Yahoo 2014 Annual Report Download - page 78

Capital Expenditures
Capital expenditures are generally comprised of purchases of computer hardware, software, server
equipment, furniture and fixtures, real estate, and capitalized software and labor for internal use
software projects.
Capital expenditures, net were $372 million in 2014, $338 million in 2013, and $506 million in 2012.
Capital expenditures increased $34 million in 2014, as compared to 2013, primarily due to incremental
investment in hardware to support Company initiatives, facilities expansions and improvements,
partially offset by a decline in capitalizable software projects. Capital expenditures declined $168
million in 2013, as compared to 2012, due to a decline in spending and capitalizable projects as well as
purchases in late 2012 to fulfill certain purchasing needs for 2013, partially offset by incremental data
center construction costs.
We expect capital expenditures, net to increase in 2015 from the amount recorded in 2014 as a result
of increased investment initiatives.
Contractual Obligations and Commitments
The following table presents certain payments due under contractual obligations with minimum
commitments as of December 31, 2014 (dollars in millions):
Payments Due by Period
Total
Due in
2015
Due in
2016-2017
Due in
2018-2019 Thereafter
Convertible notes(1) $1,438 $ — $ — $1,438 $ —
Operating lease obligations(2) (3) (4) 555 141 176 96 142
Capital lease obligation 58 19 25 14 —
Affiliate commitments(5) 2,087 505 801 750 31
Non-cancelable obligations(6) 255 148 94 13 —
Intellectual property rights(7) 21 6 9 2 4
Uncertain tax positions, including interest and
penalties(8) 1,122 2 — — 1,120
Total contractual obligations $5,536 $821 $1,105 $2,313 $1,297
(1) During the year end December 31, 2013, we completed an offering of the Notes, which are due
in 2018. The amount above represents the principal balance to be repaid. See Note 11—
“Convertible Notes” in the Notes to our consolidated financial statements for additional
information.
(2) 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 12
years, expiring between 2015 and 2025. See Note 12—“Commitments and Contingencies” in the
Notes to our consolidated financial statements for additional information.
(3) In May 2013, we entered into a 12 year operating lease agreement for four floors of the former
New York Times building in New York City with a total expected minimum lease commitment of
$125 million. We have the option to renew the lease for an additional five years.
(4) In December 2014, the Company entered into a 10-year operating lease agreement for three
partially completed buildings in Los Angeles, California with a total expected minimum lease
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