AMD 2003 Annual Report Download - page 74

Table of Contents
New Accounting Pronouncements. In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46, “Consolidation of Variable
Interest Entities” (FIN 46). Variable interest entities are often created for a single specified purpose, for example, to facilitate securitization, leasing, hedging,
research and development, or other transactions or arrangements. In December 2003, the FASB issued Interpretation No. 46 (revised December 2003) (FIN 46R)
which replaces FIN 46. This interpretation of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” defines what these variable interest
entities are and provides guidelines on identifying them and assessing an enterprise’s interests in a variable interest entity to decide whether to consolidate that
entity. FIN 46R applies at different dates to different types of enterprises and entities, and special provisions apply to enterprises that have fully or partially
applied FIN 46 prior to issuance of FIN 46R. Generally, application of FIN 46R is required in financial statements of public entities that have interests in variable
interest entities or potential variable interest entities commonly referred to as special-purpose entities for periods ending after December 15, 2003. Application by
public entities for all other types of entities is required in financial statements for periods ending after March 15, 2004. The adoption of FIN 46 or FIN 46R did
not have a material impact on the Company’s results of operations or financial condition.
NOTE 3: FASL LLC
The Company and Fujitsu Limited formed FASL LLC effective June 30, 2003. FASL LLC is headquartered in Sunnyvale, California, and its
manufacturing, research and assembly operations are in the United States and Asia. As the Company has a 60 percent controlling equity interest in FASL LLC, it
began consolidating the results of FASL LLC’s operations on June 30, 2003, the effective date of the transaction. The Company is accounting for the FASL LLC
transaction as a partial step acquisition and purchase business combination under the provision for SFAS 141, Business Combinations, and EITF Consensus No.
01-02, Interpretations of APB Opinion No. 29, [Accounting for Nonmonetary Transactions].
As part of the formation of FASL LLC, both the Company and Fujitsu contributed their respective investments in the former Manufacturing Joint Venture
(formerly referred to as FASL) to the new venture. As a result of this transaction, the Company acquired an incremental 10.008 percent controlling interest in the
net assets of the Manufacturing Joint Venture (the difference between the Company’s 60 percent ownership of these net assets after their contribution to FASL
LLC and its previous 49.992 percent ownership in these same net assets prior to their contribution to FASL LLC). Accordingly, the Company recorded its
acquired incremental 10.008 percent interest in the Manufacturing Joint Venture’s contributed net assets based on the assets’ fair value on the effective date of
the transaction. The remaining 89.992 percent interest in the Manufacturing Joint Venture’s net assets was recorded at historical carrying value.
The Company also contributed its Flash memory inventory, its manufacturing facility located in Austin, Texas (Fab 25), its Flash memory research and
development facility in Sunnyvale, California, and its Flash memory assembly and test operations in Thailand, Malaysia and China to FASL LLC. The Company
recorded its continuing 60 percent interest in these net assets at their historical carrying values. The remaining 40 percent interest in these net assets was treated
as being sold to Fujitsu and, accordingly, 40 percent of the carrying values of these net assets were adjusted to and recorded based on the net assets’ fair value on
the effective date of the transaction. During the fourth quarter of 2003, the Company completed its determination of the fair value of the assets and liabilities of
FASL LLC. The excess of the fair value of the net assets treated as sold over their historical carrying value was approximately $57 million. However, the gain of
approximately six million dollars recognized by the Company and recorded in interest income and other, net, was limited to the excess of the fair value of the
consideration received by the Company in the form of the Company’s 60 percent equity interest in Fujitsu’s contributions and the incremental 10.008 percent
interest in the former Manufacturing Joint Venture’s net assets less direct costs of the transaction, over the 40 percent interest in the book value of the net assets
contributed by the Company to FASL LLC.
Fujitsu also contributed its Flash memory division to FASL LLC, including related inventory, cash, and its Flash memory assembly and test operations in
Malaysia. The Company is deemed to have acquired a 60 percent
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Source: ADVANCED MICRO DEVIC, 10-K, March 09, 2004