Apple 2004 Annual Report Download - page 99

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payments under noncancelable operating leases having remaining terms in excess of one year as of September 25, 2004, are as follows (in
millions):
Accrued Warranty and Indemnifications
The Company offers a basic limited parts and labor warranty on its hardware products. The basic warranty period for hardware products is
typically one year from the date of purchase by the end-user. The Company also offers a 90-day basic warranty for Apple service parts used to
repair Apple hardware products. The Company provides currently for the estimated cost that may be incurred under its basic limited product
warranties at the time related revenue is recognized. Factors considered in determining appropriate accruals for product warranty obligations
include the size of the installed base of products subject to warranty protection, historical and projected warranty claim rates, historical and
projected cost-per-claim, and knowledge of specific product failures that are outside of the Company's typical experience. The Company
assesses the adequacy of its preexisting warranty liabilities and adjusts the amounts as necessary based on actual experience and changes in
future expectations.
The following table reconciles changes in the Company's accrued warranties and related costs (in millions):
The Company generally does not indemnify end-users of its operating system and application software against legal claims that the software
infringes third-party intellectual property rights. Other agreements entered into by the Company sometimes include indemnification provisions
under which the Company could be subject to costs and/or damages in the event of an infringement claim against the Company or an
indemnified third-party. However, the Company has not been required to make any significant payments resulting from such an infringement
claim asserted against itself or an indemnified third-party and, in the opinion of management, does not have a potential liability related to
unresolved infringement claims subject to indemnification that would have a material adverse effect on its financial condition, liquidity or results
of operations. Therefore, the Company did not record a liability for infringement costs as of either September 25, 2004 or September 27, 2003.
95
Fiscal Years
2005
$
89
2006
91
2007
79
2008
65
2009
61
Later years
232
Total minimum lease payments
$
617
2004
2003
2002
Beginning accrued warranty and related costs
$
67
$
69
$
87
Cost of warranty claims
(105
)
(71
)
(79
)
Accruals for product warranties
143
69
61
Ending accrued warranty and related costs
$
105
$
67
$
69