AMD 2003 Annual Report Download - page 76

Table of Contents
and the Company and Fujitsu did not convey in-process technology rights to FASL LLC. Additionally, FASL LLC pays intellectual property royalties to the
Company and Fujitsu for technological know-how used in its business operations at royalty rates deemed to approximate fair market values. No additional
intangible assets were identified in connection with the transaction.
The following unaudited pro forma financial information includes the combined results of operations of the Company and the Manufacturing Joint Venture
as though the Manufacturing Joint Venture had been consolidated by the Company at the beginning of the years ended December 28, 2003 and December 29,
2002. The historically reported operating results of the Manufacturing Joint Venture do not include Flash memory sales and related operating expenses recorded
by Fujitsu’s former Flash memory operations in periods preceeding June 30, 2003 because the information is not available to the Company. Depreciation and
amortization expenses were estimated for the unaudited pro forma periods based on the amounts at which fixed and intangible assets were recorded at the
acquisition date. Unaudited pro forma interest income and expense are not material and are not included in the unaudited pro forma financial information. On an
unaudited pro forma basis, had the transaction occurred at the beginning of fiscal 2003, revenue, net loss and net loss per share for 2003 would have been $3,741
million, $278 million and $0.80. On an unaudited pro forma basis, had the transaction occurred at the beginning of 2002, revenue, net loss and net loss per share
for 2002 would have been $3,117 million, $1,290 million, and $3.77. These unaudited pro forma results are not necessarily indicative of the operating results that
would have occurred if the transaction had been completed at the beginning of the periods indicated. The unaudited pro forma results are not necessarily
indicative of future operating results.
In addition, the Manufacturing Joint Venture provided a defined benefit pension plan and a lump-sum retirement benefit plan to certain employees. These
plans continue to be administered by Fujitsu and cover FASL JAPAN’s employees formerly assigned from Fujitsu and employees hired directly by FASL
JAPAN. A full actuarial valuation has not been completed for the specific portion of the plans that relate to FASL JAPAN’s employees. As a result, the Company
estimated FASL LLC’s proportionate allocation of pension obligations, pension assets and elements of pension expense based on information provided by
actuaries to determine the amounts to be recorded on its consolidated financial statements. For the six month period ended December 28, 2003, since the
inception of FASL LLC, the Company recorded an estimated pension cost of approximately $7 million and has recorded an estimated pension benefit obligation
liability of approximately $26 million. As of December 28, 2003, the estimated projected benefit obligations under the plan related to FASL JAPAN’s employees
was approximately $35 million and the estimated total pension plan assets were approximately $4 million. Although the Company believes that the estimates and
assumptions used are reasonable, the actual amounts recorded could vary when a full actuarial valuation is completed as of Fujitsu’s fiscal year ending March 31,
2004. However, the Company does not expect that any such difference will have a material impact on its consolidated financial statements.
The following tables present the significant related party transactions and account balances between the Company and the Manufacturing Joint Venture for
the periods in which the former investment was accounted for under the equity method (through June 29, 2003):
Six months ended
June 29, 2003
Year ended
2002
Year ended
2001
(Thousands)
Royalty income from Manufacturing Joint Venture $ 24,611 $ 38,488 $ 44,342
Purchases from Manufacturing Joint Venture 356,595 443,209 509,642
Sales to Manufacturing Joint Venture 222,570 25,780 —
December 29,
2002
(Thousands)
Royalty receivable from Manufacturing Joint Venture $ 11,551
Accounts receivable from Manufacturing Joint Venture 96,814
Accounts payable from Manufacturing Joint Venture 108,890
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Source: ADVANCED MICRO DEVIC, 10-K, March 09, 2004