AMD 2004 Annual Report Download - page 118

Table of Contents
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 13: Other Long-term Liabilities
The Company’s other long-term liabilities at December 26, 2004 and December 28, 2003 consisted of:
December 26,
2004
December 28,
2003
(in thousands)
Dresden deferred grants and subsidies (see Note 7) $ 274,150 $ 262,941
Customer deposits — 17,500
Deferred gain on sale leaseback of building (see Note 12) 21,807 23,488
Restructuring accrual (see Note 14) 86,680 98,590
Spansion LLC pension liability (see Note 3) 25,890 26,242
Other 6,099 —
$ 414,626 $ 428,761
NOTE 14: Restructuring and Other Special Charges
2002 Restructuring Plan
In December 2002, the Company began implementing a restructuring plan (the 2002 Restructuring Plan) to further align its cost structure to industry
conditions resulting from weak customer demand and industry-wide excess inventory.
As part of this plan, and as a result of the Company’s agreement with IBM to jointly develop future generations of the Company’s microprocessor
manufacturing process technology, the Company ceased microprocessor-related research and development in the Submicron Development Center (SDC) in
Sunnyvale, California and eliminated most of the related resources, including the sale or abandonment of certain equipment used in the SDC.
The 2002 Restructuring Plan resulted in the consolidation of facilities, primarily at the Company’s Sunnyvale, California site and at sales offices
worldwide. The Company vacated, and is attempting to sublease, certain facilities currently occupied under long-term operating leases through 2011. The
Company also terminated the implementation of certain partially completed enterprise resource planning (ERP) software and other information technology
implementation activities, resulting in the abandonment of certain software, hardware and capitalized development costs.
Pursuant to the 2002 Restructuring Plan, the Company recorded restructuring costs and other special charges of $330.6 million in the fourth quarter of
2002, consisting primarily of $68.8 million of anticipated severance and fringe benefit costs, an asset impairment charge of $32.5 million relating to a license that
has no future use because of its association with discontinued microprocessor process development activities, asset impairment charges of $30.6 million resulting
from the abandonment of equipment previously used in microprocessor process development and manufacturing activities, anticipated exit costs of $138.9
million almost wholly related to vacating and consolidating the Company’s facilities and a charge of $55.5 million resulting from the abandonment of partially
completed ERP software and other information technology implementation activities.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005