AMD 2003 Annual Report Download - page 98

Table of Contents
The Company has not recorded any liability in its consolidated financial statements associated with these guarantees because they were issued prior to the
effective date of FIN 45.
Warranties and Indemnities
The Company generally offers a three-year limited warranty to end users for certain of its boxed microprocessor products and a one-year limited warranty
to direct purchasers for all other products.
Changes in the Company’s potential liability for product warranty during the years ended December 28, 2003 and December 29, 2002 are as follows (in
thousands):
Year Ended
December 28,
2003
December 29,
2002
Balance, beginning of the period $ 19,369 $ 16,730
New warranties issued during the period 40,011 34,574
Settlements during the period (24,560) (51,935)
Changes in liability for pre-existing warranties during the period,
including expirations (10,152) 20,000
Balance, end of period $ 24,668 $ 19,369
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. The Company has
agreed to hold the other party harmless against specified 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) infringe the intellectual property rights of such third-party or other claims made against certain
parties. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the limited history of prior
indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim. Historically, payments made by the
Company under these obligations have not been material.
NOTE 13: Other Long-term Liabilities
The Company’s other long-term liabilities at December 28, 2003 and December 29, 2002 consisted of:
December 28,
2003
December 29,
2002
(Thousands)
Dresden deferred grants and subsidies (see Note 2) $ 262,941 $ 146,346
Customer deposits 17,500 38,000
Deferred gain on building (see Note 12) 23,488 25,169
Restructuring accrual (see Note 14) 98,590 112,567
FASL LLC pension liability (see Note 3) 26,242 —
Other — 1,615
$ 428,761 $ 323,697
Customer deposits are related to multi-year supply agreements for Spansion Flash memory products that will be repaid through 2005, which guarantee
customers’ purchases of these products.
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Source: ADVANCED MICRO DEVIC, 10-K, March 09, 2004