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This excerpt taken from the ELN 6-K filed Mar 30, 2009. 26 Leases
Operating
Leases
We lease certain of our facilities under non-cancellable
operating lease agreements that expire at various dates through
2024. The major components of our operating leases that were in
effect at 31 December 2008 are as described below.
In August 1998, we entered into an agreement for the lease of
four buildings located in South San Francisco, California.
These buildings are utilised for R&D, administration and
other corporate functions. The leases expire between December
2012 and December 2014. Thereafter, we have an option to renew
for two additional five-year periods.
In August 1996 and August 2000, we entered into lease agreements
for our R&D facility located in King of Prussia,
Pennsylvania. The lease agreements expire in May 2012 and April
2011, respectively.
In September 2004, we entered into a lease agreement for our
corporate headquarters located in the Treasury Building, Dublin,
Ireland. This lease expires in July 2014, with an option to
renew for two additional
10-year
periods. In April 2008, we entered into another lease agreement
for an additional space at the Treasury Building. This lease
expires in July 2014, with an option to renew for two additional
10-year
periods. The agreement provides us with a
15-month
rent-free period commencing at the beginning of the lease.
Table of Contents
In June 2007, we entered into a lease agreement for a building
in South San Francisco, California. The building is under
construction and will be utilised for R&D, sales and
administrative functions. The lease term commenced in March
2009. The lease term is 15 years, with an option to renew
for one additional five-year period. The agreement provides us
with the option to cancel 10 years from the commencement
date. The cancellation will require a one-year written notice
and will include a penalty equal to nine months of rental
payments and any unamortised landlord costs for tenant
improvements. At 31 December 2008, we estimate the total
rental payments and leasehold improvement incentives to be
$99.9 million and $7.2 million, respectively. The
rental payments and leasehold improvement incentives will be
finalised upon completion of the building.
In July 2007, we entered into a lease agreement for a portion of
a building in South San Francisco, California. The leased
space is for our sales and administrative functions. The lease
period expires in August 2009. We have notified the landlord
that we will not renew the lease after the expiration of the
lease in August 2009.
In December 2007, we entered into a lease agreement for a
building in South San Francisco, California. The building
is under construction and will be utilised for R&D, sales
and administrative functions. We expect the lease term to
commence in the first quarter of 2010. The lease term is 15
years, with an option to renew for one additional five-year
period. The agreement provides us with the option to cancel
10 years from the commencement date. The cancellation will
require a one-year written notice and will include a penalty
equal to nine months of rental payments and any unamortised
landlord costs for tenant improvements. At 31 December
2008, we estimate the total rental payments and leasehold
improvement incentives to be $82.7 million and
$5.6 million, respectively. The rental payments and
leasehold improvement incentives will be finalised upon
completion of the building.
In December 2008, we announced the planned closure of the New
York office, which occurred in March 2009. The lease period
expires in February 2015. The future rental commitments relating
to this lease are included in the table below.
In addition, we also have various operating leases for equipment
and vehicles, with lease terms that range from three to five
years.
We recorded an expense under operating leases for premises and
plant and equipment of $19.4 million in 2008 (2007:
$22.7 million). We had no sublease income in any of these
periods. At 31 December, our future minimum rental
commitments for operating leases with non-cancellable terms in
excess of one year are as follows:
Finance
Leases
The net book value of property, plant and equipment held under
finance leasing agreements at 31 December 2008 amounted to
$5.0 million (2007: $7.0 million), which is net of
$68.3 million of accumulated depreciation (2007:
$66.0 million). Depreciation expense for the period
amounted to $2.3 million (2007: $3.0 million).
In prior years, we disposed of plant and equipment and
subsequently leased them back and also entered into an
arrangement with a third-party bank, the substance of which
allows us a legal right to require a net settlement of our
obligations under the leases. The cash and borrowings relating
to the previous sale and leaseback transactions have been offset
in the Consolidated Financial Statements in the amount of
$32.8 million at 31 December 2008 (2007:
$37.6 million).
Table of Contents
Notes to the
Consolidated Financial Statements
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