Yahoo 2014 Annual Report Download - page 137

On February 16, 2015, plaintiffs filed a petition for review by the Supreme Court of Mexico, where
review is limited to constitutional questions under Mexican law. The Company believes there is no
basis for such review in the matter.
On September 10, 2014, the same plaintiffs in the Mexico litigation described above filed an action in
U.S. District Court for the Southern District of New York against Yahoo! Inc., Yahoo! Mexico, Baker &
McKenzie, and Baker & McKenzie, S.C. Plaintiffs allege that defendants conspired to influence the
Mexican courts and “illegally obtain a favorable judgment” in the above litigation. Plaintiffs advance
claims for relief under the Racketeer Influenced and Corrupt Organizations Act of 1970 (“RICO”),
which provides for treble damages in certain cases, conspiracy to violate RICO, common-law fraud,
and civil conspiracy. The complaint seeks unspecified damages. The Company and Yahoo! Mexico
have filed a motion to dismiss the complaint. The Company believes the plaintiffs’ claims in this action
are without merit.
The Company has determined, based on current knowledge, that the amount or range of reasonably
possible losses, including reasonably possible losses in excess of amounts already accrued, is not
reasonably estimable with respect to certain matters described above. The Company has also
determined, based on current knowledge, that the aggregate amount or range of losses that are
estimable with respect to the Company’s legal proceedings, including the matters described above
other than the Mexico matters, would not have a material adverse effect on the Company’s
consolidated financial position, results of operations or cash flows. Amounts accrued as of
December 31, 2014 were not material. The Company did not accrue for the judgment in Mexico, which
was reversed as explained above. The ultimate outcome of legal proceedings involves judgments,
estimates and inherent uncertainties, and cannot be predicted with certainty. In the event of a
determination adverse to Yahoo, its subsidiaries, directors, or officers in these matters, the Company
may incur substantial monetary liability, and be required to change its business practices. Either of
these events could have a material adverse effect on the Company’s financial position, results of
operations, or cash flows. The Company may also incur substantial legal fees, which are expensed as
incurred, in defending against these claims.
Note 13 Stockholders’ Equity
The Board has the authority to issue up to 10 million shares of preferred stock and to determine the
price, rights, preferences, privileges, and restrictions, including voting rights, of those shares without
any further vote or action by the stockholders.
Stock Repurchases.In May 2012, the Board authorized a stock repurchase program allowing the
Company to repurchase up to an additional $5 billion of its outstanding shares of common stock.
That repurchase program was exhausted during the first quarter of 2014. In November 2013, the
Board authorized an additional stock repurchase program with an authorized level of $5 billion. The
November 2013 program, according to its terms, will expire in December 2016. The aggregate
amount remaining under the November 2013 repurchase program was approximately $930 million at
December 31, 2014. Repurchases under the repurchase programs may take place in the open market
or in privately negotiated transactions, including derivative transactions such as accelerated share
repurchase transactions, and may be made under a Rule 10b5-1 plan.
In September and October 2014, the Company entered into two unrelated accelerated share
repurchase agreements (“ASR”) with a financial institution to repurchase shares of its common stock.
Under the September 2014 agreement, the Company prepaid $1.1 billion and approximately 15 million
shares were initially delivered to the Company on September 30, 2014 and are included in treasury
stock. Final settlement occurred on October 17, 2014, resulting in a total of approximately 23.5 million
shares, inclusive of shares initially delivered, repurchased for $933 million, all of which are included in
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