - $18.05</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>11,895</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>8.3</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>12.19</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2,485</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>11.67</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="16%"><FONT SIZE=2>$19.63 - $49.50</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>21,276</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>8.8</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>36.64</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>4,379</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>38.53</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="16%"><FONT SIZE=2>$50.98 - $63.75</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2,771</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>9.2</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>57.31</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>277</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>51.89</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="16%"><FONT SIZE=2>$65.75 - $71.91</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>16,924</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>9.6</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>71.44</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>98</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>68.41</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="16%"><FONT SIZE=2>$73.14 - $195.13</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>17,510</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>9.5</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>93.37</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>35</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>115.19</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="16%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="78%" COLSPAN=11 ALIGN="RIGHT"><HR NOSHADE></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="16%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>124,570</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>8.1</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>32.45</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>39,875</FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>6.53</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="16%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="7%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="78%" COLSPAN=11 ALIGN="RIGHT"><HR NOSHADE></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=2>Options to purchase approximately 30.2 million shares and 18.4 million shares were exercisable at December 31, 1998 and 1997, respectively. The weighted average exercise prices per share for options exercisable at December 31, 1998 and 1997 were $1.40 and $0.52, respectively. Through December 31, 1999, Yahoo! and certain acquired entities recorded compensation expense related to certain stock options issued with exercise prices below the fair market value of the related common stock. The Company recorded compensation expense in the amount of $3.0 million, $2.2 million, and $1.2 million in 1999, 1998, and 1997, respectively. As of December 31, 1999, approximately $0.7 million remains to be amortized over the remaining vesting periods of the options.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Employee Stock Purchase Plan.</B></FONT><FONT SIZE=2> Effective March 6, 1996, the Company's Board of Directors adopted the Employee Stock Purchase Plan (the "Purchase Plan"), which provides for the issuance of a maximum of 3.6 million shares of Common Stock. Eligible employees can have up to 15% of their earnings withheld, up to certain maximums, to be used to purchase shares of the Company's Common Stock on every December 31st and June 30th. The price of the Common Stock purchased under the Purchase Plan will be equal to 85% of the lower of the fair market value of the Common Stock on the commencement date of each six month offering period or the specified purchase date. During 1999, 96,000 shares were purchased at prices from $52.70 to $75.33 per share. During 1998, 252,000 shares were purchased at prices from $7.36 to $18.05 per share. During 1997, 1,074,000 shares were purchased at prices from $0.93 to $2.42 per share. At December 31, 1999, 2.2 million shares were available under the Purchase Plan for future issuance.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Stock Compensation.</B></FONT><FONT SIZE=2> The Company accounts for stock-based compensation in accordance with the provisions of APB 25. Had compensation expense been determined based on the fair value at the grant dates, as prescribed in SFAS 123, the Company's results would have been as follows (in thousands, except per share amounts):</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="50%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="36%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="18%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1997</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="36%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="58%" COLSPAN=8 ALIGN="CENTER"><HR NOSHADE></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="36%"><FONT SIZE=1>Net income (loss)</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="36%"><FONT SIZE=1>As reported</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>61,133</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(12,674</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(43,376</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="36%"><FONT SIZE=1>Pro forma</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(256,023</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(63,529</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(50,043</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="36%"><FONT SIZE=1> <BR> Net income (loss) per share:</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> <BR> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> <BR> </FONT></TD> <TD WIDTH="14%"><FONT SIZE=1> <BR> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> <BR> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> <BR> </FONT></TD> <TD WIDTH="12%"><FONT SIZE=1> <BR> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> <BR> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> <BR> </FONT></TD> <TD WIDTH="12%"><FONT SIZE=1> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="36%"><FONT SIZE=1>As reported – basic</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>0.12</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(0.03</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(0.11</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="36%"><FONT SIZE=1>Pro forma – basic</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(0.50</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(0.15</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(0.13</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="36%"><FONT SIZE=1>As reported – diluted</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>0.10</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(0.03</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(0.11</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="36%"><FONT SIZE=1>Pro forma – diluted</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(0.50</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(0.15</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(0.13</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=2>The fair value of option grants is determined using the Black-Scholes model. The weighted average fair market value of an option granted during 1999, 1998, and 1997 was $41.77, $12.06, and $1.91, respectively. The following range of assumptions was used to perform the calculations: expected life of 36 months in 1999, 1998, and 1997; risk-free interest rate ranges of 4.6% to 6.1%</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>46</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=10,SEQ=46,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=607757,FOLIO=46,FILE='DISK004:[00PAL6.00PAL1236]FI1236A.;27',USER='DNICHOL',CD='29-MAR-2000;17:20 --> <P><FONT SIZE=2>during 1999, 4.2% to 5.6% during 1998, and 5.6% to 6.6% during 1997; expected volatility of 71% in 1999, 67% in 1998, and 59% in 1997; and no expected dividend yield for the three years ended December 31, 1999. Because additional stock options are expected to be granted each year, the above pro forma disclosures are not representative of pro forma effects on reported financial results for future years.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=3><B>Note 8</B></FONT><FONT SIZE=2>SEGMENT AND GEOGRAPHIC INFORMATION</FONT></P> <P><FONT SIZE=2>Based on the criteria established by SFAS 131, "Disclosures about Segments of an Enterprise and Related Information," the Company operates in two principal business segments globally. In accordance with SFAS 131, the Company is required to describe its reportable segments and provide data that is consistent with the data made available to the Company's management to assess performance and make decisions. The Company does not allocate any operating costs to its business services segment as management does not use this information to measure the performance of the operating segment. Management does not believe that allocating these expenses is material in evaluating the segment's performance. Information from the internal management reports may differ from the amounts reported under generally accepted accounting principles due to certain corporate level adjustments related to reserves for potential under-delivery of minimum guaranteed impressions.