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Yahoo! Inc.
Notes to Consolidated Financial Statements—(Continued)
Year Ended December 31, 2009
Q408
Restructuring
Plan
Q209
Restructuring
Plan
Q409
Restructuring
Plan Total
United States .................................... $63,247 $17,761 $18,403 $ 99,411
International .................................... 2,171 9,015 16,304 27,490
Restructuring charges, net ..................... $65,418 $26,776 $34,707 $126,901
Q108 Restructuring Plan. During the first quarter of 2008, the Company implemented a strategic workforce
realignment to more appropriately allocate resources to its key strategic initiatives. The strategic workforce
realignment involved investing resources in some areas, reducing resources in others, and eliminating some areas
of the Company’s business that did not support its strategic priorities. During the year ended December 31, 2008,
the Company incurred total pre-tax charges of approximately $27 million in severance pay expenses and related
cash expenses in connection with this workforce realignment, net of reversal for adjustments to original estimates
totaling $2 million. The pre-tax cash charges were offset by a $12 million credit related to non-cash stock-based
compensation expense reversals for unvested stock awards that were forfeited. Of the net estimated total strategic
workforce realignment pre-tax expense of approximately $15 million, $12 million was related to the U.S.
segment and $3 million was related to the International segment. As of December 31, 2008, there was no
remaining restructuring accrual related to the strategic workforce realignment.
Q408 Restructuring Plan. During the fourth quarter of 2008, the Company implemented additional cost reduction
initiatives, including a workforce reduction and consolidation of certain real estate facilities in the U.S. and
International.The Company began to consolidate and exit selected facilities beginning in the fourth quarter of
2008 and expects to continue this process through the second quarter of 2010. The Company vacated and ceased
use of most of the ten facilities in the U.S. and five international facilities identified under the plan.
Non-cancelable lease costs were determined based on the present value of remaining lease payments reduced by
estimated sublease income. Present value computations use discount rates based on published Treasury risk-free
interest rates, adjusted for the Company’s credit spread, which is consistent with observable credit spreads of
companies with similar credit standing. The cost of exiting and terminating the Company’s facility leases was
determined by referring to the contractual terms of the agreements, by evaluating the current real estate market
conditions, and, where applicable, by referring to amounts in negotiation. The Company’s ability to generate the
estimated amounts of sublease income, as well as to terminate lease obligations at the estimated amounts, is
dependent upon the commercial real estate market conditions in certain geographies at the time the Company
negotiates the lease termination and sublease arrangements with third parties. These amounts represent the
Company’s best estimate of the obligations the Company expects to incur and could be subject to adjustment as
market conditions change. The fair value measurement of the liability related to exited facilities involves the use
of certain significant unobservable inputs and therefore fall within level 3 of the fair value hierarchy established
by accounting guidance. The remaining lease obligations will be settled over the remaining lease terms which
expire through fiscal 2017 and will be adjusted for changes in estimates or the impact of sublease contracts.
During the year ended December 31, 2008, the Company incurred severance, facility, and other restructuring
costs of $110 million related to the Q408 restructuring plan offset by $18 million related to stock-based
compensation expense reversals for unvested stock awards, resulting in a net restructuring charge of $92 million
under the Q408 restructuring plan. Of the $92 million in restructuring charges, net recorded in the year ended
December 31, 2008 related to the Q408 restructuring plan, $68 million related to the U.S. segment and
$24 million related to the International segment. During the year ended December 31, 2009, the Company
incurred total pre-tax cash charges for severance benefits provided and facilities vacated of approximately $57
million related to the Q408 restructuring plan in connection with the continued implementation of these
initiatives, net of reversal for adjustments to original estimates totaling $8 million. Of the $65 million in
105