Yahoo 2013 Annual Report Download - page 64

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activities was due to $2.2 billion used for the repurchase of 126 million shares of our common stock at an
average price of $17.20 per share, $61 million for tax withholding payments related to net share settlements of
restricted stock units, and $5 million for other financing activities. This use of cash was partially offset by $218
million in cash proceeds from employee stock option exercises and employee stock purchases made through our
employee stock purchase plan, and an excess tax benefit from stock-based awards of $36 million. During the year
ended December 31, 2011, the $1.5 billion used in financing activities was due to $1.6 billion used for the
repurchase of 110 million shares of our common stock at an average price of $14.75 per share, $45 million for
tax withholding payments related to net share settlements of restricted stock units, and $19 million for other
financing activities. This use of cash was partially offset by $156 million in cash proceeds from employee stock
option exercises and employee stock purchases made through our employee stock purchase plan, and an excess
tax benefit from stock-based awards of $71 million.
In 2013, 2012, and 2011, $64 million, $36 million, and $71 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 14—“Employee Benefits” in the Notes to our consolidated
financial statements for additional information.
Stock Repurchases
In June 2010, the Board authorized a stock repurchase program allowing us to repurchase up to $3 billion of our
outstanding shares of common stock from time to time. That repurchase program, which by its terms would have
expired in June 2013, was exhausted during the third quarter of 2012. In May 2012, the Board authorized a stock
repurchase program allowing us to repurchase up to an additional $5 billion of our outstanding shares of common
stock from time to time (this amount includes the $3.65 billion we committed to return to our shareholders from
the Initial Repurchase proceeds). The May 2012 repurchase program, according to its terms, will expire in June
2015. In November 2013, the Board authorized a stock repurchase program allowing us to repurchase up to an
additional $5 billion of our outstanding shares of common stock from time to time. The November 2013
repurchase program, according to its terms, will expire in December 2016. Repurchases under the repurchase
programs 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, 2013, we
repurchased approximately 129 million shares of our common stock under the May 2012 stock repurchase
program at an average price of $25.95 per share for a total of approximately $3.3 billion. These repurchases
included the repurchase of 40 million shares of our common stock beneficially owned by Third Point LLC on
July 25, 2013. These shares were repurchased pursuant to a Purchase Agreement entered into on July 22, 2013,
prior to the market opening for trading in Yahoo stock, at $29.11 per share, which was the closing price of our
common stock on July 19, 2013. The total purchase price for these shares was $1.2 billion. The repurchase
transaction was funded primarily with cash as well as borrowings of $150 million under our Credit Agreement
that have been repaid.
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