Yahoo 2007 Annual Report Download - page 55

Contractual obligations and commitments
The following table presents certain payments due under contractual obligations with minimum firm commitments
as of December 31, 2007 (in millions):
Total
Due in
2008
Due in
2009-2010
Due in
2011-2012 Thereafter
Payments Due by Period
Short-term debt
(1)
............................ $ 750 $ 750 $ — $ — $ —
Operating lease obligations
(2)
................... 900 131 238 171 360
Affiliate commitments
(3)
....................... 286 91 195 — —
Non-cancelable obligations
(4)
................... 145 83 49 13 —
FIN 48 obligations including interest and
penalties
(5)
............................... 246 1 — — 245
Total contractual obligations .................. $2,327 $1,056 $482 $184 $605
(1)
The short-term debt matures in April 2008, unless previously 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 — “Short-Term Debt” in the consolidated financial statements for
additional information related to the short-term debt.
(2)
We have entered into various non-cancelable operating lease agreements for our offices throughout the U.S. and for our international
subsidiaries with original lease periods up to 23 years, expiring between 2008 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.
(5)
As of December 31, 2007, unrecognized tax benefits and potential interest and penalties resulted in accrued liabilities of $245 million and are
classified as “deferred and other long-term tax liabilities, net” on our consolidated balance sheets. As of December 31, 2007, the settlement
period for our income tax liabilities cannot be determined; however, the liabilities are not expected to become due within the next twelve
months.
Affiliate Commitments. In connection with our contracts to provide advertising services to Affiliates, we are
obligated to make payments, which represent traffic acquisition costs, to our 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, we are obligated to
invest up to $93 million through July 2008. To the extent the licensed intellectual property will benefit future
periods, we will capitalize such payments and amortize them over the useful life of the related intellectual property.
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 and former directors and officers of acquired
companies, in certain circumstances. It is not possible to determine the aggregate 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.
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