Yahoo 2010 Annual Report Download - page 104

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. 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. The Company began
to consolidate and exit selected facilities beginning in the fourth quarter of 2008 and continued this process
through the second quarter of 2010. The Company vacated and ceased use of the 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 falls 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.
During the year ended December 31, 2009, the Company incurred total pre-tax cash charges for severance,
facility, and other restructuring costs of approximately $57 million related to the Q408 restructuring plan, net of
reversal for adjustments to original estimates totaling $8 million. In addition to the pre-tax cash charges, the
Company recorded a non-cash charge of approximately $8 million related to the write-off of leasehold
improvements, furniture and fixtures for exited facilities. During the year ended December 31, 2010, the
Company incurred total pre-tax cash charges for severance, facility, and other restructuring costs of
approximately $19 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 $6 million.
Q209 Restructuring Plan. During the second quarter of 2009, the Company implemented new cost reduction
initiatives to further reduce the Company’s worldwide workforce by approximately 5 percent. The restructuring
plan involved reallocating resources to align with the Company’s strategic priorities including investing
resources in some areas, reducing resources in others, and eliminating some areas of the Company’s business that
do not support the Company’s strategic priorities. During the year ended December 31, 2009, the Company
incurred total pre-tax cash charges of approximately $35 million in severance and other costs related to the Q209
restructuring plan. The pre-tax charges were offset by an $8 million credit related to non-cash stock-based
compensation expense reversals for unvested stock awards that were forfeited. During the year ended
December 31, 2010, the Company incurred insignificant charges related to the Q209 restructuring plan.
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