Yahoo 2006 Annual Report Download - page 103

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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 2007 and 2027.
The Company has entered into the following material lease agreements with minimum lease commitments as of
December 31, 2006.
• 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 $139 million as of December 31, 2006. 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. One of these
lease agreements with total expected minimum lease commitments of $172 million was cancelled during 2005.
The remaining minimum lease commitments excluding the cancelled lease were $97 million as of December 31,
2006. The Company has the option to renew this lease 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 agreements for office space in Southern California, with
total expected minimum lease commitments (as per 2006 amendments) of approximately $159 million over the
lease terms and remaining minimum lease commitments of approximately $154 million as of December 31, 2006.
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.
• In 2006, the Company entered into an eleven year lease agreement for a data center in the eastern United States.
As of December 31, 2006, the Company had total expected and remaining minimum lease commitments of
approximately $191 million over the lease term. The Company has the option to renew this lease for an additional
five years and also has a right of expansion for any additional lease space that becomes available.
Rent expense for all operating leases was approximately $34 million, $55 million, and $73 million for 2004, 2005,
and 2006, 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.
Gross and net lease commitments as of December 31, 2006 can be summarized as follows (in millions):
Years Ending December 31,
Gross Lease
Commitments
Sublease
Income
Net Lease
Commitments
2007 . . . ....................................... $ 97 $ 3 $ 94
2008 . . . ....................................... 107 3 104
2009 . . . ....................................... 107 3 104
2010 . . . ....................................... 93 2 91
2011 . . . ....................................... 75 1 74
Due after 5 years ................................ 399 — 399
Total gross and net lease commitments ............... $878 $12 $866
93
Yahoo! Inc.
Notes to Consolidated Financial Statements — (Continued)