Yahoo 2015 Annual Report Download - page 160

The Company currently reports as revenue the revenue share it receives from Microsoft under the
Search Agreement as the Company is not the primary obligor in the arrangement with the advertisers
and publishers as the underlying search advertising services are provided by Microsoft.
Approximately 31 percent, 35 percent, and 35 percent of the Company’s revenue for the years ended
December 31, 2013, 2014 and, 2015, respectively, was attributable to the Search Agreement.
As of December 31, 2014 and 2015, the Company had collected total amounts of $52 million and nil,
respectively, on behalf of Microsoft and Microsoft’s affiliates, which was included in cash and cash
equivalents with a corresponding liability in accrued expenses and other current liabilities. The
Company’s uncollected revenue share in connection with the Search Agreement was $330 million
and $267 million, which is included in accounts receivable, net, as of December 31, 2014 and 2015,
respectively.
On December 9, 2010, in connection with entering into the Search Agreement, the Company also
entered into a License Agreement with Microsoft (as amended, the “License Agreement”). Under the
License Agreement, Microsoft acquired an exclusive 10-year license to the Company’s core search
technology and has the ability to integrate this technology into its existing web search platforms.
Pursuant to the Eleventh Amendment, the exclusive licenses granted to Microsoft under the License
Agreement became non-exclusive. The Company also agreed pursuant to the Eleventh Amendment
to license certain sales tools to Microsoft to use solely in connection with Microsoft’s paid search
services pursuant to the terms of the License Agreement.
Note 20 Subsequent Events
Restructuring Charges. On February 2, 2016, the Company announced that it had begun notifying
employees about plans to reduce its workforce by approximately 15 percent by the end of 2016 and
exit five offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan subject to applicable laws and
consultation processes as a part of the strategic plan to simplify Yahoo’s product portfolio. The
Company further subsequently announced that it will also be closing its office in Burbank, California.
The Company estimates that in connection with this action it will incur related pre-tax cash charges
of $40 million to $48 million for severance pay expenses and related cash expenditures. The
Company estimates that it will incur pre-tax cash charges of $17 million to $21 million related to the
consolidation and exit of facilities related to non-cancelable lease costs and other related costs. Non-
cancelable lease costs were determined based on the present value of remaining lease payments
reduced by estimated sublease income. In addition, the Company estimates that it will incur pre-tax
non-cash charges of $6 million to $8 million related to stock-based compensation expense and
$1 million related to impairment costs. The Company estimates that it will incur a total of $64 million
to $78 million in pre-tax charges, as discussed above, in connection with the planned action.
The Company expects to recognize most of the pre-tax charges in the first quarter of 2016.
Approximately $57 million to $69 million of the total charges are expected to result in future cash
expenditures.
156