Yahoo 2011 Annual Report Download - page 58

(1) We have entered into various non-cancelable operating lease agreements for our offices throughout the
Americas, EMEA, and Asia Pacific regions with original lease periods up to 13 years, expiring between 2011
and 2022. See Note 12—“Commitments and Contingencies” in the Notes to the consolidated financial
statements for additional information.
(2) During the year ended December 31, 2008, we 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.
(3) We are obligated to make minimum payments under contracts to provide sponsored search and/or display
advertising services to our Affiliates, which represent TAC.
(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, 2011, unrecognized tax benefits and potential interest and penalties resulted in accrued
liabilities of $408 million, classified as deferred and other long-term tax liabilities, net on our consolidated
balance sheets. As of December 31, 2011, the settlement period for the $408 million long-term income tax
liabilities cannot be determined; however, the liabilities are not expected to result in cash payments or
become due within the next twelve months.
Intellectual Property Rights. We are 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, we may provide indemnifications of varying scope and
terms to customers, vendors, lessors, joint venture 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 our breach of
agreements or representations and warranties made by us, services to be provided by us, intellectual property
infringement claims made by third parties or, with respect to the sale of assets or a subsidiary, matters related to
our conduct of the business and tax matters prior to the sale. 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 might
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.
As of December 31, 2011, we 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. In addition, as of December 31, 2011, we had no off-balance sheet arrangements that have, or
are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of
operations, liquidity, capital expenditures, or capital resources.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our consolidated
financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these
consolidated financial statements requires us to make estimates, judgments, and assumptions that affect the
reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and
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