Google 2008 Annual Report Download - page 73

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Contractual Obligations as of December 31, 2008
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 ............... $1,030.3 $ 618.0 $ 401.8 $ 10.5 $ —
Operating lease obligations ................................. 2,858.0 275.4 529.9 448.0 1,604.7
Purchase obligations ....................................... 141.0 98.1 42.9 — —
Other long-term liabilities reflected on our balance sheet under
GAAP .................................................. 178.1 16.3 138.3 7.8 15.7
Total contractual obligations ................................ $4,207.4 $1,007.8 $1,112.9 $466.3 $1,620.4
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 payments to a small number of our Google Network members over the term
of the respective contracts. Under our contracts, these guaranteed payments are prorated down based on our
Google Network members not achieving defined performance targets, such as number of advertisements
displayed or search queries. The amounts included in the table above assume that our Google Network members
will meet or exceed their performance targets. We believe these amounts best represent a reasonable and
conservative 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, 2008, our aggregate outstanding non-cancelable guaranteed minimum revenue share
commitments totaled $1,030.3 million through 2012 compared to $1,746.4 million at December 31, 2007.
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 2009 and 2063. 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.
Purchase Obligations
Purchase obligations represent non-cancelable contractual obligations at December 31, 2008. In addition, we
had $1.3 billion of open purchase orders for which we have not received the related services or goods at
December 31, 2008. 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 non-cancelable contractual obligations are related to data
center operations and facility build-outs.
Other Long-Term Liabilities
Other long-term liabilities consist of cash obligations, primarily the legal settlement with the Authors Guild
and the AAP, milestone and royalty payments owed in connection with certain acquisitions and licensing
agreements.
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