Yahoo 2003 Annual Report Download - page 47

financing arrangement, and at December 31, 2001 such them against certain liabilities that may arise by reason of
amount had been classified as restricted long-term invest- their status or service as directors or officers. We maintain
ments. During July 2002, the Company exercised its director and officer insurance, which may cover certain
right, pursuant to the master lease agreement to acquire liabilities arising from our obligation to indemnify our
the complex for approximately $259 million, which was directors and officers in certain circumstances. The indem-
funded by the restricted long-term investments. nification provided by us to our officers and directors does
not have a stipulated maximum, therefore we are not able
We have entered into various non-cancelable operating to develop a reasonable estimate of the maximum liabili-
lease agreements for our other offices throughout the ties. To date, we have not incurred material costs as a
United States and for our international subsidiaries for result of such obligations and have not accrued any liabili-
original lease periods ranging from six months to 15 years ties related to such indemnification obligations in our
and expiring between 2004 and 2018. financial statements.
In addition, we have entered into various sublease arrange- We continue to increase capital expenditures and operat-
ments associated with our excess facilities under the 2001 ing lease commitments, which is consistent with our
restructuring programs. Such subleases have terms increased staffing and operational expansion, and we
extending through 2006 and amounts estimated to be anticipate that this will continue in the future as business
received have been included in determining the restructur- conditions merit. Additionally, we will continue to evalu-
ing accrual. ate possible acquisitions of, or investments in businesses,
products, and technologies that are complementary to our
Net lease commitments as of December 31, 2003 can be business, which may require the use of cash. Management
summarized as follows (in millions): believes existing cash and investments will be sufficient to
meet operating requirements for at least the next twelve
Gross lease Sublease Net lease months; however, we may sell additional equity or debt
Years ending December 31, commitments income commitments
securities or obtain credit facilities to further enhance our
2004 $ 43 $ (7) $ 36
liquidity position beyond 2004. The sale of additional
2005 34 (4) 30
securities could result in additional dilution to our
2006 25 (3) 22
stockholders.
2007 21 – 21
2008 16 – 16
On April 21, 2003, Overture completed its purchase of
Due after 5 years 104 – 104
the Web Search unit of Fast Search and Transfer ASA, a
Total net lease commitments $243 $(14) $229 Norway based developer of search and real-time filtering
technologies, for $70 million in cash, plus a contingent
earn-out payment of up to $30 million over three years
Other Commitments
based on specified operating criteria. The earn-out pay-
In the ordinary course of business, we enter into various ment is not included in the table above.
arrangements with vendors and other business partners,
principally for marketing, bandwidth and content arrange- On January 2, 2004, we completed our acquisition of
ments. There are no material commitments for these 3721 Network Software Company Limited, a China-based
arrangements extending beyond 2004. software development company. Under the terms of the
acquisition, we have agreed to pay a total of approxi-
In connection with our commercial agreements, we pro- mately $120 million in cash over two years, subject to
vide indemnifications of varying scope and terms to cus- certain performance conditions. In January 2004, approxi-
tomers, business partners and other parties with respect to mately $50 million of the total commitment was paid.
certain matters, including, but not limited to, losses aris- The remaining $70 million is a contingent earn-out pay-
ing out of our breach of such agreements and out of ment over the two-year period ending December 31,
intellectual property infringement claims made by third 2005. The earn-out payment is not included in the table
parties. In addition, we have entered into indemnification below.
agreements with our directors and certain of our officers
that will require us, among other things, to indemnify
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