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 at 23A Serangoon North Avenue 5, #01-01 K&S Corporate Headquarters, Singapore 554369 and Pte agreed to lease from the Landlord approximately 198,000 square feet (the “Initial Premises”) 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 the three and nine months ended June 28, 2014 and June 29, 2013:



	Three months ended						Nine months ended
(in thousands)	June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013
Reserve for product warranty, beginning of period	$	885		$	1,163		$	1,194		$	2,412
Provision for product warranty	784			379			1,284			443
Product warranty costs paid	(375		)	(468		)	(1,184		)	(1,781		)
Reserve for product warranty, end of period	$	1,294		$	1,074		$	1,294		$	1,074

Other Commitments and Contingencies

The following table reflects obligations not reflected on the Consolidated Balance Sheet as of June 28, 2014:



			Payments due by fiscal year
(in thousands)	Total		2014		2015		2016		2017		thereafter
Inventory purchase obligation (1)	$	133,542	$	133,542	$	—	$	—	$	—	$	—
Operating lease obligations (2)	29,716		1,143		3,154		3,177		2,974		19,268
Total	$	163,258	$	134,685	$	3,154	$	3,177	$	2,974	$	19,268


(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 2018 (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. This financing obligation is not reflected in the table above. The Company has recorded a financing obligation of $19.6 million on the balance sheet as of June 28, 2014.

Concentrations

There is no significant customer that represents 10% or more of our net revenue for the nine months ended June 28, 2014 and June 29, 2013.

The following table reflects significant customer concentrations as a percentage of total accounts receivable as of June 28, 2014 and June 29, 2013:



	As of
	June 28, 2014		June 29, 2013
Haoseng Industrial Co., Ltd	15.3	%	15.0	%
STATS ChipPAC Ltd	*		19.0	%
Siliconware Precision Industries Co. Limited	*		13.0	%

* Represents less than 10% of total accounts receivable