Yahoo 2010 Annual Report Download - page 53

stock. During the year ended December 31, 2009, we used $113 million in the direct repurchase of 7 million
shares of common stock at an average price of $15.31 per share and $73 million for tax withholding payments
related to net share settlements of restricted stock units and tax withholding-related reacquisition of shares of
restricted stock. During the year ended December 31, 2008, we used $79 million in the direct repurchase of
3 million shares of common stock at an average price of $23.39 per share and $77 million for tax withholding
payments related to net share settlements of restricted stock units and tax withholding-related reacquisition of
shares of restricted stock.
In 2010, 2009, and 2008, $131 million, $108 million, and $125 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 11—“Employee Benefits” in the Notes to the consolidated
financial statements for additional information.
Stock repurchases
In October 2006, our Board of Directors authorized a stock repurchase program for us to repurchase up to $3
billion of our outstanding shares of common stock from time to time over the next five years from the date of
authorization, dependent on market conditions, stock price, and other factors. We repurchase our common stock,
from time to time, in part to reduce the dilutive effects of our stock options, awards, and employee stock
purchase plan. Repurchases may take place in the open market or in privately negotiated transactions, including
derivative transactions, and may be made under a Rule 10b5-1 plan.
On June 24, 2010, our Board of Directors approved a new stock repurchase program. Under the new program,
which expires in June 2013, we are authorized to repurchase up to $3 billion of our outstanding shares of
common stock from time to time. The repurchases may take place in the open market or in privately negotiated
transactions, including derivative transactions, and may be made under a Rule 10b5-1 plan.
During the year ended December 31, 2010, 63 million shares were repurchased under the October 2006 program
for a total of $973 million, which exhausted the repurchase authorization of the October 2006 program, and
56 million shares were repurchased under the June 2010 program for a total of $776 million, resulting in
aggregate repurchases during the period of 119 million shares for a total of $1,749 million at an average price of
$14.68 per share. As of December 31, 2010, the June 2010 program had remaining authorized purchase capacity
of $2,224 million.
As of December 31, 2010, we have repurchased and retired 335 million shares, resulting in reductions of $0.3
million in common stock, $2.5 billion in additional paid-in capital, and $4.6 billion in retained earnings. Treasury
stock is accounted for under the cost method.
Capital expenditures
Capital expenditures are generally comprised of purchases of computer hardware, software, server equipment,
furniture and fixtures, and real estate. Capital expenditures, net were $714 million in 2010, compared to $434
million in 2009 and $675 million in 2008. Our capital expenditures in 2011 are expected to be lower compared to
2010 due in part to higher infrastructure costs in 2010 in connection with our initiatives to build out our owned
and operated data centers.
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