Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10- K 3 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2012 OR q TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 000- 28018 Yahoo! Inc. (Exact name of Registrant as specified in its charter) Delaware 77- 0398689 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 701 First Avenue Sunnyvale, California 94089 (Address of principal executive offices, including zip code) Registrant's telephone number, including area code: (408) 349- 3300 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Common stock, $.001 par value The NASDAQ Stock Market LLC (NASDAQ Global Select Market) Securities registered pursuant to Section 12(g) of the Act: None (Title of Class) Indicate by check mark if the Registrant is a well- known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes 3 No q Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes q No 3 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 3 No q Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S- T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes 3 No q Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S- K (§229.405 of this chapter) 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. q Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non- accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b- 2 of the Exchange Act. Large accelerated filer 3 Accelerated filer q Non- accelerated filer q (Do not check if a smaller reporting company) Smaller reporting company q Indicate by check mark whether the Registrant is a shell company (as defined by Rule 12b- 2 of the Exchange Act). Yes q No 3 As of June 29, 2012, the last business day of the Registrant's most recently completed second fiscal quarter, 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 on the NASDAQ Global Select Market was $15,665,361,526. Shares of common stock held by each officer and director and by each person who owns 10 percent 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. The number of shares of the Registrant's common stock outstanding as of February 15, 2013 was 1,101,295,389. DOCUMENTS INCORPORATED BY REFERENCE The following documents (or parts thereof) are incorporated by reference into the following parts of this Form 10- K: Proxy Statement for the 2013 Annual Meeting of Shareholders- Part III Items 10, 11, 12, 13, and 14. Table of Contents YAHOO! INC. Form 10- K Fiscal Year Ended December 31, 2012 INDEX ITEM Page PART I ITEM 1 Business 3 ITEM 1A Risk Factors 12 ITEM 1B Unresolved Staff Comments 27 ITEM 2 Properties 27 ITEM 3 Legal Proceedings 28 ITEM 4 Mine Safety Disclosures 28 PART II ITEM 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 29 ITEM 6 Selected Financial Data 31 ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 33 ITEM 7A Quantitative and Qualitative Disclosures About Market Risk 60 ITEM 8 Financial Statements and Supplementary Data 63 ITEM 9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 115 ITEM 9A Controls and Procedures 115 ITEM 9B Other Information 115 PART III ITEM 10 Directors, Executive Officers and Corporate Governance 116 ITEM 11 Executive Compensation 116 ITEM 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 116 ITEM 13 Certain Relationships and Related Transactions, and Director Independence 116 ITEM 14 Principal Accounting Fees and Services 116 PART IV ITEM 15 Exhibits, Financial Statement Schedules 117 Signatures 118 The trademarks and/or registered trademarks of Yahoo! Inc. and its subsidiaries referred to herein include, but are not limited to, Yahoo!, Y!, IntoNow, interclick, Flickr, Right Media, omg!, Shine, Sportacular, Cocktails, Mojito, Genome, Stamped, Rivals, MarketDash, Yahoo! Search BOSS, Citizen Sports and their respective logos. Other names are trademarks and/or registered trademarks of their respective owners. 2 Table of Contents Part I Item 1. Business OVERVIEW Yahoo! Inc., together with its consolidated subsidiaries ("Yahoo!," the "Company," "we," or "us"), is a global technology company focused on making the world's daily habits inspiring and entertaining. We provide a variety of products and services, many of them personalized, including search, content, and communications tools- all daily habits for hundreds of millions of users, on the Web and on mobile devices. The majority of our product offerings are available in more than 45 languages and in 60 countries, regions, and territories. We create value for advertisers and their brands by connecting them with targeted audiences of users through their daily habits. Advertisers can build their businesses through advertising to these targeted audiences on our online properties and services ("Yahoo! Properties"), or through our distribution network of third- party entities ("Affiliates") who integrate our advertising offerings into their Websites or other offerings (those Websites and other offerings, "Affiliate sites"). We generate revenue principally from display advertising on Yahoo! Properties and some Affiliate sites and from search advertising on Yahoo! Properties and Affiliate sites. Additionally, we generate revenue from other sources including listings- based services, facilitating commercial transactions, royalties, and consumer and business fee- based services. Yahoo! has a storied history that has evolved with the Internet, beginning in 1994 when our founders, Jerry Yang and David Filo, then graduate students at Stanford University, created Jerry and Dave's Guide to the World Wide Web, a simple directory of websites to help people navigate the Internet. Yahoo! was incorporated in 1995 and is a Delaware corporation. We completed our initial public offering on April 12, 1996, and our stock is listed on the Nasdaq Global Select Market under the symbol "YHOO." Yahoo! is headquartered in Sunnyvale, California, and is a global company- with offices in more than 30 countries, regions and territories. EXECUTIVE LEADERSHIP Since the beginning of 2012, we have made key changes to enhance our executive leadership team. Marissa Mayer became our Chief Executive Officer and President on July 17, 2012. Today, the management team reporting to the Chief Executive Officer is: Ron Bell- became General Counsel and Secretary on August 13, 2012; Jackie Reses- became Executive Vice President of People and Development on September 7, 2012; Kathy Savitt- became Chief Marketing Officer on September 14, 2012; Ken Goldman- became Chief Financial Officer on October 22, 2012; Adam Cahan- became Senior Vice President of Mobile & Emerging Products on October 25, 2012; Henrique de Castro- became Chief Operating Officer on November 12, 2012; Jay Rossiter- became Executive Vice President of Cloud Platforms on November 13, 2012; David Filo- Co- Founder and Chief Yahoo; David Dibble- Executive Vice President of Central Technology; Scott Burke- Senior Vice President, Display Advertising and Advertising Technology; and Laurence Mann- Senior Vice President, Search. 3 Table of Contents Since the beginning of 2012, we also made significant additions to our Board of Directors. Currently, our Board of Directors is composed of: Marissa Mayer, our CEO; Alfred Amoroso, our Chairman of the Board; John Hayes; Susan James; Max Levchin; Peter Liguori; Daniel Loeb; Thomas McInerney; Harry Wilson; Maynard Webb; and Michael Wolf. 2012 BUSINESS HIGHLIGHTS During 2012, we focused our attention on people and products- laying the foundation that we believe will make Yahoo! an incredible place to work, and a company known for product excellence. Selected highlights of 2012 are: Products. We launched a new and improved version of Yahoo! Mail, making it faster, easier to use and available across the Web and on Windows 8, iPhone/iPod touch and Android. We also redesigned the Flickr application for iPhone and iPod touch, making it easier to capture, share and discover photos. The new Flickr application allows users to share photos by e- mail, with the Flickr community and via your social network of choice, including Facebook, Twitter or Tumblr. Talent. We focused on hiring top talent, including a new talented and experienced management team. We also acquired two mobile application developers, Stamped and OnTheAir, accelerating our efforts to build an exceptional team of mobile engineers, product managers and designers.