Intel 2004 Annual Report Download - page 39

Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Contractual Obligations
The following table summarizes our significant contractual obligations at December 25, 2004, and the effect such obligations are
expected to have on our liquidity and cash flows in future periods. This table excludes amounts already recorded on our balance sheet as
current liabilities at December 25, 2004:
Payments Due by Period
(In Millions)
Total
Less than
1 year
1–
3 years
3–
5 years
More than
5 years
Operating lease obligations
$
563
$
124
$
138
$
79
$
222
Capital purchase obligations
1
2,752
2,532
220
—
—
Other purchase obligations and commitments
2
687
264
406
17
—
Long
-
term debt obligations
736
33
80
171
452
Total
3
$
4,738
$
2,953
$
844
$
267
$
674
1
Capital purchase obligations represent commitments for construction or purchase of property, plant and equipment. They were not
recorded as liabilities on our balance sheet as of December 25, 2004, as we had not yet received the related goods or taken title to the
property. Capital purchase obligations increased from $1.5 billion at December 27, 2003 to $2.8 billion at December 25, 2004,
primarily due to purchase obligations for capital equipment relating to our next
-
generation 65
-
nanometer process technology.
2
Other purchase obligations and commitments include payments due under various types of licenses and non-contingent funding
obligations. Funding obligations include, for example, agreements to fund various projects with other companies, such as co-
marketing and co
-
development initiatives.
Contractual obligations for purchases of goods or services are defined as agreements that are enforceable and legally binding on Intel and
that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the
approximate timing of the transaction. Our purchase orders are based on our current manufacturing needs and are fulfilled by our vendors
within short time horizons. In addition, some of our purchase orders represent authorizations to purchase rather than binding agreements. We
do not have significant agreements for the purchase of raw materials or other goods specifying minimum quantities and set prices that exceed
our expected requirements for three months. Therefore, agreements for the purchase of raw materials and other goods and services are not
included in the table above. Agreements for outsourced services generally contain clauses allowing for cancellation without significant penalty,
and are therefore not included in the table above.
Contractual obligations that are contingent upon the achievement of certain milestones are not included in the table above. These
obligations include contingent funding obligations, milestone-based equity investment funding, and acquisition-related deferred cash
compensation contingent upon future employment. These arrangements are not considered contractual obligations until the milestone is met by
the third party. As of December 25, 2004, assuming all future milestones were met, additional required payments would be approximately $23
million.
The expected timing of payments of the obligations above is estimated based on current information. Timing of payments and actual
amounts paid may be different, depending on the time of receipt of goods or services, or changes to agreed-
upon amounts for some obligations.
Amounts disclosed as contingent or milestone-based obligations are dependent on the achievement of the milestones or the occurrence of the
contingent events and can vary significantly.
Off-Balance-Sheet Arrangements
As of December 25, 2004, we did not have any significant off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC
Regulation S-K.
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3
Total does not include contractual obligations recorded on the balance sheet as current liabilities or certain purchase obligations, as
discussed below.