Yahoo 2011 Annual Report Download - page 110

Q408 Restructuring Plan. During the fourth quarter of 2008, the Company implemented certain 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, 2009, the Company incurred total pre-tax cash charges for severance,
facility, and other restructuring costs of $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 $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 $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. During the year ended December 31, 2011, the Company incurred total pre-tax cash
charges for facility, and other restructuring costs of $6 million related to the Q408 restructuring plan, net of
reversal for adjustments to original estimates totaling $2 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
did not support the Company’s strategic priorities. During the year ended December 31, 2009, the Company
incurred total pre-tax cash charges of $35 million in severance and other costs related to the Q209 restructuring
plan. The pre-tax cash 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. The plan was completed during
the fourth quarter of 2010.
Q409 Restructuring Charges. During the fourth quarter of 2009, the Company decided to close one of its EMEA
facilities and began implementation of workforce realignment at the facility to focus resources on its strategic
initiatives. The Company exited the facility in the third quarter of 2010. During the year ended December 31,
2009, the Company incurred total pre-tax cash charges of $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 the Company’s
acquired businesses departed. The Company 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.
During the year ended December 31, 2010, the Company incurred total pre-tax cash charges of $2 million in
severance, facility and other costs related to the Q409 restructuring charges. During the year ended December 31,
2011, the Company recorded a net reversal of $2 million for adjustments to original estimates in severance and
other costs related to the Q409 restructuring charges. The workforce realignment was completed during the
second quarter of 2011.
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