</FONT></P> <P><FONT SIZE=2>Summarized information by segment for 1999, 1998, and 1997, as excerpted from the internal management reports, is as follows (in thousands):</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="50%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="30%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="20%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="20%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="18%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1997</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="30%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH> <TH WIDTH="4%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="66%" COLSPAN=8 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2>Net revenues:</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="14%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2>Advertising</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>532,219</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>226,301</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>78,397</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2>Business services</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>56,389</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>18,799</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>5,711</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="66%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>588,608</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>245,100</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>84,108</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="66%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=2>Enterprise-wide information is provided in accordance with SFAS 131. Revenue is attributed to individual countries according to the international online property that generated the revenue. No single foreign country or geographic area accounted for more than 10% of net revenues in 1999, 1998, and 1997. Property and equipment information is based on the physical location of the assets:</FONT></P> <P><FONT SIZE=2>The following table sets forth net revenues and gross property and equipment information for geographic areas (in thousands):</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="53%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="30%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="19%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>U.S.</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>International</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="19%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>Total</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="30%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="67%" COLSPAN=8 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2>1999</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="19%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2>Net revenues</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>529,553</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>59,055</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>588,608</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2>Long-lived assets</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>85,476</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>4,818</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>90,294</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2>1998</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="19%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2>Net revenues</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>228,897</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>16,203</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>245,100</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2>Long-lived assets</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>45,220</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>1,938</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>47,158</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2>1997</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="19%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2>Net revenues</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>80,395</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>3,713</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>84,108</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="30%"><FONT SIZE=2>Long-lived assets</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>17,955</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>665</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>18,620</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT COLOR="#C226FF" SIZE=3><B>Note 9</B></FONT><FONT SIZE=2>INCOME TAXES</FONT></P> <P><FONT SIZE=2>The components of income (loss) before taxes are as follows (in thousands):</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="51%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="31%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="63%" COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1>Year Ended December 31,</FONT><HR NOSHADE></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="31%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="20%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="17%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="19%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1997</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="31%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="63%" COLSPAN=8 ALIGN="CENTER"><HR NOSHADE></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2>United States</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>100,760</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>6,456</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(40,818</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2>Foreign</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>1,130</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(1,303</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(2,558</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="63%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>101,890</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>5,153</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(43,376</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="31%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="63%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=2>The provision for income taxes is comprised of the following (in thousands):</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="47%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="47%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="4%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="46%" COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1>Year Ended December 31,</FONT><HR NOSHADE></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="47%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="19%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT><BR></TH> <TH WIDTH="8%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="19%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="47%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="4%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="46%" COLSPAN=5 ALIGN="CENTER"><HR NOSHADE></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2>Current:</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2>Federal</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>40,835</FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>20,333</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2>State</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>4,779</FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,937</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2>Foreign</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>2,383</FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="46%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>47,997</FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>22,270</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="46%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2>Deferred:</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2>Federal</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(6,335</FONT></TD> <TD WIDTH="8%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(3,616</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2>State</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(905</FONT></TD> <TD WIDTH="8%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(827</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="46%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(7,240</FONT></TD> <TD WIDTH="8%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(4,443</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="46%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2>Total provision</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>40,757</FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>17,827</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="47%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="46%" COLSPAN=5 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=2>No provision for income taxes was recorded for the year ended December 31, 1997 as the Company had net operating losses.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>47</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=11,SEQ=47,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=1034685,FOLIO=47,FILE='DISK004:[00PAL6.00PAL1236]FI1236A.;27',USER='DNICHOL',CD='29-MAR-2000;17:20 --> <P><FONT SIZE=2>The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate as follows (in thousands):</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="50%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="39%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="4%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="55%" COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1>Year Ended December 31,</FONT><HR NOSHADE></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="39%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1997</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="39%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="4%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="55%" COLSPAN=8 ALIGN="CENTER"><HR NOSHADE></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="39%"><FONT SIZE=1>Income tax at the federal statutory rate of 35%</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>35,662</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>1,804</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(15,182</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="39%"><FONT SIZE=1>State income tax, net of federal benefit</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>4,779</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>1,473</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(1,896</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="39%"><FONT SIZE=1>Non-deductible acquisition-related charges</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>26,433</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>8,521</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="39%"><FONT SIZE=1>Research tax credits</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(3,000</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>(1,155</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="39%"><FONT