AMD 2007 Annual Report Download - page 143

Table of Contents
The Company leases certain of its facilities, as well as the underlying land in certain jurisdictions, under agreements accounted for as operating leases that
expire at various dates through 2021. The Company also leases certain of its manufacturing and office equipment under agreements accounted for as operating
leases for terms ranging from one to five years. Rent expense was approximately $83 million, $57 million and $85 million in 2007, 2006 and 2005.
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 29, 2007, were approximately $343 million, of which $50 million was recorded as a liability
for certain facilities that were included in our 2002 Restructuring Plan. (See Note 16).
The Company, in the normal course of business, enters into purchase commitments to purchase raw materials, energy and gas, other manufacturing and
office supplies and services. Total non-cancelable purchase commitments as of December 29, 2007, were $2.3 billion for periods through 2020. These purchase
commitments include $975 million related to contractual obligations of Fab 30 and Fab 36 to purchase energy and gas and approximately $400 million
representing future payments to IBM for the period from December 30, 2007 through 2011 pursuant to our joint development agreement. The remaining
purchase commitments also include 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 unconditional purchase commitments.
In connection with the acquisition of ATI, the Company made several commitments to the Minister of Industry under the Investment Canada Act including
that it 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
the Company’s Board of Directors over the next five years. The Company’s minimum required Canadian capital expenditures and research and development
commitments are included in its aggregate unconditional purchase commitments.
Guarantees of Indebtedness Recorded on the Company’s Consolidated Balance Sheet
The following table summarizes the principal guarantees issued as of December 29, 2007 related to underlying liabilities that are already recorded on the
Company’s consolidated balance sheet as of December 29, 2007 and their expected expiration dates by year. No incremental liabilities are recorded on the
Company’s consolidated balance sheet for these guarantees:
Amounts
Guaranteed 2008 2009
(In millions)
Repurchase obligations to Fab 36 partners(1) $ 94 $ 47 $ 47
Payment guarantees on behalf of consolidated subsidiaries(2) 54 54 —
Total guarantees $ 148 $ 101 $ 47
138
Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008