Yahoo 2009 Annual Report Download - page 108

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Yahoo! Inc.
Notes to Consolidated Financial Statements—(Continued)
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, 2009, these
commitments totaled $143 million, of which $120 million will be payable in 2010 and $23 million will be
payable in 2011.
Non-cancelable Obligations. The Company is obligated to make payments under various non-cancelable
arrangements with vendors and other business partners, principally for marketing, bandwidth, co-location, and
content arrangements. As of December 31, 2009, these commitments totaled $169 million, of which $76 million
will be payable in 2010, $43 million will be payable in 2011, $22 million will be payable in 2012, $14 million
will be payable in 2013, $5 million will be payable in 2014, and $9 million will be payable thereafter.
Intellectual Property Rights. The Company is committed to make certain payments under various intellectual
property arrangements of up to $44 million through 2023.
Other Commitments. In the ordinary course of business, the Company may provide indemnifications of varying
scope and terms to customers, vendors, lessors, joint ventures and business partners, purchasers of assets or
subsidiaries, and other parties with respect to certain matters, including, but not limited to, losses arising out of
the Company’s breach of agreements or representations and warranties made by the Company, services to be
provided by the Company, intellectual property infringement claims made by third parties or, with respect to the
sale of assets or a subsidiary, matters related to the Company’s conduct of the business and tax matters prior to
the sale. In addition, the Company has entered into indemnification agreements with its directors and certain of
its officers that will require the Company, among other things, to indemnify them against certain liabilities that
may arise by reason of their status or service as directors or officers. The Company has also agreed to indemnify
certain former officers, directors, and employees of acquired companies in connection with the acquisition of
such companies. The Company maintains director and officer insurance, which may cover certain liabilities
arising from its obligation to indemnify its 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 might not be subject
to maximum loss clauses. Historically, the Company has not incurred material costs as a result of obligations
under these agreements and it has not accrued any liabilities related to such indemnification obligations in its
consolidated financial statements.
As of December 31, 2009, the Company 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, the Company is not exposed to any financing, liquidity, market, or credit risk that
could arise if the Company had engaged in such relationships. In addition, the Company identified no variable
interests currently held in entities for which it is the primary beneficiary.
Search and License Agreement with Microsoft. The Company has entered into a Search and Advertising Services
and Sales Agreement and License Agreement with Microsoft, under which Microsoft will become Yahoo!’s
exclusive platform technology provider for algorithmic and paid search services and Yahoo! will become the
exclusive worldwide relationship sales force for both companies’ premium search advertisers. The Company
derives a majority of revenue from marketing services, including search services. The parties commenced
implementation of the Search Agreement on February 23, 2010.
Contingencies. Currently, the Company is engaged in lawsuits regarding patent issues and has been notified of
other potential patent disputes. In addition, from time to time, the Company is subject to other legal proceedings
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