SIZE=1>Change in valuation allowances</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(23,292</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>7,085</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>15,660</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="39%"><FONT SIZE=1>Other</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>175</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>99</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>1,418</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="55%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="39%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>40,757</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>17,827</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="55%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=2>Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the net deferred income tax assets are as follows (in thousands):</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="50%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="35%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="59%" COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1>Year Ended December 31,</FONT><HR NOSHADE></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="35%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="18%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="18%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>1997</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="35%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="59%" COLSPAN=8 ALIGN="CENTER"><HR NOSHADE></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=1>Deferred income tax assets:</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=1>Net operating loss and credit carryforwards</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>886,624</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>171,003</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>33,984</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=1>Non-deductible reserves and expenses</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>9,880</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>5,147</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>4,999</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="35%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="59%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=1>Gross deferred tax assets</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>896,504</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>176,150</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>38,983</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=1>Valuation allowance</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(807,231</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(169,826</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(38,614</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="35%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="59%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>89,273</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>6,324</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>369</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="35%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="59%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=1>Deferred income tax liabilities:</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=1>Unrealized investment gains</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(86,051</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(595</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=1>Intangible assets</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(3,222</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(4,833</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=1>Other</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(896</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(369</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="35%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="59%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=1>Gross deferred tax liabilities</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(89,273</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>(6,324</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1>)</FONT></TD> <TD WIDTH="4%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>(369</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="35%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="59%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="BOTTOM"> <TD WIDTH="35%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=1>$</FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=1>–</FONT></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="35%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="59%" COLSPAN=8 ALIGN="RIGHT"><HR NOSHADE></TD> <TD WIDTH="2%"><FONT SIZE=1> </FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=2>As of December 31, 1999, the Company's federal and state net operating loss carryforwards for income tax purposes were approximately $2.3 billion and $1.1 billion, respectively. If not utilized, the federal net operating loss carryforwards will begin to expire in 2010, and the state net operating loss carryforwards will begin to expire in 2002. The Company's federal and state research tax credit carryforwards for income tax purposes are approximately $13.7 million and $11.9 million, respectively. If not utilized, the federal tax credit carryforwards will begin to expire in 2010. Approximately $71 million of net operating loss carryforwards relate to acquired entities and expire beginning in 2010. The Company has a valuation allowance of $812.6 million as of December 31, 1999 for deferred tax assets for which realization is not more-likely-than-not.</FONT></P> <P><FONT SIZE=2>Deferred tax assets of approximately $881.0 million as of December 31, 1999 pertain to certain net operating loss carryforwards and credit carryforwards resulting from the exercise of employee stock options. When recognized, the tax benefit of these loss and credit carryforwards are accounted for as a credit to additional paid-in capital rather than a reduction of the income tax provision. Deferred tax assets include approximately $5.0 million related to net operating loss carryforwards in various foreign jurisdictions. These carryforwards will expire if not utilized.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=3><B>Note 10</B></FONT><FONT SIZE=2>COMMITMENTS AND CONTINGENCIES</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Operating Leases.</B></FONT><FONT SIZE=2> During 1999, the Company entered into a non-cancelable operating lease agreement that will provide the Company with additional office space at its existing Santa Clara, California location. Additionally during 1999, the company entered into various other non-cancelable operating lease agreements for its sales offices throughout the U.S. and its international subsidiaries. Future minimum lease payments under non-cancelable operating leases with initial terms of one year or more are $10.2 million in 2000, $9.7 million in 2001, $9.2 million in 2002, $9.2 million in 2003, $6.8 million in 2004, and $10.5 million thereafter. Certain of the Company's lease agreements have a five year renewal option from the date of expiration. Total minimum rental payments aggregate $55.6 million. Rent expense under operating leases totaled $9.4 million, $5.5 million, and $2.9 million during 1999, 1998, and 1997, respectively.</FONT></P> <P><FONT SIZE=2>During 1999, the Company entered into agreements for the development of an office complex in Sunnyvale, California, to be constructed in 2000 to 2003, and to serve as the Company's new headquarters. Upon substantial completion of the buildings, the Company will collateralize a lease facility with deposited funds equal to the amount of the funds drawn on the facility by the lessors. Rent obligations for the buildings will bear a direct relationship to the lessors' carrying costs, estimated to range from $300 to $350 million. The amount of the</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>48</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=12,SEQ=48,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=252310,FOLIO=48,FILE='DISK004:[00PAL6.00PAL1236]FI1236A.;27',USER='DNICHOL',CD='29-MAR-2000;17:20 --> <P><FONT SIZE=2>rent obligation is contingent upon future events and is not included in the above future minimum lease commitments under non-cancelable operating leases.</FONT></P> <P><FONT SIZE=2>From time to time, the Company is subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks, copyrights and other intellectual property rights, and a variety of claims arising in connection with the Company's email, message boards, auction sites, shopping services, and other communications and community features, such as claims alleging defamation or invasion of privacy. In addition, from time to time, third parties assert patent infringement claims against the Company in the form of letters, lawsuits and other forms of communication. Currently, the Company is engaged in two lawsuits regarding patent issues and has been notified of a number of other potential patent disputes.</FONT></P> <P><FONT SIZE=2>In addition to intellectual property claims, the Company has also been advised that the Federal Trade Commission (the "FTC") is conducting an inquiry into certain of the Company's consumer information practices to determine whether the Company has complied with applicable FTC consumer protection regulations. In connection with this inquiry, the FTC has requested that the Company provide information about its practices and submit various documents and other materials to the FTC.</FONT></P> <P><FONT SIZE=2>The Company is not currently aware of any legal proceedings or claims that the Company believes are likely to have a material adverse effect on the Company's financial position or results of operations. However, the Company may incur substantial expenses in defending against third party claims or any action by the FTC. In the event of a determination adverse to the Company, the Company may incur substantial monetary liability, and be required to change its business practices. Either of these could have a material adverse effect on the Company's financial position and results of operations.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=3><B>Note 11</B></FONT><FONT SIZE=2>SUBSEQUENT EVENTS</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Yahoo! Japan.