AMD 2001 Annual Report Download - page 213

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
acquire any particular amount of our common stock and the program may be
suspended at any time at our discretion. As of December 30, 2001, we had
acquired approximately 6.3 million shares of our common stock at an aggregate
cost of $77 million. Shares repurchased under this program will be used in
connection with our stock option plans.
We plan to make capital investments of approximately $850 million during 2002,
including amounts related to the continued facilitization of Dresden Fab 30. We
believe that cash flows from operations and current cash balances, together with
available external financing and the extension of existing facilities, will be
sufficient to fund operations and capital investments for at least the next 12
months.
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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141 "Business Combinations" (SFAS 141) and
Statement of Financial Accounting Standards No. 142 "Goodwill and Other
Intangible Assets" (SFAS 142). SFAS 141 requires all business combinations
initiated after June 30, 2001 to be accounted for using the purchase method.
Under SFAS 142, goodwill and intangible assets with indefinite lives are no
longer amortized but are reviewed annually (or more frequently if impairment
indicators arise) for impairment. Separable intangible assets that are not
deemed to have indefinite lives will continue to be amortized over their useful
lives (but with no maximum life). The amortization provisions of SFAS 142 apply
to goodwill and intangible assets acquired after June 30, 2001. With respect to
goodwill and intangible assets acquired prior to July 1, 2001, the amortization
and impairment provisions of SFAS 142 are effective upon the adoption of SFAS
142. We are required to adopt SFAS 141 and SFAS 142 at the beginning of 2002.
Presently these accounting standards would not have a material effect on our
consolidated financial statements as we do not have material amounts of
intangibles or any goodwill.
In August 2001, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" (SFAS 144), which supersedes both Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of" (SFAS 121) and the
accounting and reporting provisions of APB Opinion No. 30, "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions" (Opinion 30), for the disposal of a segment of a business (as
previously defined in that Opinion). SFAS 144 retains the fundamental provisions
in SFAS 121 for recognizing and measuring impairment losses on long-lived assets
to be "held and used." In addition, the statement provides more guidance on
estimating cash flows when performing a recoverability test, requires that a
long-lived asset or group of assets to be disposed of other than by sale be
classified as "held-and-used" until they are disposed of, and establishes more
restrictive criteria to classify an asset or group of assets as "held for sale."
SFAS 144 also retains the basic provisions of Opinion 30 on how to present
discontinued operations in the income statement but broadens that presentation
to include a component of an entity (rather than a segment of a business). We
will adopt SFAS 144 at the beginning of 2002. We do not believe the adoption of
SFAS 144 will have a material impact on our operating results or financial
position.
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QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Interest Rate Risk. Our exposure to market risk for changes in interest rates
relates primarily to our investment portfolio and short-term debt obligations.
We mitigate default risk by investing in only the highest credit quality
securities and by constantly positioning our portfolio to respond appropriately
to a significant reduction in a credit rating of any investment issuer or
guarantor. The portfolio includes only marketable securities with active
secondary or resale markets to ensure portfolio liquidity. As stated in our
investment policy, we are averse to principal loss and ensure the safety and
preservation of our invested funds by limiting default risk and market risk.
We use proceeds from debt obligations primarily to support general corporate
purposes, including capital expenditures and working capital needs.
The following table presents the cost basis, fair value and related
weighted-average interest rates by year of maturity for our investment portfolio
and debt obligations as of December 30, 2001 and comparable fair values as of
December 31, 2000:
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Source: ADVANCED MICRO DEVIC, 10-K, March 07, 2002