COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS

Agreement to Develop and Lease

On May 7, 2012, Pte entered into the ADL and a Lease Agreement with DBS Trustee Limited as trustee of the Landlord. Pursuant to the ADL, the Landlord agreed to develop a building in Singapore as our corporate headquarters manufacturing, technology, sales and service center and Pte agreed to lease from the Landlord 198,000 square feet, representing approximately 70% of the building. The building was completed on December 1, 2013.

Warranty Expense

The Company's equipment is generally shipped with a one-year warranty against manufacturing defects. The Company establishes reserves for estimated warranty expense when revenue for the related equipment is recognized. The reserve for estimated warranty expense is based upon historical experience and management's estimate of future warranty costs.

The following table reflects the reserve for product warranty activity for fiscal 2014, 2013, and 2012:



	Fiscal
(in thousands)	2014			2013			2012
Reserve for product warranty, beginning of period	$	1,194		$	2,412		$	2,245
Provision for product warranty	2,099			1,093			3,521
Product warranty costs paid	(1,751		)	(2,311		)	(3,354		)
Reserve for product warranty, end of period	$	1,542		$	1,194		$	2,412

Other Commitments and Contingencies

The following table reflects obligations not reflected on the Consolidated Balance Sheet as of September 27, 2014:



			Payments due by fiscal year
(in thousands)	Total		2014		2015		2016		2017		thereafter
Inventory purchase obligation (1)	$	84,240	$	84,240	$	—	$	—	$	—	$	—
Operating lease obligations (2)	29,525		3,702		3,462		3,058		2,584		16,719
Total	$	113,765	$	87,942	$	3,462	$	3,058	$	2,584	$	16,719


(1)	The Company orders inventory components in the normal course of its business. A portion of these orders are non-cancelable and a portion may have varying penalties and charges in the event of cancellation.


(2)	The Company has minimum rental commitments under various leases (excluding taxes, insurance, maintenance and repairs, which are also paid by the Company) primarily for various facility and equipment leases, which expire periodically through 2023 (not including lease extension options, if applicable).

Pursuant to ASC No. 840, Leases, for lessee's involvement in asset construction, the Company was considered the owner of the Building during the construction phase of the ADL. The building was completed on December 1, 2013 and Pte signed a Lease Agreement with the Landlord to lease from the Landlord approximately 198,000 square feet , representing approximately 70% of the Building. Following the completion of construction, we performed a sale-leaseback analysis pursuant to ASC 840-40 and determined that because of our continuing involvement, ASC 840-40 precluded us from derecognizing the asset and associated financing obligation. As such, we reclassified the asset from construction in progress to Property, Plant and Equipment and began to depreciate the building over its estimated useful life of twenty-five years. We concluded that the term of the financing obligation is 10 years. This is equal to the non-cancellable term of our lease agreement with the Landlord. As of September 27, 2014, we recorded a financing obligation of $19.1 million. The financing obligation is not reflected in the table above.

Concentrations

The following tables reflect significant customer concentrations as a percentage of net revenue for fiscal 2014, 2013, and 2012:



	Fiscal
	2014	2013		2012
Siliconware Precision Industries Ltd.	*	11.0	%	14.9	%
Advanced Semiconductor Engineering	*	*		22.4	%

* Represents less than 10% of net revenue

The following table reflects significant customer concentrations as a percentage of total accounts receivable as of September 27, 2014 and September 28, 2013:



	As of
	September 27, 2014		September 28, 2013
Haoseng Industrial Co., Ltd	21.5	%	11.9	%
Siliconware Precision Industries Ltd.	*		19.5	%
STATS ChipPAC Ltd	*		14.5	%

* Represents less than 10% of total accounts receivable