</B></FONT><FONT SIZE=2> During January 2000, Yahoo! Japan announced that it had agreed to acquire GeoCities Japan and broadcast.com japan for 1,100 shares of Yahoo! Japan common stock. Yahoo! owns 40% of GeoCities Japan and 44% of broadcast.com japan. As a result of the acquisitions which closed on March 1, 2000, Yahoo! will record goodwill, to be amortized over seven years, and a gain from investments of approximately $40 million. Yahoo! continues to own approximately 34% of Yahoo! Japan.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Yahoo! Korea.</B></FONT><FONT SIZE=2> During March 2000, the Company invested an additional $61 million in Yahoo! Korea which increased Yahoo!'s ownership from 60% to 67%. As a result, Yahoo! will record goodwill of approximately $20 million which will be amortized over seven years.</FONT></P> <P><FONT COLOR="#C226FF" SIZE=1><B>Increase in Authorized Shares.</B></FONT><FONT SIZE=2> At the Company's Annual Meeting of Stockholders which is scheduled for May 12, 2000, stockholders will vote to amend the Company's certificate of incorporation by increasing the number of authorized shares of Common Stock from 900 million to five billion.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>49</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=13,SEQ=49,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=1005543,FOLIO=49,FILE='DISK004:[00PAL6.00PAL1236]FI1236A.;27',USER='DNICHOL',CD='29-MAR-2000;17:20 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <BR> <P><FONT COLOR="#C226FF" SIZE=4><B>Schedule II – Valuation and Qualifying Accounts</B></FONT><BR><FONT SIZE=1>Years Ended December 31, 1999, 1998, and 1997<BR> (in thousands)</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="91%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="42%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="11%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Balance at<BR> Beginning of Year</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="11%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Charged to Costs<BR> and Expenses</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="12%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Write-Offs Net<BR> of Recoveries</B></FONT><BR></TH> <TH WIDTH="4%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Balance at<BR> End of Year</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="42%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="56%" COLSPAN=11 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="TOP"> <TD WIDTH="42%"><FONT SIZE=2>Allowance for Doubtful Accounts</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="10%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="42%"><FONT SIZE=2>1999</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>5,947</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>10,264</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>4,889</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>11,322</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="42%"><FONT SIZE=2>1998</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>2,772</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>6,953</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>3,778</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>5,947</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="42%"><FONT SIZE=2>1997</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>749</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>2,996</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>973</FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>2,772</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P ALIGN="CENTER"><FONT SIZE=2>50</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=50,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=346627,FOLIO=50,FILE='DISK004:[00PAL6.00PAL1236]GA1236A.;14',USER='ATOBAK',CD='28-MAR-2000;19:36 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <BR> <P><FONT COLOR="#C226FF" SIZE=4><B>Quarterly Financial Data</B></FONT><BR><FONT SIZE=1>(unaudited) (in thousands, except per share amounts)</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="98%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="39%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="56%" COLSPAN=11 ALIGN="CENTER"><FONT SIZE=1>Quarter Ended</FONT><HR NOSHADE></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="39%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>March 31</B></FONT><BR></TH> <TH WIDTH="5%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>June 30</B></FONT><BR></TH> <TH WIDTH="5%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>September 30</B></FONT><BR></TH> <TH WIDTH="5%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><FONT COLOR="#C226FF" SIZE=1><B>December 31</B></FONT><BR></TH> <TH WIDTH="3%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="39%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1> </FONT><BR></TH> <TH WIDTH="2%"><FONT SIZE=1> </FONT></TH> <TH WIDTH="56%" COLSPAN=11 ALIGN="CENTER"><HR NOSHADE></TH> <TH WIDTH="3%"><FONT SIZE=1> </FONT></TH> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT COLOR="#C226FF" SIZE=1><B>1999</B></FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Net revenues</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>103,878</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>128,569</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>155,078</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>201,083</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Gross profit</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>83,105</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>103,234</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>128,882</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>171,588</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Net income (loss)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,796</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> (a)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(263</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2>)(b)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>14,862</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> (c)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>44,738</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> (d)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Net income (loss) per share – basic*</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>0.00</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> (a)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>0.00</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> (b)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.03</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> (c)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>0.08</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> (d)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Net income (loss) per share – diluted*</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>0.00</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> (a)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>0.00</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> (b)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.03</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> (c)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>0.07</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> (d)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Shares used in per share calculation – basic*</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>504,048</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>511,812</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>519,060</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>528,870</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Shares used in per share calculation – diluted*</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>594,926</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>511,812</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>592,672</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>606,002</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2> <BR></FONT> <FONT COLOR="#C226FF" SIZE=1><B>1998</B></FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="9%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="8%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Net revenues</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>37,013</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>50,520</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>66,290</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>91,277</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Gross profit</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>28,385</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>38,599</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>52,175</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>73,787</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Net income (loss)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(3,060</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(17,703</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2>)(e)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>4,249</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> (f)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>3,840</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> (g)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Net income (loss) per share – basic*</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(0.01</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(0.04</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2>)(e)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.01</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> (f)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>0.01</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> (g)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Net income (loss) per share – diluted*</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(0.01</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2>)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(0.04</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2>)(e)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.01</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> (f)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>0.01</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> (g)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Shares used in per share calculation – basic*</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>395,698</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>409,508</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>464,808</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>489,944</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="39%"><FONT SIZE=2>Shares used in per share calculation – diluted*</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>395,698</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>409,508</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>559,684</FONT></TD> <TD WIDTH="5%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>585,818</FONT></TD> <TD WIDTH="3%"><FONT SIZE=2> </FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <BR> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="83%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="TOP"> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>Note:</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="94%"><FONT SIZE=1>The quarterly financial data for the quarters presented above has been restated to reflect the acquisitions of Net Roadshow, Encompass, GeoCities, Online Anywhere, and broadcast.com which were accounted for as poolings of interests.