AMD 2006 Annual Report Download - page 290

Spansion Inc.
Notes to Consolidated Financial Statements—(Continued)
Fair Value of Other Financial Instruments
The fair value of the Company’s fixed rate long-term debt is estimated by considering the Company’s credit rating, the interest rates and the terms of the
debt. The fair value of the Company’s variable rate long-term debt is estimated based on the current rates offered to the Company for debt of the same remaining
maturities. The carrying amounts and estimated fair values of the Company’s debt instruments are as follows:
Dec. 31, 2006 Dec. 25, 2005
Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
(in thousands)
Debt obligations 980,307 1,024,926 359,803 359,803
Debt obligations to related parties 500 500 183,915 183,915
Total debt obligations $ 980,807 $ 1,025,426 $ 543,718 $ 543,718
The fair value of the Company’s accounts receivable and accounts payable approximate their carrying value based on existing payment terms. As of
December 31, 2006 and December 25, 2005, the fair values of the Company’s foreign currency forward contracts were not significant.
8. Warranties and Indemnities
The Company offers a one-year limited warranty for its Flash memory products.
Changes in the Company’s liability for product warranty during the years ended December 31, 2006 and December 25, 2005 are as follows:
Dec. 31, 2006 Dec. 25, 2005
(in thousands)
Balance, beginning of fiscal year $ 1,000 $ 600
Provision for warranties issued 4,529 2,418
Settlements (5,562) (5,246)
Changes in liability for pre-existing warranties during the period, including expirations 1,383 3,228
Balance, end of fiscal year $ 1,350 $ 1,000
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, directors, 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
infringement claims 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, there have been no indemnification claims.
Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007