Yahoo 2001 Annual Report Download - page 32

The following table summarizes information concerning outstanding and exercisable options as of Decem-
ber 31, 2001 (in thousands, except years and per share amounts):
Options Outstanding Options Exercisable
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Life Exercise Number Exercise
Exercise Prices Outstanding (in years) Price Exercisable Price
Less than $0.01 7,935 3.6 $ 0.00 7,935 $ 0.00
$ 0.02–$ 0.58 5,492 4.1 0.39 5,475 0.39
$ 0.63–$ 2.20 3,005 4.9 1.47 2,702 1.41
$ 2.22–$ 6.73 5,365 5.8 5.44 5,002 5.57
$ 6.97–$ 9.24 26,614 9.5 9.13 2,447 8.06
$ 9.83–$ 14.57 6,006 8.3 12.35 2,089 13.08
$14.74–$ 49.50 38,677 8.4 27.83 17,306 31.47
$50.26–$ 71.91 22,744 8.2 65.18 9,672 67.11
$73.14–$198.69 21,119 8.0 116.46 10,100 114.35
136,957 7.9 $ 39.22 62,728 $ 38.73
Options to purchase approximately 50.0 million shares and 40.0 million shares were exercisable as of
December 31, 2000 and 1999, respectively. The weighted average exercise prices per share for options
exercisable as of December 31, 2000 and 1999 were $23.25 and $6.49, respectively.
The Company and certain acquired entities have 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 $9.1 million, $20.9 million, and $10.4 million
in 2001, 2000, and 1999, respectively. As of December 31, 2001, approximately $3.3 million remains to
be amortized over the remaining vesting periods of the options.
Employee Stock Purchase Plan. The Company has an Employee Stock Purchase Plan (the “Purchase
Plan”), which provides for the issuance of a maximum of 7.6 million shares of Common Stock. In February
2001, the Company amended the Purchase Plan to allow, among other things, a 24-month offering period
beginning with the July 1, 2001 offering period. 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 at
certain plan-defined dates. The price of the Common Stock purchased under the Purchase Plan for offer-
ing periods prior to July 1, 2001 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. The
price of the Common Stock purchased under the Purchase Plan for offering periods on or subsequent to
July 1, 2001 will be equal to 85% of the lower of the fair market value of the Common Stock on the com-
mencement date of each 24-month offering period or the specified purchase date. During 2001, 645,000
shares were purchased at prices from $9.25 to $16.99 per share. During 2000, 199,000 shares were pur-
chased at prices from $25.61 to $105.30 per share. During 1999, 96,000 shares were purchased at prices
from $52.70 to $75.33 per share. As of December 31, 2001, 5.3 million shares were available under the
Purchase Plan for future issuance.
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Stock Compensation. The Company measures compensation expense for its stock-based employee com-
pensation plans using the intrinsic value method. If the fair value based method had been applied in meas-
uring stock compensation expense, the pro forma effect on net income (loss) and net income (loss) per
share would have been as follows (in thousands, except per share amounts):
Years Ended December 31, 2001 2000 1999
Net income (loss):
As reported $ (92,788) $ 70,776$ 47,811
Pro forma $(983,195) $(1,264,987) $(269,563)
Net income (loss) per share:
As reported – basic $ (0.16) $ 0.13 $ 0.09
Pro forma – basic (1.73) (2.30) (0.52)
As reported – diluted (0.16) 0.12 0.08
Pro forma – diluted $ (1.73) $ (2.30) $ (0.52)
Because additional stock options are expected to be granted each year, the pro forma disclosures are
not representative of pro forma effects on reported financial results for future years. The fair value of option
grants is determined using the Black-Scholes option pricing model with the following weighted average
assumptions:
Years Ended December 31, 2001 2000 1999
Expected dividend 0.0% 0.0% 0.0%
Risk-free interest rate ranges 3.1%–4.8% 5.6%–6.7% 4.6%–6.1%
Expected volatility 79% 76% 71%
Expected life (in years) 333
Note 9. Segments
The Company conducts business globally and manages it geographically. The Company’s primary areas of
measurement and decision-making are the United States and International. The Company’s management
relies on an internal management reporting process that provides revenue and segment EBITDA informa-
tion for making financial decisions and allocating resources. Segment EBITDA information includes income
from operations before certain unallocated operating costs and expenses, including stock compensation
expense, amortization of intangibles, depreciation, restructuring costs, and acquisition-related costs.
Management believes that segment EBITDA is an appropriate measure of evaluating the operating per-
formance of the Company’s segments. However, segment EBITDA should be considered in addition to, not
as a substitute for or superior to, operating income, cash flows or other measures of financial perform-
ance prepared in accordance with generally accepted accounting principles.
Revenue is attributed to individual countries according to the international online property that gen-
erated the revenue. No single foreign country accounted for more than 10% of net revenues in 2001, 2000,
and 1999. Property and equipment information is based on the physical location of the assets.