</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>*</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="94%"><FONT SIZE=1>Reflects the two-for-one stock split effective February 2000.</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>(a)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="94%"><FONT SIZE=1>Net income and net income per share include in-process research and development of $9.8 million incurred in connection with the January 1999 acquisition of Log-Me-On and amortization of intangible assets and purchased technology of $5.2 million.</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>(b)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="94%"><FONT SIZE=1>Net loss and net loss per share include acquisition related costs of $56.1 million which are primarily attributable to the May 1999 acquisition of GeoCities and amortization of intangible assets and purchased technology of $6.2 million.</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>(c)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="94%"><FONT SIZE=1>Net income and net income per share include a acquisition related costs of $22.1 million incurred in connection with the July 1999 acquisition of broadcast.com and amortization of intangible assets and purchased technology of $6.0 million.</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>(d)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="94%"><FONT SIZE=1>Net income and net income per share include in-process research and development of $1.2 million incurred in connection with the acquisition of ISSG, $10.3 million of employer payroll taxes assessed on gains from stock option exercises realized by employees and amortization of intangible assets and purchased technology of $6.0 million, offset by a $2.1 million reversal of previously recorded acquisition-related charges.</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>(e)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="94%"><FONT SIZE=1>Net loss and net loss per share include in-process research and development of $15.0 million incurred in connection with the June 1998 acquisition of Viaweb Inc. and amortization of $0.7 million on related intangible assets and purchased technology.</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>(f)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="94%"><FONT SIZE=1>Net income and net income per share include amortization of $2.3 million on intangible assets and purchased technology.</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>(g)</FONT></TD> <TD WIDTH="1%"><FONT SIZE=1> </FONT></TD> <TD WIDTH="94%"><FONT SIZE=1>Net income and net income per share include acquisition related costs of $2.1 million incurred in connection with the October 1998 acquisition of Yoyodyne Entertainment, Inc. and $1.5 million in connection with the November 1998 acquisition of SimpleNet, in-process research and development of $2.3 million incurred in connection with the December 1998 acquisition of HyperParallel, Inc., and amortization of $3.1 million on intangible assets and purchased technology.</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P ALIGN="CENTER"><FONT SIZE=2>51</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=51,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=704682,FOLIO=51,FILE='DISK004:[00PAL6.00PAL1236]GC1236A.;9',USER='ATOBAK',CD='28-MAR-2000;19:36 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <H2><FONT SIZE=2> </FONT></H2> <BR> <P><FONT SIZE=2><A NAME="ge1236_item_9._changes_in_and_disagre__ite03576"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</B></FONT></P> <P><FONT SIZE=2>None.</FONT></P> <BR> <P><FONT SIZE=2><A NAME="ge1236_part_iii"> </A></FONT> <FONT COLOR="#C226FF" SIZE=4><B>Part III</B></FONT></P> <BR> <P><FONT SIZE=2><A NAME="ge1236_item_10._directors_and___ge102281"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 10. Directors and Executive Officers of the Registrant</B></FONT></P> <P><FONT SIZE=2>Incorporated by reference from the information under the caption "Proposal No. 1 – Election of Directors" in the Registrant's Proxy Statement for its 2000 Annual Meeting of Stockholders. The following sets forth certain information with respect to the other executive officers of Yahoo!:</FONT></P> <P><FONT SIZE=2>Tim Brady (age 31) has served as Senior Vice President, Network Services of the Company since November 1999. Prior to that, Mr. Brady served as the Company's Vice President of Production from October 1997 to November 1999, the Company's Director of Production from January 1996 to October 1997, and the Company's Director of Marketing from April 1995 to December 1995. Mr. Brady also serves on the Board of Directors of The Boyd's Collection Ltd. Mr. Brady holds a B.S. degree in electrical engineering from Stanford University and an M.B.A. from the Harvard Business School.</FONT></P> <P><FONT SIZE=2>David Filo (age 33), Chief Yahoo and a founder of the Company, has served as an officer of the Company since March 1995, and served as a director of the Company from its founding through February 1996. Mr. Filo co-developed Yahoo! in 1994 while working towards his Ph.D. in electrical engineering at Stanford University, and co-founded the Company in 1995. Mr. Filo holds a B.S. degree in computer engineering from Tulane University and a M.S. degree in electrical engineering from Stanford University.</FONT></P> <P><FONT SIZE=2>Heather Killen (age 41) has served as Senior Vice President, International Operations of the Company since November 1999. Prior to that, Ms. Killen served as the Company's Vice President, International from January 1998 to November 1999 and as the Company's Managing Director, European Operations from September 1996 to December 1997. Prior to joining the Company, Ms. Killen was Director, European Online Services for Ziff-Davis, a technology publishing company, from 1994 to 1996, and Director of Business Development for Ziff-Davis from 1992 to 1994. From 1989 to 1991, Ms. Killen was an associate in the Corporate Finance department of Salomon Brothers Inc. Ms. Killen holds degrees from the University of Queensland, the Universite de Paris III, and Columbia Business School.</FONT></P> <P><FONT SIZE=2>Farzad Nazem (age 38) was promoted to Chief Technology Officer in January 1998. Prior to that, he served as the Company's Senior Vice President, Product Development and Site Operations since March 1996. From 1985 to 1996, Mr. Nazem held a number of technical and executive management positions at Oracle Corporation, including, most recently, Vice President of Oracle's Media and Web Server Division and member of the Product Division Management Committee. Prior to that, Mr. Nazem was a member of the technical staff at SYDIS, Inc. and Rolm Corporation. Mr. Nazem holds a B.S. in computer science from California Polytechnic State University.</FONT></P> <P><FONT SIZE=2>Ellen Siminoff (age 32) has served as Senior Vice President, Corporate Development of the Company since November 1999. Prior to that, Ms. Siminoff served as the Company's Vice President, Business Development and Planning from June 1997 to November 1999, and the Company's Director, Communities from February 1996 to June 1997. Prior to joining the Company, Ms. Siminoff was the Online Classifieds Manager for the Los Angeles Times from February 1994 to February 1996. Ms. Siminoff holds an A.B. degree in economics from Princeton University and an M.B.A. from Stanford University.</FONT></P> <P><FONT SIZE=2>Anil Singh (age 41) was promoted to Senior Vice President, Business Operations, and Chief Sales and Marketing Officer in October 1999. Prior to that, Mr. Singh served as the Company's Senior Vice President, Sales since July 1998, Vice President, Sales since December 1996 and Director of Sales since November 1995. Prior to joining the Company, Mr. Singh was Vice President of Sales for Socket Communications from 1994 to 1995. From 1992 to 1994, Mr. Singh was Vice President of Sales for Mountain, Inc. From 1991 to 1992,</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>52</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=52,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=690883,FOLIO=52,FILE='DISK004:[00PAL6.00PAL1236]GE1236A.;7',USER='ATOBAK',CD='28-MAR-2000;19:36 --> <BR> <P><FONT SIZE=2>Mr. Singh was Director of Sales for Novell, Inc. Mr. Singh holds a B.S. degree in computer science from Imperial College at the University of London, England.</FONT></P> <P><FONT SIZE=2>Gary Valenzuela (age 43) has served as the Company's Senior Vice President, Finance and Administration, and Chief Financial Officer since February 1996. From 1994 to 1996, Mr. Valenzuela served as Senior Vice President, Finance and Administration, and Chief Financial Officer of TGV Software, Inc., a publicly held developer of TCP/ IP software products. Prior to joining TGV, Mr. Valenzuela was employed by Pyramid Technology Corporation, a then-publicly held manufacturer of UNIX minicomputers, where he last served as Senior Vice President, Finance and Chief Financial Officer. Mr. Valenzuela holds a B.S. degree in business administration from San Jose State University, and is a Certified Public Accountant in the State of California.</FONT></P> <BR> <P><FONT SIZE=2><A NAME="ge1236_item_11._executive_compensation"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 11. Executive Compensation</B></FONT></P> <P><FONT SIZE=2>Incorporated by reference from the information under the captions "Executive Officer Compensation and Other Matters," "Report of the Compensation Committee of the Board of Directors on Executive Compensation," "Compensation Committee Interlocks and Insider Participation," and "Performance Graph" in the Registrant's Proxy Statement for its 2000 Annual Meeting of Stockholders.