2.2.0.25falsefalse11201 - Disclosure - Commitments and Contingenciestruefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010
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<tr><td valign="top" width="4%" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>12.</b></font></td>
<td valign="top" align="left"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>COMMITMENTS AND CONTINGENCIES </b></font></td></tr></table>
<p style="margin-top: 6px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Lease Arrangements </b></font></p>
<div>
<p style="margin-top: 6px; text-indent: 4%; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">We have entered into various long-term non-cancelable operating leases for equipment and facilities. We lease facilities in Foster City, Palo Alto and San Dimas, California; Durham, North Carolina; Boulder, Colorado; Seattle, Washington; the Dublin and Cork areas of Ireland and the London area of the United Kingdom. We also have operating leases for sales, marketing and administrative facilities in Europe, Canada and Asia Pacific. Our leases expire on various dates between 2011 and 2029, with many of our leases containing options to renew. Certain facility leases also contain rent escalation clauses. Our most significant lease, related to a facility in Seattle, Washington, expires in 2020 and has a 10-year term. The lease provides us with three consecutive rights to extend the term of the lease through 2035 and contains an annual three percent rent escalation clause. The lease also requires us to pay additional amounts for operating expenses and maintenance. We also have leases for three corporate aircraft, with varying terms, with renewal options upon expiration of the lease terms. </font></p></div>
<p style="margin-top: 12px; text-indent: 4%; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">Lease expense under our operating leases was approximately $<font class="_mt">41.7</font> million, $<font class="_mt">37.3</font> million and $<font class="_mt">29.3</font> million during the years ended December 31, 2010, 2009 and 2008, respectively. Aggregate non-cancelable future minimum rental payments under operating leases are as follows (in thousands): </font></p>
<p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;"> </p>
<table border="0" cellspacing="0" cellpadding="0" width="84%" align="center">
<tr><td width="87%"> </td>
<td valign="bottom" width="5%"> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr bgcolor="#cceeff"><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">2011</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">45,887</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td></tr>
<tr><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">2012</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">37,733</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td></tr>
<tr bgcolor="#cceeff"><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">2013</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">29,648</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td></tr>
<tr><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">2014</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">21,477</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td></tr>
<tr bgcolor="#cceeff"><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">2015</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">19,078</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td></tr>
<tr><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Thereafter</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">57,344</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td></tr>
<tr style="font-size: 1px;"><td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="border-top: #000000 1px solid;" valign="bottom"> </td>
<td style="border-top: #000000 1px solid;" valign="bottom"> </td>
<td> </td></tr>
<tr bgcolor="#cceeff"><td valign="top"> </td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">211,167</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td></tr>
<tr style="font-size: 1px;"><td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="border-top: #000000 3px double;" valign="bottom"> </td>
<td style="border-top: #000000 3px double;" valign="bottom"> </td>
<td> </td></tr></table>
<p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Legal Proceedings </b></font></p>
<p style="padding-bottom: 0px; margin-top: 6px; text-indent: 4%; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">On August 12, 2009, we received a subpoena from the Office of the Inspector General of the U.S. Department of Health and Human Services requesting documents regarding the development, marketing and sales of Ranexa<font style="font-family: Times New Roman;" class="_mt" size="1"><sup style="position: relative; bottom: 0.8ex; vertical-align: baseline;">®</sup></font>. Ranexa is approved for the treatment of chronic angina and was developed and originally commercialized by CV Therapeutics, a company that Gilead acquired in April 2009. Following receipt of the subpoena, we cooperated with the government's inquiry. On December 13, 2010, the United States Department of Justice notified the United States District Court for the Northern District of California "of its decision not to intervene" in a False Claims Act lawsuit filed by a former employee of CV Therapeutics regarding the promotion of Ranexa. On December 16, 2010, the plaintiff-relator filed a notice of voluntary dismissal without prejudice of the underlying lawsuit, and the United States consented to the dismissal without prejudice. </font></p>
<p style="margin-top: 12px; text-indent: 4%; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">We are a party to various other legal actions that arose in the ordinary course of our business. We do not believe that any of these other legal actions will have a material adverse impact on our consolidated business, financial position or results of operations. </font></p>
<p style="margin-top: 18px; margin-bottom: 0px; font-size: 1px;"> </p>
<p style="margin-top: 0px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Other Commitments </b></font></p>
<p style="margin-top: 6px; text-indent: 4%; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">In the normal course of business, we enter into various firm purchase commitments primarily related to active pharmaceutical ingredients and certain inventory related items. As of December 31, 2010, these commitments for the next five years were approximately $<font class="_mt">640.3</font> million in 2011, $<font class="_mt">149.3</font> million in 2012, $<font class="_mt">57.5</font> million in 2013, $<font class="_mt">20.2</font> million in 2014 and $<font class="_mt">3.1</font> million in 2015. The amounts related to active pharmaceutical ingredients represent minimum purchase requirements. Actual payments for the purchases related to these active pharmaceutical ingredients were $<font class="_mt">835.7</font> million, $<font class="_mt">1.03</font> billion and $<font class="_mt">1.04</font> billion during the years ended December 31, 2010, 2009 and 2008, respectively. </font></p> </div>12.
COMMITMENTS AND CONTINGENCIES
Lease Arrangements
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