Financial Review

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NOTE 16  COMMITMENTS AND GUARANTEES

We have committed $621 million for constructing new buildings as of June 30, 2009.

We have operating leases for most U.S. and international sales and support offices and certain equipment. Rental expense for operating leases was $475 million, $398 million, and $325 million, in fiscal years 2009, 2008, and 2007, respectively. Future minimum rental commitments under noncancellable operating leases in place as of June 30, 2009 are as follows:

(In millions)
Year Ended June 30, Amount
2010 $((457
2011 370
2012 309
2013 252
2014 and thereafter 997
$2,385

We provide indemnifications of varying scope and size to certain customers against claims of intellectual property infringement made by third parties arising from the use of our products and certain other matters. We evaluate estimated losses for these indemnifications under SFAS No. 5, Accounting for Contingencies, as interpreted by FIN No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others. We consider such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. To date, we have not encountered significant costs as a result of these obligations and have not accrued any liabilities related to these indemnifications in our financial statements.

PRODUCT WARRANTY

The changes in our aggregate product warranty liabilities, which are included in other current liabilities and other long term-liabilities on our balance sheets, were as follows:

(In millions)
Year Ended June 30, 2009 2008
Balance, beginning of year $, 692 $, 850
Accruals for warranties issued 161 365
Adjustments to pre-existing warranties 36
Settlements of warranty claims (511) (559)
Balance, end of year $, 342 $, 692