Facebook 2014 Annual Report Download - page 54

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Contractual Obligations
Our principal commitments consist of obligations under operating and capital leases for equipment, office, and data center facilities. The
following table summarizes our commitments to settle contractual obligations in cash as of December 31, 2014 .
_____________________
In addition, our other liabilities include $1.19 billion related to uncertain tax positions as of December 31, 2014
. Due to uncertainties in the timing
of the completion of tax audits, the timing of the resolution of these positions is uncertain and we are unable to make a reasonably reliable estimate of
the timing of payments in individual years beyond 12 months. As a result, this amount is not included in the above contractual obligations table.
Contingencies
We are involved in claims, lawsuits, government investigations, and proceedings. We record a provision for a liability when we believe that it is
both probable that a liability has been incurred, and the amount can be reasonably estimated. Significant judgment is required to determine both
probability and the estimated amount. Such legal proceedings are inherently unpredictable and subject to significant uncertainties, some of which are
beyond our control. Should any of these estimates and assumptions change or prove to be incorrect, it could have a material impact on our results of
operations, financial position, and cash flows.
See Note 10 in the accompanying notes to our consolidated financial statements included in Part II, Item 8, "Financial Statements and
Supplementary Data" and Part I, Item 3, "Legal Proceedings" of this Annual Report on Form 10-K for additional information regarding contingencies.
Recently Issued and Adopted Accounting Pronouncement
In May 2014, the Financial Accounting Standards Board issued guidance related to revenue from contracts with customers. Under this guidance,
revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be
received for those goods or services. The updated standard will replace most existing revenue recognition guidance under GAAP when it becomes
effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard
will be effective for us in the first quarter of 2017. We have not yet selected a transition method and we are currently evaluating the effect that the
updated standard will have on our consolidated financial statements and related disclosures.
51
Payment Due by Period
Total
Less than
1 Year
1-3
Years
3-5
Years
More than
5 Years
Operating lease obligations
$
1,101
$
155
$
319
$
268
$
359
Capital lease obligations
303
124
35
32
112
Other contractual commitments
(1)
1,031
644
84
64
239
Total contractual obligations
$
2,435
$
923
$
438
$
364
$
710
(1)
Other contractual commitments primarily relate to network infrastructure for our data center operations and, to a lesser extent, construction commitments related to our data center sites.