Seagate 2007 Annual Report Download - page 106

Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
—
(
Continued)
agreements to repurchase the Company’s common shares. As of June 29, 2007, the Company had approximately $974 million remaining under
the authorized $2.5 billion August 2006 stock repurchase program.
8. Commitments
Leases —The Company leases certain property, facilities and equipment under non-cancelable lease agreements. Land and facility leases
expire at various dates through 2082 and contain various provisions for rental adjustments including, in certain cases, a provision based on
increases in the Consumer Price Index. Also, certain leases provide for renewal of the lease at the Company’s option at expiration of the lease.
All of the leases require the Company to pay property taxes, insurance and normal maintenance costs.
Future minimum lease payments for operating leases with initial or remaining terms of one year or more were as follows at June 27, 2008
(lease payments are shown net of sublease income):
Total rent expense for all land, facility and equipment operating leases was approximately $32 million, $36 million and $24 million for
fiscal years 2008, 2007 and 2006, respectively. Total sublease rental income for fiscal years 2008, 2007 and 2006 was $6 million, $11 million
and $6 million, respectively. The Company subleases a portion of its facilities that it considers to be in excess of current requirements. As of
June 27, 2008, total future lease income to be recognized for the Company’s existing subleases is approximately $26 million.
The Company established reserves for both adverse and favorable leasehold interests and for exit costs that apply directly to the lease
commitments assumed through the acquisition of Maxtor. As of June 27, 2008, in accordance with SFAS No. 141, the Company has recorded a
$52 million adverse leasehold interest and a $4 million favorable leasehold interest. Both the adverse and favorable leasehold interest reserves
are being amortized to Cost of Revenue and Operating Expenses over the remaining duration of the leases. In addition, the Company had
$17 million and $28 million remaining in accrued exit costs related to the planned exit of Maxtor leased excess facilities at June 27, 2008 and
June 29, 2007, respectively.
Capital Expenditures —The Company’s commitments for construction of manufacturing facilities and equipment approximated
$289 million at June 27, 2008.
9. Legal, Environmental, and Other Contingencies
Fiscal Years Ending
Operating
Leases
(In millions)
2009
$
42
2010
38
2011
39
2012
34
2013
20
Thereafter
108
$
281
In accordance with SFAS No. 5,
Accounting for Contingencies,
the Company assesses the probability of an unfavorable outcome of all its
material litigation, claims, or assessments to determine whether a liability had been incurred and whether it is probable that one or more future
events will occur confirming the fact of the loss. In the event that an unfavorable outcome is determined to be probable and the amount of the
loss can be
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