Google 2007 Annual Report Download - page 100

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Google Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 9. Commitments and Contingencies
Operating Leases
We have entered into various non-cancelable operating lease agreements for certain of our offices, land and data
centers throughout the world with original lease periods expiring between 2008 and 2051. We are committed to pay a
portion of the related operating expenses under certain of these lease agreements. These operating expenses are not
included in the table below. Certain of these arrangements have free or escalating rent payment provisions. We recognize
rent expense under such arrangements on a straight line basis.
At December 31, 2007, future minimum payments under non-cancelable operating leases, along with sublease
income amounts, are as follows over each of the next five years and thereafter (in thousands):
Operating
Leases Sub-lease
Income
Net
Operating
Leases
2008 ................................................................ $ 169,574 $18,001 $ 151,573
2009 ................................................................ 185,157 16,649 168,508
2010 ................................................................ 174,194 14,038 160,156
2011 ................................................................ 159,764 12,810 146,954
2012 ................................................................ 149,767 7,991 141,776
Thereafter ........................................................... 1,446,525 11,853 1,434,672
Total minimum payments required ....................................... $2,284,981 $81,342 $2,203,639
Rent expense under operating leases was $41.2 million, $80.7 million and $127.9 million in 2005, 2006, and 2007.
Sub-lease income was not material in any year presented.
The above minimum payments at December 31, 2007 under non-cancelable operating lease commitments and the
above rent expense amounts do not include amounts related to certain non-cancelable service contracts for our data
centers. The non-cancelable commitments under these service contracts at December 31, 2007 are included below under
purchase obligations.
Guaranteed Minimum Revenue Share Payments
In connection with our AdSense revenue share agreements, we are periodically required to make non-cancelable
guaranteed minimum revenue share payments to a small number of our Google Network members over the term of the
respective contracts. These guaranteed payments can vary based on our Google Network members achieving defined
performance terms, such as number of advertisements displayed or search queries. In some cases, certain guaranteed
amounts will be adjusted downward if our Google Network members do not meet their performance terms and, in some
cases, these amounts will be adjusted upward if they exceed their performance terms. In all of these AdSense agreements, if
a Google Network member were unable to perform under the contract, such as being unable to provide search queries, as
defined under the terms of that agreement, then we would not be obligated to make any non-cancelable guaranteed
minimum revenue share payments to that member. At December 31, 2007, our aggregate outstanding non-cancelable
guaranteed minimum revenue share commitments totaled $1,746.4 million through 2012 compared to $1,165.6 million at
December 31, 2006.
Purchase Obligations
We had $734.0 million of other non-cancelable contractual obligations and $1,375.8 million of open purchase orders
for which we had not received the related services or goods at December 31, 2007. We have the right to cancel these open
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