Yahoo 2005 Annual Report Download - page 97

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91
Note 13 COMMITMENTS AND CONTINGENCIES
Operating Lease Commitments. The Company leases office space and data centers under operating lease
agreements with original lease periods up to 23 years which expire between 2006 and 2027.
The Company has entered into the following material lease agreements with minimum lease commitments
as of December 31, 2005.
• In 2004, the Company entered into a 23 year lease agreement for office space in Sunnyvale,
California with a total expected minimum lease commitment of approximately $149 million over the
lease term and a remaining minimum lease commitment of approximately $143 million as of
December 31, 2005. The Company has the option to renew the lease for two additional five year
terms and the right of first offer to purchase the leased office space if the lessor sells the building.
• In 2005, the Company entered into two ten year lease agreements for data centers in the eastern
United States with total expected minimum lease commitments of approximately $280 million over
the lease terms and remaining minimum lease commitments of approximately $278 million as of
December 31, 2005. The Company has the option to renew each of these leases for an additional
five years and also has a right of expansion for any additional lease space that becomes available.
• In 2005, the Company entered into three ten year lease agreement for office space in Southern
California with total expected minimum lease commitments of approximately $153 million over the
lease terms and remaining minimum lease commitments of approximately $152 million as of
December 31, 2005. In each of these leases, the Company has the option to renew for two
additional terms of three to five years as well as the right of expansion for any additional lease space
that becomes available. Further, in the case of two of these leases, the Company has the right of
first offer to purchase the leased office space if the lessor sells the building.
Rent expense for all operating leases was approximately $21 million, $34 million, and $55 million for 2003,
2004, and 2005, respectively.
Many of the Company’s leases contain one or more of the following options which the Company can
exercise at the end of the initial lease term: (a) renewal of the lease for a defined number of years at the
then fair market rental rate or at a slight discount to the fair market rental rate; (b) purchase of the
property at the then fair market value; or (c) right of first offer to lease additional space that becomes
available.
Net lease commitments as of December 31, 2005 can be summarized as follows (in millions):
Years Ending December 31,
Gross lease
commitments
Sublease
income
Net lease
Commitments
2006 $ 75 $ (4 ) $ 71
2007 86 — 86
2008 92 (1 ) 91
2009 91 — 91
2010 80 — 80
Due after 5 years 414 (1 ) 413
Total net lease commitments $ 838 $ (6 ) $ 832
Other Commitments. In the ordinary course of business, the Company 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 the Company’s breach of such
agreements, services to be provided by the Company, or from intellectual property infringement claims
made by third parties. In addition, the Company has entered into indemnification agreements with its