</FONT></P> <BR> <P><FONT SIZE=2><A NAME="ge1236_item_12._security_ownership_of__ite02706"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 12. Security Ownership of Certain Beneficial Owners and Management</B></FONT></P> <P><FONT SIZE=2>Incorporated by reference from the information under the captions "Record Date; Voting Securities" and "Information Regarding Beneficial Ownership of Principal Stockholders and Management" in the Registrant's Proxy Statement for its 2000 Annual Meeting of Stockholders.</FONT></P> <BR> <P><FONT SIZE=2><A NAME="ge1236_item_13._certain_relati__ge102124"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 13. Certain Relationships and Related Transactions</B></FONT></P> <P><FONT SIZE=2>Incorporated by reference from the information under the captions "Certain Transactions" and "Compensation Committee Interlocks and Insider Participation" in the Registrant's Proxy Statement for its 2000 Annual Meeting of Stockholders.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>53</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=2,SEQ=53,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=958031,FOLIO=53,FILE='DISK004:[00PAL6.00PAL1236]GE1236A.;7',USER='ATOBAK',CD='28-MAR-2000;19:36 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <H2><FONT SIZE=2> </FONT></H2> <BR> <P><FONT SIZE=2><A NAME="gg1236_part_iv"> </A></FONT> <FONT COLOR="#C226FF" SIZE=4><B>Part IV</B></FONT></P> <P><FONT SIZE=2><A NAME="gg1236_item_14._exhibits,_financial_s__ite02564"> </A></FONT> <FONT COLOR="#C226FF" SIZE=2><B>Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K</B></FONT></P> <DL compact> <DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>The following documents are filed as part of this report: <BR><BR></FONT> <DL compact> <DT><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Consolidated Financial Statements: See Index to Consolidated Financial Statements at Item 8 on page 31 of this report. <BR><BR></FONT></DD><DT><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Financial Statement Schedule: See Index to Consolidated Financial Statements at Item 8 on page 31 of this report. <BR><BR></FONT></DD><DT><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>Exhibits are incorporated herein by reference or are filed with this report as indicated below (numbered in accordance with Item 601 of Regulation S-K):</FONT></DD></DL> </DD></DL> <BR> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="81%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="10%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Exhibit<BR> Number</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="88%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Description</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="100%" COLSPAN=3 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2.1</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Agreement and Plan of Merger, dated as of January 27, 1999 by and among the Registrant, Home Page Acquisition Corp. and GeoCities (without exhibits) (Filed as Exhibit 1 to the GeoCities Schedule 13D, dated February 8, 1999 and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2.2</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Agreement and Plan of Merger, dated as of March 31, 1999 by and among the Registrant, Alamo Acquisition Corp. and broadcast.com inc. (without exhibits) (Filed as Exhibit 1 to the broadcast.com Schedule 13D, dated April 9, 1999 and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2.3</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Agreement and Plan of Merger dated June 4, 1998 by and among the Registrant, XY Acquisition Corporation, and Viaweb Inc. (Filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K, dated June 12 1998, and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2.4</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Agreement and Plan of Merger dated as of October 9, 1998, by and among the Registrant, YO Acquisition Corporation, and Yoyodyne Entertainment, Inc. (Filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K, dated October 23, 1998 [the 8-K dated October 23, 1998] and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2.5</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Amendment to the Agreement and Plan of Merger dated as of October 19, 1998, by and among the Registrant, YO Acquisition Corporation, and Yoyodyne Entertainment, Inc. (Filed as Exhibit 2.2 to the 8-K dated October 23, 1998 and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2.6</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Agreement and Plan of Merger dated as of May 19, 1999 among the Registrant, Scarlett Acquisition Corporation, and Encompass, Inc. (Filed as Exhibit 99.2 to the Registrant's Current Report on Form 8-K, dated May 26, 1999 [the 8-K dated May 26, 1999] and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2.7</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Agreement and Plan of Merger dated as of May 25, 1999 among the Registrant, Airborne Acquisition Corporation, and Online Anywhere (Filed as Exhibit 99.5 to the 8-K dated May 26, 1999 and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>3.1</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Certificate of Incorporation of Registrant</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>3.2</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Bylaws of Registrant</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.1</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Form of Indemnification Agreement with certain of the Registrant's officers and directors</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.2</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>1995 Stock Plan, as amended (filed herein) and form of stock option agreement (Filed as Exhibit 10.2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1996 [the 1996 10-K] and incorporated herein by reference.)</FONT></TD> </TR> </TABLE> <!-- insert table folio --> <P ALIGN="CENTER"><FONT SIZE=2>54</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=54,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=727391,FOLIO=54,FILE='DISK004:[00PAL6.00PAL1236]GG1236A.;10',USER='MMEYER',CD='29-MAR-2000;03:49 --> <!-- end of table folio --> <TABLE WIDTH="81%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.3</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Form of Management Continuity Agreement with the Registrant's Executive Officers (Filed as Exhibit 10.3 to the Registrant's Registration Statement on Form SB-2, Registration No. 333-2142-LA, declared effective on April 11, 1996 [the SB-2 Registration Statement] and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.4</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Stock Purchase Agreement dated March 3, 1995 with each of David Filo and Jerry Yang (Filed as Exhibit 10.4 to the SB-2 Registration Statement and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.5</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Series A Preferred Stock Agreement dated April 7, 1995 between the Registrant and Purchasers of Series A Preferred Stock (Filed as Exhibit 10.5 to the SB-2 Registration Statement and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.6</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Form of Stock Restriction Agreements dated April 7, 1995 between the Registrant and Jerry Yang and David Filo (Filed as Exhibit 10.6 to the SB-2 Registration Statement and incorporated herein by reference.) </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.7</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Series B Preferred Stock Agreement dated November 22, 1995 between the Registrant and Purchasers of Series B Preferred Stock (Filed as Exhibit 10.7 to the SB-2 Registration Statement and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.8</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Series C Preferred Stock Agreement dated March 12, 1996 between the Registrant and SOFTBANK Holdings Inc. (Filed as Exhibit 10.8 to the SB-2 Registration Statement and incorporated herein by reference.) </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.9</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Second Amended and Restated Investor Rights Agreement dated March 12, 1996 between the Registrant and certain shareholders (Filed as Exhibit 10.9 to the SB-2 Registration Statement and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.10</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Second Amended and Restated Co-Sale Agreement dated March 12, 1996 between the Registrant and certain shareholders (Filed as Exhibit 10.10 to the SB-2 Registration Statement and incorporated herein by reference.) </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.11</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Second Amended and Restated Voting Agreement dated March 12, 1996 between the Registrant and certain shareholders (Filed as Exhibit 10.11 to the SB-2 Registration Statement and incorporated herein by reference.) </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.12†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Publishing Agreement dated June 2, 1995 between the Registrant and IDG Books Worldwide, Inc. (Filed as Exhibit 10.12 to the SB-2 Registration Statement and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.13</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Sublease Agreement dated June 6, 1996 relating to the Registrant's office at 3400 Central Expressway, Suite 201, Santa Clara, California (Filed as Exhibit 10.15 to the 1996 10-K and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.14†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Agreement dated January 15, 1996 between the Registrant and Ziff-Davis Publishing Company (Filed as Exhibit 10.19 to the SB-2 Registration Statement and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.15</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>1996 Employee Stock Purchase Plan and form of subscription agreement (Filed as Exhibit 10.20 to the SB-2 Registration Statement and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.16</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>1996 Directors' Stock Option Plan, as amended (filed herein) and form of option agreement (Filed as Exhibit 10.21 to the SB-2 Registration Statement and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.17†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Yahoo! Canada Affiliation Agreement dated February 29, 1996 between the Registrant and Rogers Multi-Media Inc. (Filed as Exhibit 10.23 to the SB-2 Registration Statement and incorporated herein by reference.) </FONT></TD> </TR> </TABLE> <!