AMD 2003 Annual Report Download - page 31

Table of Contents
currently occupied under long-term operating leases through 2013. We also terminated the implementation of certain partially completed enterprise resource
planning (ERP) software and other information technology implementation activities, resulting in the abandonment of certain software, hardware and capitalized
development costs.
Pursuant to the 2002 Restructuring Plan, we recorded restructuring costs and other special charges of $330.6 million in the fourth quarter of 2002,
consisting primarily of $68.8 million of anticipated severance and fringe benefit costs, an asset impairment charge of $32.5 million relating to a license that has
no future use because of its association with discontinued logic development activities, asset impairment charges of $30.6 million resulting from the
abandonment of equipment previously used in logic process development and manufacturing activities, anticipated exit costs of $138.9 million almost wholly
related to vacating and consolidating our facilities and a charge of $55.5 million resulting from the abandonment of partially completed ERP software and other
information technology implementation activities.
During 2003, management approved the sale of additional equipment, primarily equipment used in the SDC, that was identified as no longer useful in our
operations. As a result, we recorded approximately $11 million of asset impairment charges in the first quarter of 2003, including $3.3 million of charges for
decommission costs necessary to complete the sale of the equipment.
During 2003, we revised our estimates of the number of positions to be eliminated pursuant to the 2002 Restructuring Plan from 2,000 to 1,800 in response
to the additional resources required due to the FASL LLC transaction. As a result, we reversed $8.9 million of the estimated severance and fringe benefit accrual.
As of December 28, 2003, 1,736 employees had been terminated pursuant to the 2002 Restructuring Plan resulting in cumulative cash payments of $53 million in
severance and employee benefit costs. The remaining accrual of $6.7 million represents the severance benefits cost obligations for individuals whose
employments terminated but who elected to defer receipt of severance benefits until 2004 and for employees who were pre-notified in 2003 of their employment
terminations, which will occur in 2004.
With the exception of exit costs consisting primarily of remaining lease payments on abandoned facilities, net of estimated sublease income that are
payable through 2011, we have substantially completed the activities associated with the 2002 Restructuring Plan as of December 28, 2003. As a result of the
2002 Restructuring Plan, we realized overall cost reductions of approximately $150 million in 2003. We also implemented other cost reduction initiatives
incremental to the specific expense reductions resulting from the 2002 Restructuring Plan.
The following table summarizes activities under the 2002 Restructuring Plan through December 28, 2003:
Severance
and employee
benefits
Asset
impairment Exit costs
Other
restructuring
charges Total
(Thousands)
2002 provision $ 68,770 $ 118,590 $ 138,900 $ 4,315 $ 330,575
Non-cash charges — (118,590) — — (118,590)
Cash charges (14,350) — (795) — (15,145)
Accrual at December 29, 2002 54,420 — 138,105 4,315 196,840
2003 Provision — 7,791 3,314 — 11,105
Cash charges (38,816) — (20,796) (4,300) (63,912)
Non-cash charges — (7,791) — — (7,791)
Non-cash adjustment (8,864) — (15) (8,879)
Accrual at December 28, 2003 $ 6,740 $ — $ 120,623 $ — $ 127,363
In 2001, we announced a restructuring plan (the 2001 Restructuring Plan) due to the continued slowdown in the semiconductor industry and a resulting
decline in revenues. We substantially completed our execution of the
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Source: ADVANCED MICRO DEVIC, 10-K, March 09, 2004