Yahoo 2008 Annual Report Download - page 52

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acquisitions, including strategic investments, in 2008, compared to $974 million and $142 million in 2007 and
2006, respectively. Acquisitions and investments in 2008 included the cash outlay for our acquisition of Maven.
Acquisitions and investments in 2007 included cash outlays for our acquisitions of Right Media, Zimbra, and
BlueLithium and an investment in Alibaba.com. Our investments in Yahoo! 7, Gmarket and Right Media were
the main cash outlays in 2006. In 2008, we utilized $368 million for net purchases of marketable debt securities,
compared to cash proceeds from the net sales and maturities of marketable debt securities of $1.1 billion and
$623 million in 2007 and 2006, respectively.
Cash used in financing activities is driven by employee option exercises and employee stock purchases offset by
our stock repurchases. Our cash proceeds from employee option exercises and employee stock purchases were
$363 million in 2008, compared to $375 million and $318 million in 2007 and 2006, respectively.
During 2008, we invested $79 million in the direct repurchase of 3.4 million shares of our common stock at an
average price of $23.39 per share. In addition, certain restricted stock awards that vested during 2008 were
subject to statutory tax withholding obligations. We reacquired 1.1 million shares of restricted stock awards to
satisfy the tax withholding obligations and $27 million was recorded as treasury stock. We paid $50 million
related to the net share settlement of 2.2 million shares of restricted stock units which was recorded as a
reduction of additional paid-in-capital. During 2007, we used $1.6 billion in the direct repurchase of 57.9 million
shares of our common stock at an average price of $27.34 per share. In addition, certain restricted stock awards
that vested during 2007 were subject to statutory tax withholding obligations. We reacquired 70,000 shares of
restricted stock awards to satisfy the tax withholding obligations and $2 million was recorded as treasury stock.
We paid $4 million related to the net share settlement of 156,000 shares of restricted stock units which was
recorded as a reduction of additional paid-in-capital. During 2006, we used $1.8 billion in the direct repurchase
of 61.5 million shares of our common stock at an average price of $28.98 per share.
In the third quarter of 2007, a $250 million structured stock repurchase transaction, which was entered into in the
first quarter of 2007, settled and matured. On the maturity date, we received 8.4 million shares of our common
stock at an effective buy-back price of $29.80 per share. In 2006, we entered into structured stock repurchase
transactions resulting in a total cash outlay of $0.5 billion. This $0.5 billion cash outlay was offset by cash
receipts of $272 million from the settlement of a structured stock repurchase transaction entered into in 2005 for
a net cash usage of $228 million for these transactions in 2006.
In 2008, 2007, and 2006, $125 million, $35 million, and $597 million, respectively, of excess tax benefits from
stock-based awards for options exercised in current and prior periods were included as a source of cash flows
from financing activities. These excess tax benefits represent the reduction in income taxes otherwise payable
during the period, attributable to the actual gross tax benefits in excess of the expected tax benefits for options
exercised in current and prior periods. We have accumulated excess tax deductions relating to stock options
exercised prior to January 1, 2006 available to reduce income taxes otherwise payable. To the extent such
deductions reduce income taxes payable in the current year, they are reported as financing activities in the
consolidated statements of cash flows. See Note 12—“Employee Benefits” in the Notes to the consolidated
financial statements for additional information.
Financing
In April 2003, we issued $750 million of zero coupon senior convertible notes (“the Notes”) which matured on
April 1, 2008. During the year ended December 31, 2008, $750 million of the Notes were converted into
36.6 million shares of Yahoo! common stock. See Note 9—“Debt” in the Notes to the consolidated financial
statements for additional information.
Stock repurchases
In October 2006, our Board of Directors (the “Board”) authorized a stock repurchase program for us to
repurchase up to $3.0 billion of our outstanding shares of common stock from time to time over the next five
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