Yahoo 2001 Annual Report Download - page 18

General and Administrative. General and administrative expenses consist primarily of compensation
related expenses and fees for professional services.
General and administrative expenses in 2001 increased $4.8 million, or 6%, as compared to 2000
and increased $32.1 million, or 76%, from 1999 to 2000. The year-over-year increases in absolute dollars
were primarily attributable to increases in the above areas, partially offset by decreases from cost effi-
ciencies obtained through our 2001 Restructuring programs described below.
We currently believe that general and administrative expenses in absolute dollars will increase mod-
estly in 2002 compared to 2001.
Amortization of Intangibles. From time to time we have purchased, and expect to continue purchasing,
assets or businesses which may result in the creation of intangible assets.
Amortization of intangibles expenses was $64.1 million for 2001, or 9%, of net revenues. For 2000
and 1999, amortization of intangibles expenses was $28.3 million and $23.3 million, or 3% and 4% of net
revenues, respectively. The year-over-year absolute dollar increases in amortization of intangibles are pri-
marily the result of acquisitions accounted for under the purchase method of accounting during those
years. Effective January 1, 2002, we have adopted the provisions of Statement of Financial Accounting
Standards No. 142 (“SFAS 142”), “Goodwill and Other Intangible Assets,” under which goodwill will no
longer be amortized and will be tested for impairment at least annually. See “Recent Accounting
Pronouncements” for further information related to the adoption of SFAS 142.
Restructuring Costs. In April and December 2001, we announced restructuring programs to balance our
investment in growth areas with the desire to modify our near-term business plan to reflect the current
economic and capital market slowdown. These restructuring programs included worldwide workforce
reductions, consolidation of excess facilities and other charges. As a result of these restructuring pro-
grams, we recorded restructuring costs of $57.5 million classified as operating expenses in 2001.
Worldwide Workforce Reduction. The restructuring programs resulted in a workforce reduction of approxi-
mately 650 employees across certain business functions, operating units, and geographic regions. The
worldwide workforce reductions in April and December 2001 were substantially completed within 2001. We
recorded a workforce reduction charge of $15.1 million in 2001 relating primarily to severance and fringe
benefits.
Consolidation of Excess Facilities and Other Charges. We recorded a restructuring charge of $42.3 million
in 2001 relating to the consolidation of excess facilities and other charges. Of this charge, approximately
$31.1 million was primarily for excess facilities relating to lease terminations and non-cancelable lease
costs. This estimate is based on current comparable rates for leases in the respective markets. If facili-
ties rental rates continue to decrease in these markets or if it takes longer than expected to sublease
these facilities, the actual loss could exceed this estimate. Property and equipment that was disposed
of or removed from operations resulted in a net charge of $9.4 million and consisted primarily of furniture
and fixtures, servers, leasehold improvements, and computer equipment. We also recorded other restruc-
turing costs of $1.8 million relating primarily to payments for professional fees incurred with the restruc-
turing program.
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A summary of the restructuring costs is as follows (in thousands):
Restructuring
Accrual at
Total Noncash Cash December 31,
Charge Charges Payments 2001
Workforce reduction $15,137 $ (5,411) $ (5,901) $ 3,825
Consolidation of excess facilities
and other charges 42,334 (9,380) (7,279) 25,675
Total $57,471 $(14,791) $(13,180) $29,500
The restructuring accrual is included on the balance sheet in accrued expenses and other current liabili-
ties. The accrual related to the workforce reduction was substantially paid subsequent to December 31,
2001. Amounts related to the net lease expense due to the consolidation of facilities will be paid over the
respective lease terms through December 2012. We have substantially completed the implementation of
the restructuring programs during the fourth quarter of 2001. We expect the restructuring programs to
result in annual savings of approximately $65 million in operating expenses effective January 2002.
Acquisition-Related Costs. Acquisition-related costs consist primarily of contract and facility termination
expenses, write-offs of certain related fixed assets and leasehold improvements, professional services,
severance costs associated with the termination of certain employees, and various registration and filing
fees incurred in connection with business combinations recorded under the pooling-of-interests method
of accounting. We also expensed certain in-process research and development that had not yet reached
technological feasibility and had no alternative future use in connection with business combinations
recorded under the purchase method of accounting.
Acquisition-related costs were $4.8 million, $22.8 million, and $88.0 million for 2001, 2000, and
1999. Acquisition-related costs in 2001 were for incremental costs associated with the final settlement
of a facilities lease termination in connection with the eGroups acquisition. During 2000, these costs
related primarily to the acquisition of eGroups. During 1999, these costs related to the acquisitions of
Encompass, GeoCities, Online Anywhere, broadcast.com, ONElist, Inc., Log-Me-On, and ISSG.
Due to the elimination of the pooling-of-interests method of accounting for business combinations as
a result of the issuance of Statement of Financial Accounting Standards No. 141 (“SFAS 141”), “Business
Combinations,” future acquisition-related costs are expected to be limited to in-process research and
development for technologies acquired in business combinations that has not yet reached technological
feasibility and has no alternative future use. Such amounts could have a significant impact on future finan-
cial results.
Other Income (Loss), Net. Other income (loss), net was as follows (in thousands):
Years Ended December 31, 2001 2000 1999
Interest income $ 91,931 $ 84,602 $36,273
Investment gains (losses) (26,623) (118,943) —
Contract termination fee 9,000 ——
Earnings in equity interests 4,356 1,428 1,760
Other (1,526) (788) (361)
$ 77,138 $ (33,701) $37,672