Texas Instruments 2015 Annual Report Download - page 63

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FORM 10-K
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 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.
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, 2014, we believe
future payments related to these indemnity obligations will not have a material effect on our financial condition, results of operations
or liquidity.
Supplemental financial information
Other income (expense), net For Years Ended December 31,
2014 2013 2012
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7 $ 10 $ 8
Tax interest income (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6(10) 32
Net gains on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 518 18
Other (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3(1) (11)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21 $ 17 $ 47
(a) Includes lease income of approximately $15 million per year, primarily from the purchaser of a former business. As of December 31,
2014, the aggregate amount of non-cancellable future lease payments to be received from these leases is $51 million. These leases
contain renewal options. Other also includes miscellaneous non-operational items such as losses related to former businesses,
including settlements in 2012; gains and losses from currency exchange rate changes; and gains and losses from our derivative
financial instruments, primarily forward foreign currency exchange contracts.
Prepaid expenses and other current assets December 31,
2014 2013
Prepaid taxes on intercompany inventory profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 693 $ 667
Other prepaid expenses and current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 196
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 850 $ 863
Property, plant and equipment at cost Depreciable
Lives (Years)
December 31,
2014 2013
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . n/a $ 137 $ 175
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 - 40 2,801 2,913
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 - 10 3,328 3,468
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,266 $ 6,556
14.