of NAND flash memory through calendar year 2010. As part of these agreements, the Company intends to prepay a total of $1.25 billion for flash memory components by the end of the second quarter of 2006. 

Asset Retirement Obligations 

The Company’s asset retirement obligations are associated with commitments to return property subject to operating leases to original condition upon lease termination. As of September 24, 2005, the Company estimates that gross expected future cash flows of approximately $14 million will be required to fulfill these obligations. 

Other Obligations 

The Company’s other obligations of approximately $4 million are primarily related to Internet and telecommunications services. 

Indemnifications 

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 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. 

Factors That May Affect Future Results and Financial Condition 

Because of the following factors, as well as other factors affecting the Company’s operating results and financial condition, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. 

General economic conditions and current economic and political uncertainty could adversely affect the demand for the Company’ s products and the financial health of its suppliers, distributors, and resellers.

The Company’s operating performance depends significantly on general economic conditions in the U.S. and abroad. At times in the past, demand for the Company’s products has been negatively impacted by difficult global economic conditions. Additionally, some of the Company’s education customers appeared to be delaying technology purchases due to concerns about the overall impact of the weaker economy and state budget deficits on their available funding. Although recent macroeconomic trends seem to indicate an economic recovery, continued uncertainty about future economic conditions makes it difficult to forecast future demand for the Company’s products and related operating results. Should global and/or regional economic conditions deteriorate, demand for the Company’s products could be adversely affected, as could the financial health of its suppliers, distributors, and resellers. 

War, terrorism, public health issues or other business interruptions could disrupt supply, delivery or demand of