Texas Instruments 2012 Annual Report Download - page 34

ANNUAL
REPORT
TEXAS INSTRUMENTS32 • 2012 ANNUAL REPORT
Purchase commitments
Some of our purchase commitments entered in the ordinary course of business provide for minimum payments. At December 31, 2012,
we had committed to make the following minimum payments under our non-cancellable operating leases, capitalized software licenses
and purchase commitments:
Operating
Leases
Capitalized
Software
Licenses Purchase Commitments
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 102 $ 46 $ 77
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 33 54
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 14 25
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 — 18
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 — 10
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 — 22
Indemnification guarantees
We routinely sell products with an intellectual property indemnification included in the terms of sale. Historically, we have had only
minimal, infrequent losses associated with these indemnities. Consequently, we cannot reasonably estimate or accrue for any future
liabilities that may result.
Warranty costs/product liabilities
We accrue for known product-related claims if a loss is probable and can be reasonably estimated. During the periods presented, there
have been no material accruals or payments regarding product warranty or product liability. Historically, we have experienced a low
rate of payments on product claims. Although we cannot predict the likelihood or amount of any future claims, we do not believe they
will have a material adverse effect on our financial condition, results of operations or liquidity. Consistent with general industry practice,
we enter into formal contracts with certain customers that include negotiated warranty remedies. Typically, under these agreements
our warranty for semiconductor products includes three years of coverage; an obligation to repair, replace or refund; and a maximum
payment obligation tied to the price paid for our products. In some cases, product claims may exceed the price of our products.
General
We are subject to various legal and administrative proceedings. Although it is not possible to predict the outcome of these matters, we
believe that the results of these proceedings will not have a material adverse effect on our financial condition, results of operations or
liquidity. From time to time, we also negotiate contingent consideration payment arrangements associated with certain acquisitions,
which are recorded at fair value.
Discontinued operations indemnity
In connection with the 2006 sale of the former Sensors & Controls (S&C) business, we have agreed to indemnify Sensata Technologies,
Inc., for specified litigation matters and certain liabilities, including environmental liabilities. In a settlement with a third party, we
have agreed to indemnify that party for certain events relating to S&C products, which events we consider remote. We believe our
total remaining potential exposure from both of these indemnities will not exceed $200 million. As of December 31, 2012, we believe
future payments related to these indemnity obligations will not have a material effect on our financial condition, results of operations
or liquidity.
14. Stockholders’ equity
We are authorized to issue 10,000,000 shares of preferred stock. No preferred stock is currently outstanding.
Treasury shares acquired in connection with the board-authorized stock repurchase program in 2012, 2011 and 2010 were
59,757,780 shares, 59,466,168 shares and 93,522,896 shares, respectively. As of December 31, 2012, $3.9 billion of stock repurchase
authorizations remain, and no expiration date has been specified.