Google 2007 Annual Report Download - page 71

Contractual Obligations as of December 31, 2007
Payments due by period
Total Less than 1 year 1-3 years 3-5 years More than 5 years
(unaudited, in millions)
Guaranteed minimum revenue share payments ................ $1,746.4 $ 671.9 $ 902.6 $171.9 $ —
Operating lease obligations ................................ 2,203.7 151.6 328.7 288.7 1,434.7
Purchase obligations ..................................... 734.0 171.6 229.5 165.2 167.7
Other long-term liabilities reflected on our balance sheet under
GAAP ............................................... 77.6 46.7 7.8 11.1 12.0
Total contractual obligations .............................. $4,761.7 $1,041.8 $1,468.6 $636.9 $1,614.4
The above table does not include contingent consideration that may be paid pursuant to asset purchases or business
combinations. It also does not include payments related to toolbar and other product distribution arrangements as those
arrangements do not include guaranteed 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. Under our 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. The amounts
included in the table above assume that the historical upward performance adjustments with respect to each contract will
continue, but do not make a similar assumption with respect to downward adjustments. We believe these amounts best
represent a reasonable estimate of the future minimum guaranteed payments. Actual guaranteed payments may differ
from the estimates presented above. To date, the aggregate advertiser fees generated under these AdSense agreements
have exceeded the aggregate guaranteed minimum revenue share payments.
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.
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 above. Certain of these leases have free or escalating rent payment provisions. We recognize rent
expense under such leases on a straight-line basis over the term of the lease.
The above minimum payments at December 31, 2007 under operating lease obligations 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 under purchase obligations.
Purchase Obligations
Purchase obligations represent non-cancelable contractual obligations at December 31, 2007. In addition, we had
$1,375.8 million of open purchase orders for which we have not received the related services or goods at December 31,
2007. This amount is not included in the above table since we have the right to cancel the purchase orders prior to the
date of delivery. The majority of our purchase obligations are related to data center operations and facility build-outs.
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