Yahoo 2011 Annual Report Download - page 103

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Note 12 C
OMMITMENTS AND
C
ONTINGENCIES
Lease Commitments. The Company leases office space and data centers under operating and capital lease
agreements with original lease periods up to 13 years which expire between 2011 and 2022.
In 2008, the Company entered into an 11-year lease agreement for a data center in the western U.S. Of the total
expected minimum lease commitment of $105 million, $21 million was classified as an operating lease for real
estate and $84 million was classified as a capital lease for equipment. As of December 31, 2011, the Company
had total expected and remaining minimum lease commitments of approximately $79 million over the lease term.
The Company has the option to renew this lease for up to an additional 10 years.
During the second quarter of 2010, the Company acquired certain office space for a total of $72 million ($7
million in cash and the assumption of $65 million in debt). In the first quarter of 2010, the property was
reclassified from an operating lease to a capital lease as a result of a commitment to purchase the property.
Accordingly, in the second quarter the Company reduced the capital lease obligation for the $7 million cash
outlay and reclassified the remaining $65 million as assumed debt in its consolidated balance sheets.
Rent expense for all operating leases was approximately $90 million, $81 million, and $84 million for 2009,
2010, and 2011, 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: (i) 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; (ii) purchase of the property at the then fair market
value; or (iii) right of first offer to lease additional space that becomes available.
Gross and net lease commitments as of December 31, 2011 can be summarized as follows (in millions):
Gross Operating
Lease Commitments
Sublease
Income
Net Operating
Lease Commitments
Years ending December 31,
2012 .............................................. $158 $ (11) $147
2013 .............................................. 132 (11) 121
2014 .............................................. 103 (10) 93
2015 .............................................. 79 (7) 72
2016 .............................................. 43 (1) 42
Due after 5 years .................................... 66 — 66
Total gross and net lease commitments ................... $581 $ (40) $541
Capital
Lease Commitment
Years ending December 31,
2012 ....................................................................... $ 9
2013 ....................................................................... 8
2014 ....................................................................... 8
2015 ....................................................................... 8
2016 ....................................................................... 8
Due after 5 years ............................................................. 23
Gross lease commitment ....................................................... $64
Less: interest ................................................................ (23)
Net lease commitment included in capital lease and other long-term liabilities ............. $41
101