Yahoo 2014 Annual Report Download - page 138

treasury stock. The Company received a return of cash for the remaining amount not settled in shares
of $167 million. Under the October 2014 agreement, the Company prepaid the maximum repurchase
amount of $1.0 billion and approximately 15 million shares were initially delivered on October 30,
2014. Final settlement occurred on December 9, 2014, resulting in a total of approximately 16 million
shares, inclusive of shares initially delivered, repurchased for $800 million, all of which are included in
treasury stock. The Company received a return of cash for the remaining amount not settled in shares
of $200 million. Both ASR agreements were entered into pursuant to the Company’s existing share
repurchase program.
The Company accounted for the September 2014 ASR as two separate transactions:
(i) approximately 15 million shares of common stock initially delivered to the Company, and $600
million was accounted for as a treasury stock transaction and (ii) the remaining $500 million
unsettled portion of the contract was determined to be a forward contract indexed to the Company’s
own common stock. The initial delivery of approximately 15 million shares resulted in an immediate
reduction, on the delivery date, of the outstanding shares used to calculate the weighted-average
common shares outstanding for basic and diluted net income per share. The Company has
determined that the forward contract, indexed to its common stock, met all of the applicable criteria
for equity classification. The Company recorded $600 million as treasury stock and recorded $500
million, the implied value of the forward contract, in additional paid-in capital on the consolidated
balance sheets as of September 30, 2014. As the remainder of the shares were delivered to the
Company, in the fourth quarter of 2014, the forward contract was reclassified from additional paid-in
capital to treasury stock for the value of the additional shares received, and additional paid-in capital
was debited for the cash returned for the remaining amount of shares not settled.
During the year ended December 31, 2013, the Company repurchased approximately 129 million
shares of its common stock under the May 2012 stock repurchase programs at an average price of
$25.95 per share for a total of $3.3 billion. These repurchases included the Company’s repurchase of
40 million shares of its 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, and at $29.11 per share, which was the closing price of
the Company’s 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 the Company’s unsecured revolving credit facility that have been repaid.
During the year ended December 31, 2014, in addition to the repurchase under the ASR’s, the
Company repurchased approximately 62 million shares of its common stock under its stock
repurchase program at an average price of $39.30 per share for a total of approximately $2.4 billion.
As of December 31, 2014, the November 2013 program had remaining authorized purchase capacity
of $930 million.
During the year ended December 31, 2013, the Company retired 198 million shares, resulting in
reductions of $198,000 in common stock, $1.6 billion in additional paid-in capital, and $2.9 billion in
retained earnings. During the year ended December 31, 2014, the Company retired 94 million shares,
resulting in reductions of $94,000 in common stock, $795 million in additional paid-in capital, and
$2.9 billion in retained earnings.
Note 14 Employee Benefits
Benefit Plans.The Company maintains the Yahoo! Inc. 401(k) Plan (the “401(k) Plan”) for its full-time
employees in the U.S. The 401(k) Plan allows employees of the Company to contribute up to the
Internal Revenue Code prescribed maximum amount. Employees may elect to contribute from 1 to 50
percent of their annual compensation to the 401(k) Plan. The Company matches employee
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