Yahoo 2011 Annual Report Download - page 104

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, 2011, these
commitments totaled $166 million, of which $91 million will be payable in 2012 and $75 million will be payable
in 2013.
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, 2011, these commitments totaled $228 million, of which $110 million
will be payable in 2012, $66 million will be payable in 2013, $20 million will be payable in 2014, $6 million will
be payable in 2015, $6 million will be payable in 2016, and $20 million will be payable thereafter.
Intellectual Property Rights. The Company is committed to make certain payments under various intellectual
property arrangements of up to $34 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 the
Company’s consolidated financial statements.
As of December 31, 2011, 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.
See Note 16—“Search Agreement with Microsoft Corporation” for a description of the Company’s Search and
Advertising Services and Sales Agreement (the “Search Agreement”) and License Agreement with Microsoft
Corporation (“Microsoft”).
Contingencies. From time to time, third parties assert patent infringement claims against Yahoo!. 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 and claims in the ordinary
course of business, including claims of alleged infringement of trademarks, copyrights, trade secrets, and other
intellectual property rights, claims related to employment matters, and a variety of other claims, including claims
alleging defamation, invasion of privacy, or similar claims arising in connection with the Company’s e-mail,
message boards, photo and video sites, auction sites, shopping services, and other communications and
community features.
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