Yahoo 2001 Annual Report Download - page 31

solidation of excess facilities and other charges. As a result of these restructuring programs, the Company
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.
The Company recorded a workforce reduction charge of $15.1 million in 2001 relating primarily to sever-
ance and fringe benefits.
Consolidation of Excess Facilities and Other Charges. The Company 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-can-
celable lease costs. This estimate is based on current comparable rates for leases in the respective mar-
kets. If facilities 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. The Company also
recorded other restructuring costs of $1.8 million relating primarily to payments for professional fees
incurred with the restructuring program.
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 has been 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.
Note 8. Stockholders’ Equity
Mandatorily Redeemable Convertible Preferred Stock. Prior to the merger with Yahoo!, eGroups and
GeoCities had mandatorily redeemable convertible preferred stock outstanding. The Company has
recorded accretion on the preferred stock through the date of the GeoCities initial public offering, at which
time the GeoCities preferred stock converted to common stock, and through December 1999, at which
time the redemption feature on the eGroups preferred stock was waived.
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Stockholder Rights Plan. In March 2001, the Company adopted a Stockholder Rights Plan. Under the plan,
Rights were distributed as a dividend at the rate of one Right for each share of Common Stock held by
stockholders of record as of the close of business on March 20, 2001. The Rights Plan was not adopted
in response to any effort to acquire control of the Company. The Rights will expire on March 1, 2011.
Stock Repurchase Program. In March 2001, the Company announced that its Board of Directors had
authorized the Company to repurchase up to $500 million of its outstanding shares of Common Stock from
time to time over the next two years, depending on market conditions, share price, and other factors. As
of December 31, 2001, the Company had repurchased 5,384,423 shares of Common Stock at an average
of $11.14 per share for a total amount of approximately $60.0 million. Of the shares repurchased,
4,959,423 shares were purchased from SOFTBANK at $11.09 per share.
Stock Option Plans. The Company’s 1995 Stock Option Plan and stock option plans assumed through
acquisitions are collectively referred to as “the Plans.”
The Plans allow for the issuance of incentive stock options, non-statutory stock options, and stock
purchase rights to purchase a maximum of 275 million shares of the Company’s Common Stock. Options
are generally granted for a term of ten years and generally vest over a four year period.
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. Options under the Directors’
Plan vest in equal monthly installments over four years for initial grants to new directors, and over four
years for annual grants, with 25% of such options vesting on the one-year anniversary of the date of grant,
with the remaining options to vest in equal monthly installments over the 36-month period thereafter. The
Directors’ Plan was amended in November 2001 to increase the initial grant for an outside Director
appointed on or after November 13, 2001 from 50,000 to 100,000 shares.
Activity under the Company’s stock option plans is summarized as follows (in thousands, except per
share amounts):
Available Weighted
for Options Average Price
Grant Outstanding per Share
Balance at December 31, 1998 26,154 129,274 $ 10.60
Additional shares reserved 80,255 — —
Options granted (38,040) 38,040 80.76
Options exercised — (33,732) 6.91
Options canceled 8,724 (8,792) 11.09
Options forfeited (7,340) — —
Balance at December 31, 1999 69,753 124,790 32.40
Options granted (27,176) 27,176 102.42
Options exercised — (23,795) 14.36
Options canceled 9,846 (9,846) 63.93
Options forfeited (1,723) — —
Balance at December 31, 2000 50,700 118,325 49.83
Options granted (60,261) 60,261 18.60
Options exercised — (15,317) 3.82
Options canceled 26,312 (26,312) 60.45
Options forfeited (1,792) — —
Balance at December 31, 2001 14,959 136,957 $ 39.22