Yahoo 2003 Annual Report Download - page 70

Company to repurchase up to $500 million of its out-
Note 10 LONG-TERM DEBT standing shares of common stock from time to time over
In April 2003, the Company issued $750 million of zero the next two years, depending on market conditions, share
coupon senior convertible notes (the ‘‘Notes’’) due price and other factors. In March 2003, the Company’s
April 2008, which resulted in net proceeds to the Com- Board of Directors authorized a two-year extension of the
pany of approximately $733 million after transaction fees stock repurchase program, which extension authorizes the
of approximately $17 million, which have been deferred Company to repurchase up to approximately $340 million
and are included on the balance sheet in other assets. The (representing the balance of the $500 million originally
Notes were issued at par and bear no interest. The Notes authorized in March 2001) of its outstanding shares of
are convertible into Yahoo! common stock at a conversion common stock from time to time over the next two years,
price of $41.00 per share, which would result in the issu- depending on market conditions, share price and other
ance of an aggregate of approximately 18 million shares, factors. The Company may utilize equity instrument con-
subject to adjustment upon the occurrence of specified tracts to facilitate the repurchase of common stock. From
events. Each $1,000 principal amount of the Notes will March 2001 through December 31, 2003, the Company
initially be convertible into 24.3902 shares of Yahoo! had repurchased 16,458,620 shares of common stock at
common stock prior to April 1, 2008 if the sale price of an average of $9.72 per share for a total amount of
the Company’s common stock issuable upon conversion of approximately $160 million. Of the shares repurchased,
the Notes reaches a specified threshold for a defined 16,033,620 shares were purchased from SOFTBANK at
period of time or specified corporate transactions have an average of $9.67 per share. No shares were repurchased
occurred. The specified thresholds for conversion prior to during the year ended December 31, 2003. Treasury stock
the maturity date are (1) the closing sale price of the is accounted for under the cost method.
Company’s common stock for at least 20 trading days in
the 30 trading-day period ending on the last trading day Stock Option Plans. The Company’s 1995 Stock Plan and
of the immediately preceding fiscal quarter exceeds stock option plans assumed through acquisitions are col-
110 percent of the conversion price on that 30th trading lectively referred to as the ‘‘Plans.’’
day, and (2) during the period beginning January 1, 2008
through the maturity date, the closing sale price of the The Plans allow for the issuance of incentive stock
Company’s common stock on the previous trading day options, non-statutory stock options, and stock purchase
was 110 percent or more of the then current conversion rights. Options are generally granted for a term of ten
price. Upon conversion, Yahoo! has the right to deliver years and generally vest over a four-year period. The 1995
cash in lieu of common stock. The Company may be Stock Plan was amended in April 2002 to increase the
required to repurchase all of the notes following a funda- number of shares available for issuance under the plan by
mental change of the Company, such as a change of con- an aggregate of 35 million shares to 287 million shares.
trol, prior to maturity at face value. Yahoo! may not The 1995 Stock Plan was amended in May 2003 to
redeem the Notes prior to their maturity. As of Decem- enable the Company to grant additional types of equity-
ber 31, 2003, the fair value of the Notes was approxi- based awards under the 1995 Stock Plan, including but
mately $966 million based on quoted market prices. not limited to, stock appreciation rights, indexed options,
restricted stock, restricted stock units and dividend equiva-
Note 11 STOCKHOLDERS’ EQUITY lents. The amendment also extended the termination date
Stockholder Rights Plan. In March 2001, the Company of the 1995 Stock Plan from May 2005 to May 2013.
adopted a Stockholder Rights Plan. Under the plan, Shares available for future option grants at December 31,
Rights were distributed as a dividend at the rate of one 2003 totaled approximately 32 million.
Right for each share of common stock held by stockhold-
ers 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
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