Yahoo 2015 Annual Report Download - page 138

relate to one corporate building in Los Angeles, California. The estimated timing and amounts of
payments for rent associated with the build-to-suit lease arrangement that has not been placed in
service totaled $20 million, of which $1 million will be payable in 2016, $2 million will be payable in
2017, $2 million will be payable in 2018, $2 million will be payable in 2019, $2 million will be payable in
2020, and $11 million will be payable thereafter.
Note Payable Obligations. The Company is obligated to make payments for notes payable related
to two buildings in Sunnyvale, California. The estimated timing and amounts of payments totaled $56
million, of which $4 million will be payable in 2016, $5 million will be payable in 2017, $5 million will be
payable in 2018, $5 million will be payable in 2019, $5 million will be payable in 2020, and $32 million
will be payable thereafter.
Standby Letters of Credit. As of December 31, 2015, the Company had outstanding potential
obligations relating to standby letters of credit of $42 million. Standby letters of credit are financial
guarantees provided by third parties for ongoing operating liabilities such as leases, utility bills, taxes,
and insurance. If any letter of credit is drawn upon by a beneficiary, the Company is obligated to
reimburse the provider of the guarantee. The standby letters of credit generally renew annually.
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, lease, or assignment of assets,
or the sale of a subsidiary, matters related to the Company’s conduct of the business and tax matters
prior to the sale, lease or assignment. 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 current and former 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 material liabilities related to such indemnification obligations
in the Company’s consolidated financial statements.
As of December 31, 2015, 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, established for the purpose of facilitating off-balance sheet arrangements or other
contractually narrow or limited purposes. Accordingly, the Company is not exposed to any financing,
liquidity, market, or credit risk that could arise if the Company had such relationships. In addition, the
Company identified no variable interests currently held in entities for which it is the primary
beneficiary.
Legal Contingencies
General. The Company is regularly involved in claims, suits, government investigations, and
proceedings arising from the ordinary course of the Company’s business, including actions with
respect to intellectual property claims, privacy, consumer protection, information security, data
134