AMD 1999 Annual Report Download - page 151

Inventories. Inventories are stated at standard cost adjusted to approximate the
lower of cost (first-in, first-out method) or market (net realizable value).
Property, Plant and Equipment. Property, plant and equipment are stated at cost.
Depreciation and amortization are provided on a straight-line basis over the
estimated useful lives of the assets for financial reporting purposes and on
accelerated methods for tax purposes. Estimated useful lives for financial
reporting purposes are as follows:
. machinery and equipment, three to five years;
. buildings, up to 26 years; and
. leasehold improvements, the shorter of the remaining terms of the leases or
the estimated economic useful lives of the improvements.
Revenue Recognition. The Company recognizes revenue from product sold direct to
customers when the contract is in place, the price is fixed or determinable,
shipment is made and collectibility is reasonably assured. The Company sells to
distributors under terms allowing the distributors certain rights of return and
price protection on unsold merchandise held by them. The distributor agreements,
which may be canceled by either party upon specified notice, generally contain a
provision for the return of the Company's products in the event the agreement
with the distributor is terminated. Accordingly, the Company defers recognition
of revenue and related profits from sales to distributors with agreements that
have the aforementioned terms until the merchandise is resold by the
distributors.
Foreign Grants and Subsidies. The Federal Republic of Germany and the State of
Saxony have agreed to support the Dresden Fab 30 project in the amount of $443
million (denominated in deutsche marks) consisting of capital investment grants
and interest subsidies. Dresden Fab 30 is the Company's new integrated circuit
manufacturing and design facility in Dresden, Germany. The grants and subsidies
are subject to conditions, including meeting specified levels of employment in
December 2001 and maintaining those levels until June 2007. The grants and
subsidies will be recognized as a reduction of operating expense ratably over
the life of the project. In 1999, grants and subsidies recognized as a reduction
to operating expenses amounted to $50 million. As of December 26, 1999, AMD
Saxony had received grants and subsidies totaling approximately $298 million
(denominated in deutsche marks). Noncompliance with the conditions of the grants
and subsidies could result in the forfeiture of all or a portion of the future
amounts to be received, as well as the repayment, of all or a portion of the
amounts received to date.
Advertising Expenses. The Company accounts for advertising costs as expense in
the period in which they are incurred. Advertising expense for 1999, 1998 and
1997 was approximately $101 million, $74 million and $74 million, respectively.
Net Loss Per Common Share. Basic and diluted net loss per share are computed
using weighted-average common shares outstanding.
The following table sets forth the computation of basic and diluted net loss
per common share:
(Thousands except per share data) 1999 1998 1997
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Numerator for basic and diluted net
loss per common share $(88,936) $(103,960) $(21,090)
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Denominator for basic and
diluted net loss per common
share -- weighted-average shares 147,068 143,668 140,453
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Basic and diluted net loss
per common share $ (0.60) $ (0.72) $ (0.15)
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Source: ADVANCED MICRO DEVIC, 10-K405, March 21, 2000