Yahoo 1998 Annual Report Download - page 57

As of December 31, 1998, the Company’s federal and state net operating loss
carryforwards for income tax purposes were approximately $333 million and
$181 million, respectively. If not utilized, the federal net operating loss carryforwards
will begin to expire in 2010, and the state net operating loss carryforwards will
begin to expire in 2003. The Company’s federal and state research tax credit
carryforwards for income tax purposes are approximately $10.7 million and
$10.1 million, respectively. If not utilized, the federal tax credit carryforwards
will begin to expire in 2010. Approximately $13 million of net operating loss car-
ryforwards relate to acquired entities and expire beginning in 2010. Utilization
of these net operating loss carryforwards may be limited by a cumulative stock
ownership change of more than 50%, or by other limitations.
Deferred tax assets of approximately $141 million as of December 31, 1998
pertain to certain net operating loss carryforwards and credit carryforwards
resulting from the exercise of employee stock options. When recognized, the tax
benefit of these loss and credit carryforwards are accounted for as a credit to
additional paid-in capital rather than a reduction of the income tax provision.
Deferred tax assets include approximately $1.6 million related to net operating
loss carryforwards in various foreign jurisdictions. These carryforwards will
expire if not utilized.
COMMITMENTS AND CONTINGENCIES
Operating Leases. During December 1998, the Company entered into a non-
cancelable operating sublease agreement that will provide the Company
with additional office space at its existing Santa Clara, California location.
Additionally during 1998, the Company entered into various other non-cance-
lable operating lease agreements for its sales offices throughout the U.S. and
its international subsidiaries. Future minimum lease payments under non-
cancelable operating leases with initial terms of one year or more are $3.6
million in 1999, $3.3 million in 2000, $2.7 million in 2001, $2.6 million in 2002,
$2.5 million in 2003, and $0.6 million thereafter. Certain of the Company’s lease
agreements have a five year renewal option from the date of expiration. Total
minimum rental payments aggregate $15.4 million. Rent expense under operating
leases totaled $2.3 million, $1.4 million, and $0.5 million during 1998, 1997,
and 1996, respectively.
Legal. From time to time the Company is subject to legal proceedings and claims
in the ordinary course of business, including claims of alleged infringement of
trademarks, copyrights and other intellectual property rights, and a variety of
claims arising in connection with the Company’s email, message boards, and
other communications and community features, such as claims alleging defama-
tion and invasion of privacy. The Company is not currently aware of any legal
proceedings or claims that the Company believes will have, individually or in
the aggregate, a material adverse effect on the Company’s financial position or
results of operations.
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