AMD 2005 Annual Report Download - page 122

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Table of Contents
Warranties and Indemnities
The Company offers a three-year limited warranty to end users for microprocessor products that are commonly referred to as “processors in a box” and a
one-year limited warranty to direct purchasers for all other microprocessor and embedded processor products. Under limited circumstances, the Company may
offer an extended limited warranty to direct purchasers of microprocessor products that are intended for systems targeted at the commercial and market. Prior to
Spansion’s IPO and the related deconsolidation, the Company also offered a one-year limited warranty to direct purchasers for all Flash memory products. Under
limited circumstances, the Company also offered an extended limited warranty to direct purchasers of Flash memory products that were intended for systems
targeted at the embedded end market.
Changes in the Company’s potential liability for product warranty during the years ended December 25, 2005 and December 26, 2004 are as follows:
Year Ended
December 25,
2005
December 26,
2004
(In thousands)
Balance, beginning of year $ 22,043 $ 24,668
New warranties issued during the year 38,964 42,471
Settlements during the year (27,857) (16,482)
Changes in liability for pre-existing warranties during the year, including
expirations (13,758) (28,614)
Decrease due to change in status of Spansion from consolidated subsidiary
to unconsolidated investee on December 21, 2005 (600) —
Balance, end of year $ 18,792 $ 22,043
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 14: Other Long-term Liabilities
The Company’s other long-term liabilities at December 25, 2005 and December 26, 2004 consisted of:
December 25,
2005
December 26,
2004
(In thousands)
Fab 30/Fab 36 deferred grants and subsidies (see Note 8) $ 341,502 $ 274,150
Restructuring accrual (see Note 15) 66,288 86,680
Deferred gain on sale leaseback of building (See Note 13) 20,126 21,807
Other 31,406 6,099
Spansion pension liability (see Note 4) — 25,890
$ 459,322 $ 414,626
117
Source: ADVANCED MICRO DEVIC, 10-K, February 27, 2006