AMD 2009 Annual Report Download - page 133

securities less the aggregate amount outstanding under any revolving credit facility and not including GF cash,
cash equivalents and marketable securities) is less than or expected to be less than $500 million, the Company
will be required to provide cash collateral equal to 50% of the balance outstanding under the revolving credit
facility.
As of March 28, 2009, Qimonda owed AMTC approximately $20 million in connection with its committed
capacity allocations. However, as a result of the commencement of insolvency proceedings, these amounts are
considered insolvency claims and will be handled along with the claims of Qimonda’s other creditors. Because
the Company believes that AMTC is unlikely to recover amounts due from Qimonda during the insolvency
proceedings, the Company recorded a charge of $10 million, or 50 percent of the total receivable, in the first
quarter of 2009. As of December 26, 2009, this receivable was still outstanding.
Warranties and Indemnities
The Company generally warrants that its microprocessors, graphics processors, and chipsets 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, provided that, subject to certain exceptions, the
Company generally offers a three-year limited warranty to end users for microprocessor products that are
commonly referred to as “processors in a box” and for ATI Technologies ULC (ATI)-branded PC workstation
products and has offered extended limited warranties to certain customers of “tray” microprocessor products 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 potential liability for product warranty during the years ended December 26,
2009 and December 27, 2008 are as follows:
Year Ended
December 26,
2009
December 27,
2008
(In millions)
Balance, beginning of year ............................ $19 $15
New warranties issued during the year ................... 31 35
Settlements during the year ............................ (30) (15)
Changes in liability for pre-existing warranties during the
year, including expirations ........................... (1) (16)
Balance, end of year .................................. $19 $19
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 a 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 indemnification claims and 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.
NOTE 18: Restructuring
In the second and fourth quarters of 2008, the Company initiated restructuring plans to reduce its cost
structure. Both plans primarily involved the termination of employees.
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