AMD 1999 Annual Report Download - page 152

Options and restricted stock were outstanding during 1999, 1998 and 1997.
Convertible debt was outstanding during 1999 and 1998. Warrants were outstanding
in 1998 and 1997. All of these instruments were not included in the computation
of diluted net loss per common share because the effect in years with a net loss
would be antidilutive.
Accumulated Other Comprehensive Loss. As required under Statement of Financial
Accounting Standards No. 130 (SFAS 130), unrealized gains or losses on the
Company's available-for-sale securities and the foreign currency translation
adjustments, are included in other comprehensive loss.
The following are the components of accumulated other comprehensive loss:
(Thousands) 1999 1998
-------------------------------------------------------------------
Unrealized gain on investments, net of tax $ 14,278 $ 6,760
Cumulative translation adjustments (31,692) (36,938)
-------------------------------------------------------------------
$(17,414) $(30,178)
-------------------------------------------------------------------
Cumulative translation adjustments are not tax affected.
Employee Stock Plans. As allowed under Statement of Financial Accounting
Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation," the
Company continues to account for its stock option plans and its employee stock
purchase plan in accordance with provisions of the Accounting Principles Board's
Opinion No. 25 (APB 25), "Accounting For Stock Issued to Employees." See Note
10.
Use of Estimates. The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results inevitably will differ from those
estimates, and such differences may be material to the financial statements.
Financial Presentation. The Company has reclassified certain prior year amounts
on the consolidated financial statements to conform to the 1999 presentation.
New Accounting Pronouncements. In 1999, the Financial Accounting Standards Board
extended the adoption of the Statement of Financial Accounting Standards No. 133
(SFAS 133), "Accounting for Derivative Instruments and Hedging Activities." SFAS
133 is required to be adopted in years beginning after June 15, 2000. The
Company expects to adopt SFAS 133 in fiscal 2001. The Company has not completed
its review of SFAS 133, and accordingly has not evaluated the effect the
adoption of the statement may have on its consolidated results of operations and
financial position. SFAS 133 will require the Company to recognize all
derivatives on the balance sheet at fair value. Derivatives that are not hedges
must be adjusted to fair value through income. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of derivatives
will either be offset against the change in fair value of the hedged assets,
liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
portion of a derivative's change in fair value which is ineffective as a hedge
will be immediately recognized in earnings.
In December 1999, the Securities and Exchange Commission (SEC) issued SEC
Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
The Company has reviewed SAB 101 and has determined that it is in compliance
with its requirements. Therefore, the application of SAB 101 will have no impact
on the Company's consolidated results of operations.
Note 3: Sale of Vantis Corporation
On June 15, 1999, the Company sold Vantis to Lattice Semiconductor Corporation
for approximately $500 million in cash. The actual cash received was net of
Vantis' cash and cash equivalents balance of approximately $46 million as of the
closing of the sale. The Company's pretax gain on the sale of Vantis was $432
million. The gain was computed based upon Vantis' net assets as of June 15, 1999
and other direct expenses related to the sale. The applicable tax rate on the
gain was 40 percent, resulting in an after-tax gain of $259 million.
As part of the sale of Vantis, the Company negotiated various service
contracts with Lattice to continue to provide services to Vantis after the sale.
Pursuant to the service contracts, the Company will continue to provide, among
other things, wafer fabrication and assembly, test, mark and pack services to
Vantis. The Company expects the wafer fabrication and assembly, test, mark and
pack service contracts to continue until September 2003. Approximately $43
million of revenue was generated from the above service contracts in 1999.
Source: ADVANCED MICRO DEVIC, 10-K405, March 21, 2000