AMD 2001 Annual Report Download - page 231

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 30, 2001, December 31, 2000 and December 26, 1999
NOTE 1: NATURE OF OPERATIONS
AMD (the Company) is a semiconductor manufacturer with manufacturing facilities
in the United States, Europe and Asia Pacific and sales offices throughout the
world. The Company's products include a variety of industry-standard digital
integrated circuits (ICs) that are used in many diverse product applications
such as telecommunications equipment, data and network communications equipment,
consumer electronics, personal computers (PCs), workstations and servers.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year. The Company uses a 52- to 53-week fiscal year ending on the last
Sunday in December. Fiscal 2001 and 1999 were 52-week years, which ended on
December 30 and December 26, respectively. Fiscal 2000 was a 53-week year, which
ended on December 31, 2000. Fiscal 2002 will be a 52-week year ending December
29, 2002.
Investments. The Company classifies its marketable debt and equity securities at
the date of acquisition, into either held-to-maturity or available-for-sale
categories. Currently, the Company classifies all securities as
available-for-sale. These securities are reported at fair market value with the
related unrealized gains and losses included in other comprehensive income
(loss), net of tax, a component of stockholders' equity. Realized gains and
losses and declines in the value of securities determined to be
other-than-temporary are included in interest and other income, net. Interest
and dividends on all securities are also included in interest and other income,
net. The cost of securities sold is based on the specific identification method.
The Company classifies investments with maturities between three and 12 months
as short-term investments. Short-term investments consist of money market
auction rate preferred stocks and debt securities such as commercial paper,
corporate notes, certificates of deposit and marketable direct obligations of
United States governmental agencies. Available for sale securities with
maturities greater than twelve months are classified as short-term, as they
represent investments of cash that are for current operations.
Revenue Recognition. The Company recognizes revenue from products sold directly
to customers when persuasive evidence of an arrangement exists, 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 and such
products have not yet been sold by the distributor. 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. The Company also sells its products to distributors
with substantial independent operations under sales arrangements whose terms do
not allow for rights of return or price protection on unsold products held by
them. In these instances, the
Source: ADVANCED MICRO DEVIC, 10-K, March 07, 2002