AMD 2000 Annual Report Download - page 373

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
agreement, which was amended on January 21, 2000 to include certain additional
technology, and a patent cross-license agreement. The agreements provide that we
will co-develop with Motorola future generation logic process and embedded Flash
technologies. In addition, we have received certain licenses to Motorola's
semiconductor logic process technologies, including copper interconnect
technology, which may be subject to variable royalty rates. In exchange, we have
developed and licensed to Motorola a Flash module design to be used in
Motorola's future embedded Flash products. Motorola will have additional rights,
subject to certain conditions, to make stand-alone Flash devices, and to make
and sell certain data networking devices. The rights to data networking devices
may be subject to variable royalty payment provisions.
Marketing, general and administrative expenses of $599 million in 2000 increased
11 percent compared to 1999 primarily as a result of marketing and promotional
activities for the AMD Athlon microprocessor, our launch of the AMD Duron
microprocessor, and higher expenses associated with higher labor costs including
profit sharing. These increases were partially offset by the absence of Legerity
expenses during the second half of 2000.
Marketing, general and administrative expenses of $540 million in 1999 increased
29 percent compared to 1998 primarily due to marketing and promotional
activities for the AMD Athlon microprocessor, increased costs and related
depreciation expense associated with new information systems and software put
into production in 1999 and higher labor costs. These increases were partially
offset by savings related to the absence of Vantis expenses in the third and
fourth quarters of 1999.
In the first quarter of 1999, we initiated a review of our cost structure. Based
upon this review, we recorded restructuring and other special charges of $38
million in 1999 as a result of certain of our actions to better align our cost
structure with expected revenue growth rates.
The $38 million in restructuring and other special charges consisted of the
following:
. $25 million for the closure of a submicron development laboratory
facility in the SDC, the write-off of certain equipment in the SDC and
the write-off of equipment taken out of service in Fab 25 related to
the 0.35-micron wafer fabrication process;
. $6 million for the write-off of capitalized costs related to
discontinued information system projects;
. $3 million for the disposal of equipment taken out of service in the
SDC;
. $3 million for severance and employee benefits for 178 terminated
employees in the Information Technology department, the SDC and certain
sales offices; and
. $1 million for costs of leases for vacated and unused sales offices.
As of December 31, 2000, the cumulative total cash outlay for restructuring and
other special charges was approximately $7.5 million. We anticipate that the
remaining accrual of $0.5 million related to sales office facilities will be
utilized over the period through lease terminations in the second quarter of
2002. The payments of the accruals are expected to be funded by cash from
operations.
The remaining $30 million of restructuring and other special charges consisted
of non-cash charges primarily for asset write-offs. As a result of the
restructuring and other special charges,
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Source: ADVANCED MICRO DEVIC, 10-K405, March 20, 2001