AMD 2008 Annual Report Download - page 152

NOTE 13: Commitments and Guarantees
As of December 27, 2008, total noncancelable long-term operating lease obligations, including those for
facilities vacated in connection with restructuring activities, and unconditional purchase commitments were as
follows for each of the next five years and beyond:
Operating
Leases
Purchase
Commitments
2009 ................................................ $ 57 $ 413
2010 ................................................ 58 272
2011 ................................................ 32 212
2012 ................................................ 25 219
2013 ................................................ 21 226
Beyond 2013 ......................................... 74 673
$267 $2,015
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 2018. 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 $81 million, $83 million and $57 million in
2008, 2007 and 2006.
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 27, 2008, were approximately $267 million,
of which $38 million was recorded as a liability for certain facilities that were included in the 2002 Restructuring
Plan and 2008 Restructuring Plan. (See Note 15).
Total non-cancelable purchase commitments as of December 27, 2008 were $2 billion for periods through
2020. These purchase commitments include $809 million related to contractual obligations of the Company’s
Dresden facilities to purchase energy and gas and approximately $934 million representing future payments to
IBM for the period from August 15, 2008 through 2015 pursuant to the Company’s amended and restated joint
development agreement. As IBM’s services are being performed ratably over the life of the agreement, the
Company expenses the payments as incurred. The remaining purchase commitments also include non-cancelable
contractual obligations to purchase raw materials, natural resources and office supplies.
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 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 remaining minimum
required Canadian capital expenditures and research and development commitments are included in its aggregate
unconditional purchase commitments. The Company’s commitments relating to the parts of the Handheld and
Digital Television business units that were divested no longer apply. The Company is in substantial compliance
with the commitments.
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