-- insert table folio --> <P ALIGN="CENTER"><FONT SIZE=2>55</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=2,SEQ=55,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=548439,FOLIO=55,FILE='DISK004:[00PAL6.00PAL1236]GG1236A.;10',USER='MMEYER',CD='29-MAR-2000;03:49 --> <!-- end of table folio --> <TABLE WIDTH="81%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.18</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Standstill and Voting Agreement dated March 12, 1996 between the Registrant and SOFTBANK Holdings Inc. (Filed as Exhibit 10.26 to the SB-2 Registration Statement and incorporated herein by reference.) </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.19†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Joint Venture Agreement dated April 1, 1996 by and between the Registrant and SOFTBANK Corporation (Filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1996 [the June 30, 1996 10-Q] and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.20†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Yahoo! Japan License Agreement dated April 1, 1996 by and between the Registrant and Yahoo! Japan Corporation (Filed as Exhibit 10.3 to the June 30, 1996 10-Q and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.21†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>SOFTBANK Letter Agreement dated April 1, 1996 by and between the Registrant and SOFTBANK Group (Filed as Exhibit 10.4 to the June 30, 1996 10-Q and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.22†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Joint Venture Agreement dated November 1, 1996 by and between the Registrant and SB Holdings (Europe) Ltd. (Filed as Exhibit 10.30 to the 1996 10-K and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.23†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Yahoo! UK License Agreement dated November 1, 1996 by and between the Registrant and Yahoo! UK (Filed as Exhibit 10.31 to the 1996 10-K and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.24†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Yahoo! Deutschland License Agreement dated November 1, 1996 by and between the Registrant and Yahoo! Deutschland (Filed as Exhibit 10.32 to the 1996 10-K and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.25†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Yahoo! France License Agreement dated November 1, 1996 by and between the Registrant and Yahoo! France (Filed as Exhibit 10.33 to the 1996 10-K and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.26</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Restructuring Agreement dated as of July 29, 1997 among the Registrant, Visa International Service Association, Visa Marketplace, Inc., Sterling Payot Company, and Sterling Payot Capital, L.P. (Filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K, dated July 29, 1997 and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.27</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Joint Venture Agreement, dated August 31, 1997 between the Registrant, SOFTBANK Korea Corporation, SOFTBANK Corporation, and Yahoo! Japan Corporation (Filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 [the September 30, 1997 10-Q] and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.28</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Sublease Agreement, dated September 11, 1997 between the Registrant and Amdahl Corporation (Filed as Exhibit 10.2 to the September 30, 1997 10-Q and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.29</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Four11 Corporation 1995 Stock Option Plan (Filed as Exhibit 4.2 to the Registrant's Registration Statement on Form S-8, Registration No. 333-39105, dated October 30, 1997, and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.30†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Amendment Agreement dated September 17, 1997 by and between the Registrant and SOFTBANK Corporation (Filed as Exhibit 10.39 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 [the 1997 10-K] and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.31†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Amendment to Yahoo! Japan License Agreement dated September 17, 1997 by and between the Registrant and Yahoo! Japan Corporation (Filed as Exhibit 10.40 to the 1997 10-K and incorporated herein by reference.) </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.32†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Services Agreement dated November 30, 1997 by and between Yahoo! Korea Corporation and SOFTBANK Korea Corporation (Filed as Exhibit 10.41 to the 1997 10-K and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.33†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Yahoo! Korea License Agreement dated November 30, 1997 by and between the Registrant, Yahoo! Korea Corporation, and Yahoo! Japan Corporation (Filed as Exhibit 10.42 to the 1997 10-K and incorporated herein by reference.)</FONT></TD> </TR> </TABLE> <!-- insert table folio --> <P ALIGN="CENTER"><FONT SIZE=2>56</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=3,SEQ=56,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=578821,FOLIO=56,FILE='DISK004:[00PAL6.00PAL1236]GG1236A.;10',USER='MMEYER',CD='29-MAR-2000;03:49 --> <!-- end of table folio --> <TABLE WIDTH="81%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.34</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Viaweb Inc. 1997 Stock Option Plan and form of Option Agreement thereunder (Filed as Exhibit 4.2 to the Registrant's Registration Statement on Form S-8, Registration No. 333-56781, dated June 12, 1998 [the S-8 Registration Statement dated June 12, 1998], and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.35</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Forms of Viaweb Inc. 1996 Option Agreements (Filed as Exhibit 4.3 to the S-8 Registration Statement, dated June 12, 1998, and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.36</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Stock Purchase Agreement dated as of July 7, 1998, between the Registrant and SOFTBANK Holdings Inc. (Filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 [the June 30, 1998 10-Q] and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.37</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Amendment to Second Amended and Restated Investor Rights Agreement dated July 7, 1998 among the Registrant, SOFTBANK Holdings Inc., Sequoia Capital VI and Sequioia Technology Partners VI (Filed as Exhibit 10.2 to the June 30, 1998 10-Q and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.38</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Content License Agreement dated January 8, 1998 between the Registrant and ZDNet (Filed as Exhibit 10.3 to the June 30, 1998 10-Q and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.39</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Yoyodyne Entertainment, Inc. 1996 Stock Option Plan and form of Option Agreement thereunder (Filed as Exhibit 4.1 to the Registrant's Registration Statement on Form S-8, Registration No. 333-66067, dated October 23, 1998 and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.40†</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Termination Agreement between the Registrant and Rogers Media Inc. dated \ January 6, 1999 (Filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.41</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Online Anywhere 1997 Stock Plan (Filed as Exhibit 4.1 to the Registrant's Registration Statement on Form S-8, Registration No. 333-81635, dated June 25, 1999 [the S-8 Registration Statement dated June 25, 1999] and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.42</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Encompass, Inc. Stock Option Plan (Filed as Exhibit 4.2 to the S-8 Registration Statement dated June 25, 1999 and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10.43</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>ISSG Stock Option Plan (Filed as Exhibit 4.1 to the Registrant's Registration Statement on Form S-8, Registration No. 333-93497, dated December 23, 1999 and incorporated herein by reference.)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>21.1</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>List of Subsidiaries</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>23.1</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Consent of Independent Accountants</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>24.1</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Power of Attorney (appears on the signature page of this report)</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>27.1</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="88%"><FONT SIZE=2>Financial Data Schedule</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <DL compact> <DT><FONT SIZE=1>†</FONT></DT><DD><FONT SIZE=1>Confidential treatment granted.</FONT><FONT SIZE=2><BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>Reports on Form 8-K</FONT></DD></DL> <BR><BR> <P><FONT SIZE=2>On October 7, 1999, the Company filed a report on Form 8-K announcing Yahoo!'s financial results for the quarter ended September 30, 1999.</FONT></P> <P><FONT SIZE=2>On November 12, 1999 and December 23, 1999, the Company filed reports on Form 8-K/A which amend the Form 8-K previously filed on July 20, 1999. The Form 8-K filed on July 20, 1999 announced the acquisition of broadcast.com and was subsequently amended to include consolidated financial statements of the Company as if broadcast.com was a wholly-owned subsidiary of the Company since inception.</FONT></P> <P ALIGN="CENTER"><FONT SIZE=2>57</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=4,SEQ=57,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=950407,FOLIO=57,FILE='DISK004:[00PAL6.00PAL1236]GG1236A.;10',USER='MMEYER',CD='29-MAR-2000;03:49 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <H2><FONT SIZE=2> </FONT></H2> <BR> <P><FONT SIZE=2><A NAME="jc1236_signatures"> </A></FONT> <FONT COLOR="#C226FF" SIZE=4><B>Signatures</B></FONT></P> <P><FONT SIZE=2>Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 29th day of March, 2000.</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="83%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="TOP"> <TD WIDTH="44%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="54%" COLSPAN=3><FONT SIZE=2>YAHOO! INC.