14. Commitments, Contingencies and Legal Matters

Purchase Commitments

The Company maintains purchase commitments with certain suppliers, primarily for inventory and some nonproduction items. Purchase commitments for inventory materials are generally restricted to a forecasted time horizon as mutually agreed upon between the parties. This forecasted time horizon can vary for different suppliers. As of June 26, 2011, the total purchase commitments were $195.5 million, which are due through 2015.

Guarantees

Product Warranties

The Company generally offers a one-year limited warranty for its Flash memory products. See Note 9 for more information relating to changes in the Company's liability for product warranty.

Indemnities

During the normal course of business, the Company makes certain indemnities and commitments under which it may be required to make payments in relation to certain transactions. These indemnities include non-infringement of patents and intellectual property, indemnities to our customers in connection with the delivery, design, manufacture and sale of our products, indemnities to our directors and officers in connection with legal proceedings, indemnities to various lessors in connection with facility leases for certain claims arising from such facility or lease, and indemnities to other parties to certain acquisition agreements. The duration of these indemnities and commitments varies, and in certain cases, is indefinite. The Company believes that substantially all of our indemnities and commitments provide for limitations on the maximum potential future payments it is obligated to make. However, the Company is unable to estimate the maximum amount of liability related to our indemnities and commitments because such liabilities are contingent upon the occurrence of events which are not reasonably determinable. Management believes that any liability for these indemnities and commitments would not be material to our accompanying condensed consolidated financial statements.

Uncertain Tax Positions

As of June 26, 2011, the liability for uncertain tax positions was $18.7 million including interest and penalties. Due to the high degree of uncertainty regarding the timing of potential future cash flows associated with these liabilities, the Company is unable to make a reasonably reliable estimate of the amount and period in which these liabilities might be paid.

Legal Matters

For a complete description of the procedural history of each of the legal proceedings referred to below, see our Annual Report on Form 10-K for the fiscal year ended December 26, 2010.

LSI, Agere v. Spansion Inc., et al

On May 19, 2011, plaintiffs LSI Corporation and Agere Systems, Inc. filed a motion to lift the stay and dismiss the action. On June 16, 2011, the U.S. District Court for the Eastern District of Texas dismissed the action.

Spansion v. Samsung Patent Infringement Litigation

Spansion was a several patent-related proceedings involving Samsung Electronics Co., Ltd. On June 15, 2011, Spansion and Samsung entered into a binding Memorandum of Understanding ("MOU") that settles all outstanding patent matters between them as well as granting each other seven-year limited patent cross-licenses. Samsung will pay to Spansion $150 million dollars over a five-year period. The payments will consist of an initial installment of $25 million, which is due August 15, 2011, and 20 quarterly installments of $6.25 million beginning in the fourth quarter of 2011. In addition, Spansion and Samsung will stipulate to a $45 million bankruptcy claim for Samsung, which Spansion agreed to purchase for $30 million that was subsequently approved by the Bankruptcy Court. Updates to the settled patent-related proceedings are as follows:

Samsung ITC Investigation (337-TA-685)

On July 7, 2011, an order terminating the investigation on the basis of a settlement agreement was entered by Secretary James R. Holbein.

Spansion v. Samsung District Court Action (D. Del.)

On June 17, 2011, the parties filed a joint motion to dismiss all claims and counterclaims with prejudice as settled. The motion was granted on June 22, 2011.

Samsung v. Spansion International, Inc.

On July 13, 2011, the Federal Patent Court of Germany confirmed Spansion's withdrawal of the nullity action.

Spansion ITC Investigation (337-TA-735)

On June 20, 2011 the ALJ entered an initial determination terminating the investigation on the basis of a settlement agreement. On July 12, 2011, the Commission determined not to review that initial determination.

Spansion LLC v. Samsung Electronics Co., Ltd., et al (N.D. Cal.)

On June 20, 2011, an order dismissing all claims and counterclaims with prejudice as settled was entered by the Court.

Spansion LLC v. Samsung Electronics Co., Ltd, et al (E.D. Va.)

On June 17, 2011, an order dismissing all claims and counterclaims with prejudice as settled was entered by the Court.

Spansion LLC v. Samsung Electronics Co., Ltd, et al (W.D. Wi.) (Civil Action No. 3:10-cv-453)

On June 16, 2011, the parties filed a joint motion to dismiss all claims and counterclaims with prejudice as settled. The motion was granted on June 17, 2011.

Spansion v. Samsung Electronics Co., Ltd, et al (W.D. Wi.) (Civil Action No. 3:10-cv-685)

On June 16, 2011, the parties filed a joint motion to dismiss all claims and counterclaims with prejudice as settled. The motion was granted on June 17, 2011.