Yahoo 2003 Annual Report Download - page 75

deferred income tax assets and liabilities are as follows (in Note 14 COMMITMENTS AND
thousands): CONTINGENCIES
Operating Leases. During 1999, the Company entered into
Years Ended December 31,
agreements for the development of an office complex in
2001 2002 2003
Sunnyvale, California to serve as its headquarters. Upon
Deferred income tax assets:
substantial completion of the construction in 2001,
Net operating loss and credit
approximately $259 million was funded for the complex
carryforwards $ 1,423,323 $ 1,443,547 $ 1,538,723
in connection with the lease financing arrangement, and
Non-deductible reserves and expenses 131,321 171,068 310,099
at December 31, 2001 such amount had been classified as
Gross deferred tax assets 1,554,644 1,614,615 1,848,822
restricted long-term investments. During July 2002, the
Valuation allowance (1,530,838) (1,560,075) (1,659,551)
Company exercised its right, pursuant to the master lease
agreement to acquire the complex for approximately
$ 23,806 $ 54,540 $ 189,271
$259 million, which was funded by the restricted
Deferred income tax liabilities:
long-term investments.
Unrealized investment gains $ (12,820) $ (6,955) $ (3,263)
Purchased intangible assets (10,986) (47,585) (186,008)
The Company has entered into various non-cancelable
Gross deferred tax liabilities $ (23,806) $ (54,540) $ (189,271)
operating lease agreements for other offices throughout the
United States, and for international subsidiaries, for origi-
Net deferred tax assets (liabilities) $ – $ – $ –
nal lease periods ranging from 6 months to 15 years and
expiring between 2004 and 2018.
As of December 31, 2003, the Company’s federal and
state net operating loss carryforwards for income tax pur- In addition, the Company has entered into various sub-
poses were approximately $3.6 billion and $2.1 billion, lease arrangements associated with excess facilities under
respectively. If not utilized, the federal net operating loss the 2001 restructuring programs. Such subleases have
carryforwards will begin to expire in 2010, and approxi- terms extending through 2006 and amounts estimated to
mately $113 million of the state net operating loss car- be received have been included in determining the restruc-
ryforwards will expire in 2004. The Company’s federal turing accrual.
and state research tax credit carryforwards for income tax
purposes are approximately $85 million and $80 million, Net lease commitments as of December 31, 2003 can be
respectively. If not utilized, the federal tax credit carryfor- summarized as follows (in millions):
wards will begin to expire in 2010. The Company has a
valuation allowance of approximately $1.7 billion as of Gross lease Sublease Net lease
Years ending December 31, commitments income commitments
December 31, 2003 for deferred tax assets because of
uncertainty regarding their realization. 2004 $ 43 $ (7) $ 36
2005 34 (4) 30
Deferred tax assets of approximately $1.4 billion as of 2006 25 (3) 22
December 31, 2003 pertain to certain net operating loss 2007 21 – 21
carryforwards and credit carryforwards resulting from the 2008 16 – 16
exercise of employee stock options. When recognized, the Due after 5 years 104 – 104
tax benefit of these loss and credit carryforwards are Total net lease
accounted for as a credit to additional paid-in capital commitments $243 $(14) $229
rather than a reduction of the income tax provision.
Included in deferred tax assets is approximately $100 mil-
Rent expense under operating leases totaled approximately
lion of acquired entity net operating losses that will adjust
$19 million, $15 million, and $21 million for the years
goodwill when recognized, and approximately $48 million
ended December 31, 2001, 2002 and 2003, respectively.
of foreign net operating losses that will expire if not
utilized.
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