</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="44%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="4%"><FONT SIZE=2> <BR> By:</FONT></TD> <TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2> <BR> /s/ </FONT><FONT SIZE=2>GARY VALENZUELA</FONT><FONT SIZE=2> </FONT><HR NOSHADE><FONT SIZE=2> Gary Valenzuela<BR></FONT> <FONT SIZE=2><I>Senior Vice President, Finance and<BR> Administration, and Chief Financial Officer</I></FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT COLOR="#C226FF" SIZE=4><B>Power of Attorney</B></FONT></P> <P><FONT SIZE=2>KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Timothy Koogle and Gary Valenzuela, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Report on Form 10-K, and to file the same, with Exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or substitute or substitutes may do or cause to be done by virtue hereof.</FONT></P> <P><FONT SIZE=2>Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:</FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="86%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="33%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Signature</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="45%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Title</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="18%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Date</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="100%" COLSPAN=5 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="TOP"> <TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=1><B> <BR></B></FONT><FONT SIZE=2> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="45%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="18%"><FONT SIZE=2> <BR> </FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=2>/s/ </FONT><FONT SIZE=2>TIMOTHY KOOGLE</FONT><FONT SIZE=2> </FONT><HR NOSHADE><FONT SIZE=2> Timothy Koogle</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="45%"><FONT SIZE=2>Chairman and Chief Executive Officer (Principal Executive Officer)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="18%" ALIGN="CENTER"><FONT SIZE=2>March 29, 2000</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=2> <BR> /s/ </FONT><FONT SIZE=2>JEFF MALLETT</FONT><FONT SIZE=2> </FONT><HR NOSHADE><FONT SIZE=2> Jeff Mallett</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="45%"><FONT SIZE=2> <BR> President, Chief Operating Officer, and Director</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="18%" ALIGN="CENTER"><FONT SIZE=2> <BR> March 29, 2000</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=2> <BR> /s/ </FONT><FONT SIZE=2>GARY VALENZUELA</FONT><FONT SIZE=2> </FONT><HR NOSHADE><FONT SIZE=2> Gary Valenzuela</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="45%"><FONT SIZE=2> <BR> Senior Vice President, Finance and Administration, and Chief Financial Officer (Principal Financial Officer)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="18%" ALIGN="CENTER"><FONT SIZE=2> <BR> March 29, 2000</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=2> <BR> /s/ </FONT><FONT SIZE=2>JAMES J. NELSON</FONT><FONT SIZE=2> </FONT><HR NOSHADE><FONT SIZE=2> James J. Nelson</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="45%"><FONT SIZE=2> <BR> Vice President, Finance (Principal Accounting Officer)</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="18%" ALIGN="CENTER"><FONT SIZE=2> <BR> March 29, 2000</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=2> <BR> /s/ </FONT><FONT SIZE=2>ERIC HIPPEAU</FONT><FONT SIZE=2> </FONT><HR NOSHADE><FONT SIZE=2> Eric Hippeau</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="45%"><FONT SIZE=2> <BR> Director</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="18%" ALIGN="CENTER"><FONT SIZE=2> <BR> March 29, 2000</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=2> <BR> /s/ </FONT><FONT SIZE=2>ARTHUR H. KERN</FONT><FONT SIZE=2> </FONT><HR NOSHADE><FONT SIZE=2> Arthur H. Kern</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="45%"><FONT SIZE=2> <BR> Director</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="18%" ALIGN="CENTER"><FONT SIZE=2> <BR> March 29, 2000</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=2> <BR> /s/ </FONT><FONT SIZE=2>MICHAEL MORITZ</FONT><FONT SIZE=2> </FONT><HR NOSHADE><FONT SIZE=2> Michael Moritz</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="45%"><FONT SIZE=2> <BR> Director</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="18%" ALIGN="CENTER"><FONT SIZE=2> <BR> March 29, 2000</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=2> <BR> /s/ </FONT><FONT SIZE=2>JERRY YANG</FONT><FONT SIZE=2> </FONT><HR NOSHADE><FONT SIZE=2> Jerry Yang</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="45%"><FONT SIZE=2> <BR> Director</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD> <TD WIDTH="18%" ALIGN="CENTER"><FONT SIZE=2> <BR> March 29, 2000</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P ALIGN="CENTER"><FONT SIZE=2>58</FONT></P> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=58,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=236815,FOLIO=58,FILE='DISK004:[00PAL6.00PAL1236]JC1236A.;13',USER='DNICHOL',CD='29-MAR-2000;16:14 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <H2><FONT SIZE=2> </FONT></H2> <BR> <P><FONT SIZE=2><A NAME="ka1236_index_to_exhibits"> </A></FONT> <FONT COLOR="#C226FF" SIZE=4><B>Index to Exhibits</B></FONT></P> <!-- User-specified TAGGED TABLE --> <TABLE WIDTH="85%" BORDER=0 CELLSPACING=0 CELLPADDING=0> <TR VALIGN="BOTTOM"> <TH WIDTH="9%" ALIGN="CENTER"><FONT COLOR="#C226FF" SIZE=1><B>Exhibit<BR> Number</B></FONT><BR></TH> <TH WIDTH="2%"><FONT COLOR="#C226FF" SIZE=1> </FONT></TH> <TH WIDTH="89%" ALIGN="LEFT"><FONT COLOR="#C226FF" SIZE=1><B>Description</B></FONT><BR></TH> </TR> <TR VALIGN="BOTTOM"> <TH WIDTH="100%" COLSPAN=3 ALIGN="CENTER"><HR NOSHADE></TH> </TR> <TR VALIGN="TOP"> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>3.1</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="89%"><FONT SIZE=2>Certificate of Incorporation of Registrant</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>3.2</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="89%"><FONT SIZE=2>Bylaws of Registrant</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>10.1</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="89%"><FONT SIZE=2>Form of Indemnification Agreement with certain of the Registrant's officers and directors</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>10.2</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="89%"><FONT SIZE=2>1995 Stock Plan, as amended</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>10.16</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="89%"><FONT SIZE=2>1996 Directors' Stock Option Plan, as amended</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>21.1</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="89%"><FONT SIZE=2>List of Subsidiaries</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>23.1</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="89%"><FONT SIZE=2>Consent of Independent Accountants</FONT></TD> </TR> <TR VALIGN="TOP"> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>27.1</FONT></TD> <TD WIDTH="2%"><FONT SIZE=2> </FONT></TD> <TD WIDTH="89%"><FONT SIZE=2>Financial Data Schedule</FONT></TD> </TR> </TABLE> <!-- end of user-specified TAGGED TABLE --> <P><FONT SIZE=2><HR NOSHADE></FONT></P> <!-- ZEQ.=1,SEQ=59,EFW="2008517",CP="YAHOO! INC.",DN="1",CHK=197038,FOLIO=blank,FILE='DISK004:[00PAL6.00PAL1236]KA1236A.;7',USER='KSEAMON',CD='27-MAR-2000;00:14 --> <!-- Generated by Merrill Corporation (www.merrillcorp.com) --> <BR> <H2><FONT SIZE=2><A NAME="00PAL1236_1">QuickLinks</A></FONT></H2> <!-- TOC_BEGIN --> <UL> <FONT SIZE=2><A HREF="#de1236_part_i">Part I</A></FONT><BR> <FONT SIZE=2><A HREF="#de1236_item_1._business">Item 1. Business</A></FONT><BR> </UL> <!-- TOC_END --> <!-- TOC_BEGIN --> <UL> <FONT SIZE=2><A HREF="#dg1236_item_2._properties">Item 2. Properties</A></FONT><BR> <FONT SIZE=2><A HREF="#dg1236_item_3._legal_proceedings">Item 3. Legal Proceedings</A></FONT><BR> <FONT SIZE=2><A HREF="#dg1236_item_4._submission_of_m__dg102396">Item 4. Submission of Matters to a Vote of Security Holders</A></FONT><BR> </UL> <!-- TOC_END --> <!-- TOC_BEGIN --> <UL> <FONT SIZE=2><A HREF="#di1236_part_ii">Part II</A></FONT><BR> <FONT SIZE=2><A HREF="#di1236_item_5._market_for_the_registr__ite03223">Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters</A></FONT><BR> </UL> <!-- TOC_END --> <!-- TOC_BEGIN --> <UL> <FONT SIZE=2><A HREF="#dk1236_item_6._selected_financial_data">Item 6. Selected Financial Data</A></FONT><BR> </UL> <!-- TOC_END --> <!-- TOC_BEGIN --> <UL> <FONT SIZE=2><A HREF="#dm1236_item_7._management_s_discussio__ite03668">Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations</A></FONT><BR> <FONT SIZE=2><A HREF="#dm1236_liquidity_and_capital_resources">Liquidity and Capital Resources</A></FONT><BR> <FONT SIZE=2><A HREF="#dm1236_item_7a._quantitative_and_qual__ite02669">Item 7a. Quantitative and Qualitative Disclosures about Market Risk</A></FONT><BR> </UL> <!-- TOC_END --> <!-- TOC_BEGIN --> <UL> <FONT SIZE=2><A HREF="#do1236_item_8._financial_statements_and_supplementary_data">Item 8. Financial Statements and Supplementary Data</A></FONT><BR> </UL> <!-- TOC_END --> <!-- TOC_BEGIN --> <UL> <FONT SIZE=2><A HREF="#ge1236_item_9._changes_in_and_disagre__ite03576">Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</A></FONT><BR> <FONT SIZE=2><A HREF="#ge1236_part_iii">Part III</A></FONT><BR> <FONT SIZE=2><A HREF="#ge1236_item_10._directors_and___ge102281">Item 10. Directors and Executive Officers of the Registrant</A></FONT><BR> <FONT SIZE=2><A HREF="#ge1236_item_11._executive_compensation">Item 11. Executive Compensation</A></FONT><BR> <FONT SIZE=2><A HREF="#ge1236_item_12._security_ownership_of__ite02706">Item 12. Security Ownership of Certain Beneficial Owners and Management</A></FONT><BR> <FONT SIZE=2><A HREF="#ge1236_item_13._certain_relati__ge102124">Item 13. Certain Relationships and Related Transactions</A></FONT><BR> </UL> <!-- TOC_END --> <!-- TOC_BEGIN --> <UL> <FONT SIZE=2><A HREF="#gg1236_part_iv">Part IV</A></FONT><BR> <FONT SIZE=2><A HREF="#gg1236_item_14._exhibits,_financial_s__ite02564">Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K</A></FONT><BR> </UL> <!-- TOC_END --> <!-- TOC_BEGIN --> <UL> <FONT SIZE=2><A HREF="#jc1236_signatures">Signatures</A></FONT><BR> </UL> <!-- TOC_END --> <!-- TOC_BEGIN --> <UL> <FONT SIZE=2><A HREF="#ka1236_index_to_exhibits">Index to Exhibits</A></FONT><BR> </UL> <!-- TOC_END --> <!-- SEQ=,FILE='QUICKLINK',USER=DNICHOL,SEQ=,EFW="2008517",CP="YAHOO! INC.",DN="1" --> </BODY> </HTML>