AMD 2006 Annual Report Download - page 88

Table of Contents
Other Long-Term Liabilities
Other Long-Term Liabilities included $66 million related to certain technology licenses that will be paid through 2008. Other Long-Term Liabilities
excluded amounts recorded on our consolidated balance sheet that do not require us to make cash payments, which, as of December 31, 2006, primarily consisted
of $364 million of deferred grants and subsidies related to the Fab 30 and Fab 36 projects and a $18 million deferred gain as a result of the sale and leaseback of
our corporate marketing, general and administrative facility in Sunnyvale, California in 1998.
Capital Lease Obligations
As of December 31, 2006, we had aggregate outstanding capital lease obligations of $160 million. Included in this amount is $141 million in obligations
under certain energy supply contracts which AMD Fab 36 KG entered into with local energy suppliers to provide Fab 36 with utilities (gas, electricity, heating
and cooling) to meet the energy demand for our manufacturing requirements. We accounted for certain fixed payments due under these energy supply
arrangements as capital leases pursuant to EITF 01-8, Determining Whether an Arrangement Contains a Lease and SFAS 13, Accounting for Leases. The capital
lease obligations under the energy supply arrangements are payable in monthly installments through 2020.
Operating Leases
We lease certain of our facilities, including our executive offices in Sunnyvale, California, and in some jurisdictions we lease the land on which these
facilities are built, under non-cancelable lease agreements that expire at various dates through 2021. We lease certain of our manufacturing and office equipment
for terms ranging from one to five years. Our total future non-cancelable lease obligations as of December 31, 2006, were $381 million, of which $67 million is
accrued as a liability for certain facilities that were included in our 2002 Restructuring Plan. We will make these payments through 2011.
Unconditional Purchase Commitments
Total non-cancelable purchase commitments as of December 31, 2006, were $3.0 billion for periods through 2020. These purchase commitments include
$1 billion related to contractual obligations of Fab 30 and Fab 36 to purchase silicon-on-insulator wafers and energy and gas and up to $169 million representing
payments to IBM for 2007 and 2008 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 August 2005, we amended this agreement, and 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 our obligations through December 31, 2008. If such approval is
received from IBM, the additional obligations from January 2009 through December 2011 would be between $304 million and $334 million. In addition,
unconditional purchase commitments also include $206 million for technology license agreements that require periodic payments through 2009 as well as
non-cancelable contractual obligations to purchase raw materials, natural resources and office supplies. Purchase orders for goods and services that are
cancelable without significant penalties are not included in the amount set forth in the table above.
In connection with the acquisition of ATI, we made several commitments to the Minister of Industry under the Investment Canada Act including that we
will: increase spending on research and development in Canada to a specified amount over the course of a three-year period when compared to ATI’s
expenditures in this area in prior years; maintain Canadian employee headcount at specified levels by the end of the three-year anniversary of the acquisition;
increase by a specified amount the number of our Canadian employees focusing on research and development; attain specified Canadian capital expenditures
over a three-year period; maintain a presence in Canada via a variety of commercial activities for a period of five years; and nominate a Canadian for election to
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007