Western Digital 2015 Annual Report Download - page 74

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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 4. Commitments and Contingencies
Lease Commitments
The Company leases certain facilities and equipment under long-term, non-cancelable operating leases. The
Company’s operating leases consist of leased property and equipment that expire at various dates through 2025.
Rental expense under these operating leases, including month-to-month rentals, was $60 million, $59 million and
$64 million in 2015, 2014 and 2013, respectively. Future minimum lease payments under operating leases that have
initial or remaining non-cancelable lease terms in excess of one year at July 3, 2015 are as follows (in millions):
2016 ................................................. $ 40
2017 ................................................. 32
2018 ................................................. 26
2019 ................................................. 23
2020 ................................................. 19
Thereafter ............................................. 45
Total future minimum payments ........................... $185
Product Warranty Liability
Changes in the warranty accrual for 2015, 2014 and 2013 were as follows (in millions):
2015 2014 2013
Warranty accrual, beginning of period ....... $182 $187 $260
Warranty liabilities assumed as a result of
acquisitions ........................ 1 4 —
Charges to operations .................. 187 170 178
Utilization ........................... (190) (207) (221)
Changes in estimate related to pre-existing
warranties ......................... 41 28 (30)
Warranty accrual, end of period ............. $221 $182 $187
Accrued warranty also includes amounts classified in other liabilities in the consolidated balance sheets of $71
million at July 3, 2015 and $63 million at June 27, 2014.
Long-term Purchase Agreements
The Company has entered into long-term purchase agreements with various component suppliers. The commit-
ments depend on specific products ordered and may be subject to minimum quality requirements and future price
negotiations. The Company expects these commitments to total $117 million for 2016, $15 million for 2017, $5
million for 2018, $3 million for 2019 and no remaining commitments for 2020.
Note 5. Legal Proceedings
When the Company becomes aware of a claim or potential claim, the Company assesses the likelihood of any loss
or exposure. The Company discloses information regarding each material claim where the likelihood of a loss con-
tingency is probable or reasonably possible. If a loss contingency is probable and the amount of the loss can be reason-
ably estimated, the Company records an accrual for the loss. In such cases, there may be an exposure to potential loss
in excess of the amount accrued. Where a loss is not probable but is reasonably possible or where a loss in excess of the
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