AMD 2001 Annual Report Download - page 234

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
recorded in accumulated other comprehensive income (a component of stockholders'
equity) and subsequently recognized in operations in the same period the hedged
forecasted transaction affects operations. Generally, the gain or loss on
derivative contracts, when recognized in operations, offsets the gain or loss on
the hedged foreign currency assets, liabilities, or firm commitments. The
Company does not use derivatives for trading purposes.
The effectiveness test for these foreign currency contracts utilized by the
Company is the fair value to fair value comparison method. The Company includes
in its effectiveness assessment the time value portion of the change in value of
the currency forward contract.
If a cash flow hedge should be discontinued because it is probable that the
original forecasted transaction will not occur, the net gain or loss in
accumulated other comprehensive income will be reclassified into operations as a
component of income and expense. No such amounts were recorded in operations
during the year ended December 30, 2001.
Premiums paid for foreign currency forward and option contracts are immediately
charged to operations.
Inventories. Inventories are stated at standard cost adjusted to approximate the
lower of cost (first-in, first-out method) or market (net realizable value).
Inventories on hand, in excess of forecasted demand, generally six months or
less, are not valued. Obsolete inventories are written off.
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. Estimated
useful lives for financial reporting purposes are as follows:
o machinery and equipment, three to five years;
o buildings, up to 26 years; and
o leasehold improvements, the shorter of the remaining terms of the leases or
the estimated economic useful lives of the improvements.
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Source: ADVANCED MICRO DEVIC, 10-K, March 07, 2002