AMD 2014 Annual Report Download - page 108

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In December 1998, the Company arranged for the sale of its marketing, general and administrative facility
in Sunnyvale, California and leased it back for a period of 20 years. The Company recorded a deferred gain of
$37 million on the sale and is amortizing it over the life of the lease. The lease expires in December 2018. At the
beginning of the fourth lease year and every three years thereafter, the rent is adjusted by 200% of the cumulative
increase in the consumer price index over the prior three-year period, up to a maximum of 6.9%.
In September 2013, the Company sold a light industrial building in Singapore and leased back a portion of
the original space. The Company recorded a deferred gain of $14 million on the sale and is amortizing over the
initial lease term. The initial lease term expires in September 2023 and provides for options to extend the lease
for 4 years, at the end of the initial lease term, and for an additional 3.5 years thereafter.
Certain other operating leases contain provisions for escalating lease payments subject to changes in the
consumer price index. Total future lease obligations as of December 27, 2014 were $340 million.
Purchase and Other Contractual Obligations
The Company’s purchase obligations primarily include the Company’s obligations to purchase wafers and
substrates from third parties. As of December 27, 2014, total non-cancelable purchase obligations, excluding the
Company’s wafer purchase commitments to GF under the WSA, were $688 million.
The Company also had other contractual obligations, included in “Other long-term liabilities” on its
consolidated balance sheet, which consists of $67 million of payments due under certain software and technology
licenses that will be paid through 2018.
Future unconditional purchase obligations as of December 27, 2014 were as follows:
Year
Unconditional
purchase
obligations
(In millions)
2015 .......................................................... $ 542
2016 .......................................................... 85
2017 .......................................................... 102
2018 .......................................................... 26
2019 .......................................................... —
2020 and thereafter .............................................. —
Total unconditional purchase commitments ........................... $ 755
Obligations to GF
Obligations to GF represent all of the Company’s expected cash payments to GF based on wafer receipts
and research and development activities. As of December 27, 2014, cash payments owed to GF were $80 million.
Warranties and Indemnities
The Company generally warrants that its products sold to its customers will conform to the Company’s
approved specifications and be free from defects in material and workmanship under normal use and service for
one year. Subject to certain exceptions, the Company also offers a three-year limited warranty to end users for
only those CPU and AMD A-Series APU products purchased as individually packaged products that are
commonly referred to as “processors in a box” and for PC workstation products. The Company has also offered
extended limited warranties to certain customers of “tray” microprocessor products for each of its business units
and/or workstation graphics products who have written agreements with the Company and target their computer
systems at the commercial and/or embedded markets.
102