Yahoo 2007 Annual Report Download - page 101

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 10 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 $87 million as of December 31,
2007. 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 10 year lease agreements for office space in Southern California, with
total expected minimum lease commitments (as per 2007 amendments) of approximately $158 million over the
lease terms and remaining minimum lease commitments of approximately $142 million as of December 31, 2007.
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 11 year lease agreement for a data center in the eastern United States with a
total expected minimum lease commitment of $191 million. As of December 31, 2007, the Company had total
expected and remaining minimum lease commitments of approximately $188 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 $55 million, $73 million, and $88 million for 2005, 2006,
and 2007, 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, 2007 can be summarized as follows (in millions):
Years Ending December 31,
Gross Lease
Commitments
Sublease
Income
Net Lease
Commitments
2008 . . . ....................................... $131 $ 4 $127
2009 . . . ....................................... 128 3 125
2010 . . . ....................................... 110 2 108
2011 . . . ....................................... 91 1 90
2012 . . . ....................................... 80 1 79
Due after 5 years ................................ 360 — 360
Total gross and net lease commitments ............... $900 $11 $889
Affiliate Commitments. In connection with contracts to provide advertising services to Affiliates, the Company is
obligated to make payments, which represent TAC, to its Affiliates. As of December 31, 2007, these commitments
totaled $286 million, of which $91 million will be payable in 2008, $111 million will be payable in 2009, and
$84 million will be payable in 2010.
Intellectual Property Rights. In connection with the licensing of certain intellectual property, the Company is
obligated to invest up to $93 million through July 2008. To the extent the licensed intellectual property will benefit
future periods, the Company will capitalize such payments and amortize them over the useful life of the related
intellectual property.
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Yahoo! Inc.
Notes to Consolidated Financial Statements — (Continued)