Yahoo 2011 Annual Report Download - page 47

Restructuring Charges, Net. For the years ended December 31, 2009, 2010, and 2011, restructuring charges, net
was comprised of the following (in thousands):
Years Ended December 31,
2009 2010 2011
Employee severance pay and related costs $ 48,696 $39,652 $12,965
Non-cancelable lease, contract terminations, and other charges 59,285 19,737 10,251
Other non-cash charges 7,858 2,779 990
Sub-total before accelerations (reversals) of stock-based compensation expense 115,839 62,168 24,206
Accelerations (reversals) of stock-based compensation expense 11,062 (4,211) 214
Restructuring charges, net $126,901 $57,957 $24,420
Q408 Restructuring Plan. During the fourth quarter of 2008, we implemented certain 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 falls 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, 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, 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 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. During the year ended December 31, 2011, we incurred
total pre-tax cash charges for severance, facility, and other restructuring costs of approximately $6 million related
to the Q408 restructuring plan, net of reversal for adjustments to original estimates totaling $2 million. Of the $6
million in restructuring charges, net recorded in the year ended December 31, 2011 related to the Q408
restructuring plan, $5 million related to the Americas segment and approximately $1 million related to the
EMEA segment. As of December 31, 2011, the aggregate outstanding restructuring liability related to the Q408
restructuring plan was $33 million, most of which relates to the non cancelable lease costs that we expect to pay
over the terms of the related obligations, which end by the second quarter of 2017.
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