Yahoo 2010 Annual Report Download - page 44

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million related to the Asia Pacific segment. During the year ended December 31, 2010, we incurred insignificant
charges related to the Q209 restructuring plan. As of December 31, 2010, there was no remaining restructuring
accrual related to the Q209 restructuring plan.
Q409 Restructuring Charges. During the fourth quarter of 2009, we decided to close one of our EMEA facilities
and began implementation of a workforce realignment at the facility to focus resources on our strategic
initiatives. We exited the facility in the third quarter of 2010. During the year ended December 31, 2009, we
incurred total pre-tax cash charges of approximately $16 million in severance and other costs related to this
realignment. In connection with the strategic realignment efforts, a U.S. executive of one of our acquired
businesses departed. We incurred $19 million of non-cash stock-based compensation expense for the acceleration
of certain of the executive’s stock-based awards pursuant to the acquisition agreements. Of the $35 million in
restructuring charges, recorded in the year ended December 31, 2009, $18 million related to the Americas
segment, $16 million related to the EMEA segment, and $1 million related to the Asia Pacific segment. During
the year ended December 31, 2010, we incurred total pre-tax cash charges of $2 million in severance, facility and
other costs related to the Q409 restructuring charges, entirely related to the EMEA segment. As of December 31,
2010, the aggregate outstanding restructuring liability related to the Q409 restructuring charges was $4 million,
which we expect to pay out by the second quarter of 2011.
Q410 Restructuring Plan. During the fourth quarter of 2010, we began implementation of a worldwide workforce
reduction to align resources with our product strategy. We incurred total pre-tax cash charges of approximately
$41 million in severance and other costs related to this workforce reduction in the fourth quarter of 2010. The
pre-tax cash charges were offset by a $4 million credit related to non-cash stock-based compensation expense
reversals for unvested stock awards that were forfeited. We expect the impact of this restructuring plan to reduce
future annual operating costs by approximately $70 million to $80 million. Of the $37 million in net restructuring
charges recorded in the fourth quarter of 2010, $21 million related to the Americas segment, $14 million related
to the EMEA segment, and $2 million related to the Asia Pacific segment. As of December 31, 2010, the
aggregate outstanding restructuring liability related to the Q410 restructuring plan was $33 million which we
expect to substantially pay out by the end of the first quarter of 2012.
In addition to the charges described above, we currently expect to incur future charges of approximately $18
million to $26 million primarily related to non-cancelable operating costs and accretion related to exited facilities
identified as part of the Q408 restructuring plan. Of the total future charges, $17 million to $23 million relate to
the Americas segment, $1 million to $3 million relate to the EMEA segment, and no charges relate to the Asia
Pacific segment. The future charges are expected to be recorded through 2017. See Note 15—“Restructuring
charges, net” in the Notes to the consolidated financial statements for additional information.
Goodwill Impairment Charge. We conduct our annual goodwill impairment test as of October 31 each year.
Goodwill is potentially impaired if the carrying value of the reporting unit that contains the goodwill exceeds its
estimated fair value. As a result of this test in 2008, we previously concluded that the carrying value of our
European reporting unit exceeded its fair value and recorded a goodwill impairment charge of approximately
$488 million. At the time of this test in 2008, the fair values of our other reporting units exceeded their carrying
values by a significant margin and therefore goodwill in those reporting units was not impaired. The goodwill
impairment in our European reporting unit resulted from a combination of factors, including the global economic
downturn, a persistent decline in business conditions, reductions in projected operating results, reductions in
estimated future cash flows, and decreases in revenue and earnings multiples of comparable companies in the
region. We had no goodwill impairment charges in the years ended December 31, 2009 and 2010.
Significant changes in the economic environment and our operating results may result in future impairment of
our reporting units. See Note 5—“Goodwill” in the Notes to the consolidated financial statements for additional
information.
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