Yahoo 2010 Annual Report Download - page 43

Q408 Restructuring Plan. During the fourth quarter of 2008, we implemented additional cost reduction
initiatives, including a workforce reduction and consolidation of certain real estate facilities. We began to
consolidate and exit selected facilities beginning in the fourth quarter of 2008 and continued this process through
the second quarter of 2010. We 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 our credit spread, which is consistent with observable credit spreads of companies with similar
credit standing. The cost of exiting and terminating our 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. Our 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 we negotiate the lease termination and sublease
arrangements with third parties. These amounts represent our best estimate of the obligations we expect 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 (described in Note 8—“Investments” in the
Notes to the consolidated financial statements ). 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, we 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 Americas segment, $22 million related to the
EMEA segment, and $2 million related to the Asia Pacific segment. During the year ended December 31, 2009,
we incurred total pre-tax cash charges for severance, facility, and other restructuring costs 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. In addition to the pre-tax cash
charges, we recorded a non-cash charge of approximately $8 million related to the write-off of leasehold
improvements and furniture and fixtures for exited facilities. Of the $65 million in restructuring charges, net
recorded in the year ended December 31, 2009 related to the Q408 restructuring plan, $63 million related to the
Americas segment and $2 million related to the EMEA segment. During the year ended December 31, 2010, we
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. Of the $19 million in
restructuring charges, net recorded in the year ended December 31, 2010 related to the Q408 restructuring plan,
$18 million related to the Americas segment and $1 million related to the EMEA segment. As of December 31,
2010, the aggregate outstanding restructuring liability related to the Q408 restructuring plan was $50 million,
most of which relates to non-cancelable lease costs that we expect to pay over the terms of the related
obligations, which end by the second quarter of 2017.
Q209 Restructuring Plan. During the second quarter of 2009, we implemented new cost reduction initiatives to
further reduce our worldwide workforce by approximately 5 percent. The restructuring plan involves reallocating
resources to align with our strategic priorities including investing resources in some areas, reducing resources in
others, and eliminating some areas of our business that do not support our strategic priorities. During the year
ended December 31, 2009, we 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. Of the
$27 million in restructuring charges, net recorded in the year ended December 31, 2009 related to the Q209
restructuring plan, $19 million related to the Americas segment, $7 million related to the EMEA segment, and $1
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