Yahoo 2004 Annual Report Download - page 51

(1) The long-term debt matures in April 2008, unless converted into Yahoo! common stock at a conversion price of $20.50 per share, subject to
adjustment upon the occurrence of certain events. See Note 9 – ‘‘Long-Term Debt’’ in the consolidated financial statements for additional
information related to the long-term debt.
(2) We have entered into various non-cancelable operating lease agreements for our offices throughout the United States, and for our international
subsidiaries with original lease periods up to 23 years and expiring between 2005 and 2027.
(3) We are obligated to make payments under contracts to provide sponsored search services to our affiliates, which represent traffic acquisition costs.
(4) We are obligated to make payments under various arrangements with vendors and other business partners, principally for marketing, bandwidth
and content arrangements.
As of December 31, 2003 and 2004, we did not have any relationships with unconsolidated entities or financial
partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been
established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited pur-
poses. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in
such relationships.
Other Commitments
In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors,
lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out
of our breach of such agreements, services to be provided by us, or from intellectual property infringement claims made
by third parties. In addition, we have entered into indemnification agreements with our directors and certain of our
officers that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of
their status or service as directors or officers. We have also agreed to indemnify certain former officers, directors and
employees of acquired companies in connection with the acquisition of such companies. We maintain director and officer
insurance, which may cover certain liabilities arising from our obligation to indemnify our directors, and officers and
former directors, officers and employees of acquired companies, in certain circumstances.
It is not possible to determine the maximum potential amount under these indemnification agreements due to the
limited history of prior indemnification claims and the unique facts and circumstances involved in each particular
agreement. Such indemnification agreements may not be subject to maximum loss clauses. Historically, we have not
incurred material costs as a result of obligations under these agreements and we have not accrued any liabilities related to
such indemnification obligations in our financial statements.
On April 21, 2003, Overture completed its purchase of the Web Search unit of Fast Search and Transfer ASA, a 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 based on specified operating criteria. The earn-out payment is not
included in the contractual obligations table.
On January 2, 2004, we completed the acquisition of 3721. In January 2004, approximately $51 million in cash
consideration was paid. Under the terms of the acquisition, we also contingently agreed to pay an additional amount up
to a maximum of $70 million in cash, part of which will be an increase to the purchase price and the remainder of
which will be operating expense, over the two-year period ending December 31, 2005, if certain performance criteria are
met. As of December 31, 2004, we recorded an additional $20 million of additional purchase price and $3 million of
additional operating expense, as 3721 achieved certain performance-based milestones. As of December 31, 2004, these
amounts were included in accrued expenses and other current liabilities and will be paid in 2005. The remaining
contingent payment of up to $35 million is not included in the contractual obligations table below. See Note 3 –
‘‘Acquisitions’’ in the consolidated financial statements for additional information related to this acquisition.
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