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Commitments and Guarantees
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Dec. 27, 2014
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| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Guarantees |
Commitments and Guarantees
Operating Leases
As of December 27, 2014, the Company's future non-cancelable operating lease commitments, including those for facilities vacated in connection with restructuring activities, were as follows:
The Company leases certain of its facilities and in some jurisdictions the Company leases the land on which these facilities are built, under non-cancelable lease agreements that expire at various dates through 2025. The Company also leases certain manufacturing and office equipment for terms ranging from one to five years. Rent expense for 2014, 2013 and 2012 was $59 million, $64 million and $49 million, respectively.
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:
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.
Changes in the Company’s estimated liability for product warranty during the years ended December 27, 2014 and December 28, 2013 are as follows:
In addition to product warranties, the Company, from time to time in its normal course of business, indemnifies other parties, with whom it enters into contractual relationships, including customers, lessors and parties to other transactions with the Company, with respect to certain matters. In these limited matters, the Company has agreed to hold certain third parties harmless against specific types of claims or losses, such as those arising from a breach of representations or covenants, third-party claims that the Company’s products when used for their intended purpose(s) and under specific conditions infringe the intellectual property rights of a third party, or other specified claims made against the indemnified party. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the unique facts and circumstances that are likely to be involved in each particular claim and indemnification provision. Historically, payments made by the Company under these obligations have not been material.
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