Yahoo 2006 Annual Report Download - page 59

Contractual obligations and commitments
The following table presents certain payments due under contractual obligations with minimum firm commitments
as of December 31, 2006 (in millions):
Total
Due in
2007
Due in
2008-2009
Due in
2010-2011 Thereafter
Payments Due by Period
Long-term debt
(1)
..................... $ 750 $ — $ 750 $ — $ —
Operating lease obligations
(2)
............. 878 97 214 168 399
Affiliate commitments
(3)
................ 17 16 1 — —
Non-cancelable obligations
(4)
............. 144 69 51 17 7
Total contractual obligations ........... $1,789 $182 $1,016 $185 $406
(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 2007 and 2027. See Note 13 —
“Commitments and Contingencies” in the consolidated financial statements for additional information.
(3)
We are obligated to make payments under contracts to provide sponsored search and/or display advertising 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.
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 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. It is not possible to determine the maximum
potential loss 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
consolidated financial statements.
In 2006, we reversed an earn-out accrual related to a prior acquisition, which resulted in a $10 million reduction to
operating expenses in the consolidated statements of income.
As of December 31, 2006, 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 purposes. As
such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such
relationships.
In February 2007, we committed to invest up to $200 million through July 2008 to acquire rights to intellectual
property. License payments associated with the acquired rights will be amortized over the useful life of the related
intellectual property.
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