AMD 2003 Annual Report Download - page 73

Table of Contents
Net Income (Loss) Per Common Share. Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding
during the period. Potential dilutive common shares include shares issuable upon the exercise of outstanding employee stock options and the conversion of
outstanding convertible notes and debentures. As the Company incurred net losses for all periods presented, diluted net loss per common share is the same as
basic net loss per common share. Potential dilutive common shares of approximately 79.0 million, 27.4 million, and 14.4 million for the years ended December
28, 2003, December 29, 2002, and December 30, 2001 were not included in the net loss per common share calculation, as their inclusion would have been
antidilutive.
Accumulated Other Comprehensive Income (Loss). Unrealized gains or losses on the Company’s available-for-sale securities, deferred gains and losses
on derivative financial instruments qualifying as cash flow hedges, changes in minimum pension liabilities, and foreign currency translation adjustments are
included in accumulated other comprehensive income (loss).
The following are the components of accumulated other comprehensive income (loss):
2003 2002
(Thousands)
Net unrealized gains on available-for-sale securities, net of taxes of $3,479 in 2003 and
$1,250 in 2002 $ 6,139 $ 2,152
Net unrealized gains on cash flow hedges, net of taxes of $7,976 in 2003 and $17,511 in
2002 18,022 29,079
Minimum pension liability (3,874) —
Cumulative translation adjustments 237,797 18,674
$ 258,084 $ 49,905
Stock-based Compensation and Employee Stock Plans. The Company has elected to use the intrinsic value method under Accounting Principles Board
Opinion No. 25, “Accounting for Stock Issued to Employee” (APB 25), as permitted by Statement of Financial Accounting Standard No. 123, “Accounting for
Stock-Based Compensation” (SFAS 123), subsequently amended by SFAS 148, “Accounting for Stock-Based Compensation—Transition and Disclosure” to
account for stock options issued to its employees under its stock option plans, and amortizes deferred compensation, if any, ratably over the vesting period of the
options. Compensation expense resulting from the issuance of fixed term stock option awards is measured as the difference between the exercise price of the
option and the fair market value of the underlying share of company stock subject to the option on the award’s grant date. The Company also makes pro forma
fair value disclosures required by SFAS 123 which reflects the impact on net income (loss) and net income (loss) per share had the Company applied the fair
value method of accounting for its stock-based awards to employees. The Company estimates the fair value of its stock-based awards to employees using a
Black-Scholes option pricing model. See Note 10 for detailed assumptions used by the Company to compute the fair value of stock-based awards for purposes of
pro forma disclosures under SFAS 123. Following is the pro forma effect on net income (loss) and net income (loss) per share for all periods presented had the
Company applied SFAS 123’s fair value method of accounting for stock-based awards issued to its employees.
2003 2002 2001
(Thousands except per share amounts)
Net income (loss)—as reported $ (274,490) $ (1,303,012) $ (60,581)
Plus: compensation expense recorded under APB 25 1,920 2,891 4,592
Less: SFAS 123 compensation expenses (80,464) (149,827) (122,929)
Net income (loss)—pro forma $ (353,034) $ (1,449,948) $ (178,918)
Basic net income (loss) per share—as reported $ (0.79) $ (3.81) $ (0.18)
Diluted net income (loss) per share—as reported $ (0.79) $ (3.81) $ (0.18)
Basic net income (loss) per share—pro forma $ (1.02) $ (4.24) $ (0.54)
Diluted net income (loss) per share—pro forma $ (1.02) $ (4.24) $ (0.54)
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Source: ADVANCED MICRO DEVIC, 10-K, March 09, 2004