AMD 2005 Annual Report Download - page 119

Table of Contents
Retirement Savings Plan. The Company has a retirement savings plan, commonly known as a 401(k) plan that allows participating employees in the
United States to contribute up to 100 percent of their pre-tax salary subject to Internal Revenue Service limits. The Company matches employee contributions at
a rate of 50 cents on each dollar of the first six percent of participants’ contributions, to a maximum of three percent of eligible compensation. The Company’s
contributions to the 401(k) plan were approximately $13 million in 2005, $12 million in 2004 and $10 million in 2003.
NOTE 13: Commitments and Guarantees
The Company leases certain of its facilities, as well as the underlying land in certain jurisdictions, under agreements that expire at various dates through
2021. The Company also leases certain of its manufacturing and office equipment for terms ranging from one to five years. Rent expense was approximately $69
million, $63 million and $53 million in 2005, 2004 and 2003.
For each of the next five years and beyond, noncancelable long-term operating lease obligations, including facilities vacated in connection with
restructuring activities, and unconditional commitments to construct the 300-millimeter wafer fabrication facility and purchase manufacturing supplies and
services are as follows:
Operating
leases
Purchase
commitments
(In thousands)
2006 $ 50,826 $ 490,391
2007 47,738 279,200
2008 43,942 226,819
2009 36,124 62,804
2010 32,953 56,183
Beyond 2010 113,947 273,107
$ 325,530 $ 1,388,504
The previous operating lease for the Company’s corporate marketing, general and administrative facility in Sunnyvale, California expired in December
1998, at which time the Company arranged for the sale of the facility to a third party and leased it back under a new operating lease. The Company deferred the
gain ($37 million) on the sale and is amortizing it over a period of 20 years, the life of the lease. The lease expires in December 2018. At the beginning of the
fourth lease year and every three years thereafter, the rent will be adjusted by 200 percent of the cumulative increase in the consumer price index over the prior
three-year period, up to a maximum of 6.9 percent. Certain other operating leases contain provisions for escalating lease payments subject to changes in the
consumer price index. Total future lease obligations as of December 25, 2005, were approximately $326 million, of which $91 million was recorded as a liability
for certain facilities that were included in our 2002 Restructuring Plan. (See Note 15.)
The Company, in the normal course of business, enters into purchase commitments for manufacturing supplies and services. Total non-cancelable
purchase commitments as of December 25, 2005, were $1.4 billion for periods through 2020. These purchase commitments include $559 million related to
contractual obligations of Fab 30 and Fab 36 to purchase silicon-on-insulator wafers and purchases of energy and gas and up to $226 million representing future
payments to IBM pursuant to our joint development agreement. As IBM’s services are being performed ratably over the life of the agreement, we expense the
payments as incurred. In October 2005, our Board of Directors approved an amendment of this agreement, which, among other things, extended its termination
date through December 2011. However, capital purchases by IBM necessary for the continued development of process development projects past December 31,
2008 are conditioned upon the approval of IBM’s board of directors. If such approval is not received by September 30, 2007, either party has the right to
terminate the agreement effective December 31, 2008 without liability. Accordingly, the table above only reflects the Company’s obligations through
December 31, 2008. If such approval is received from IBM, the additional
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Source: ADVANCED MICRO DEVIC, 10-K, February 27, 2006