AMD 2001 Annual Report Download - page 257

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is condensed financial data of FASL:
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(Thousands) 2001 2000 1999
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Net sales $ 978,059 $ 733,574 $ 501,797
Gross profit 165,115 53,174 20,415
Operating income 160,298 49,645 17,724
Net income 34,924 28,179 9,977
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December 30, December 31,
(Thousands) 2001 2000
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Current assets $ 146,549 $ 234,139
Non-current assets 1,056,061 786,802
Current liabilities 463,555 482,629
Non-current liabilities 1,058 1,271
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The Company's share of the above FASL net income differs from the equity in net
income of joint venture reported on the consolidated statements of operations.
The difference is due to adjustments resulting from the intercompany profit
eliminations and differences in U.S. and Japanese tax treatment, which are
reflected on the Company's consolidated statements of operations. The Company
has never received cash dividends from its investment in FASL.
In 2000, FASL further expanded its production capacity through a foundry
arrangement with Fujitsu Microelectronics, Inc. (FMI), a wholly owned subsidiary
of Fujitsu Limited. In connection with FMI equipping its wafer fabrication
facility in Gresham, Oregon (the Gresham Facility) to produce flash memory
devices for sale to FASL, the Company agreed to guarantee the repayment of up to
$125 million of Fujitsu's obligations as a cosigner with FMI under its global
multicurrency revolving credit facility (the Credit Facility) with a third-party
bank (the Guarantee). On November 30, 2001, Fujitsu announced that it was
closing the Gresham Facility, due to the downturn of the flash memory market. To
date, the Company has not received notice from Fujitsu that FMI has defaulted on
any payments due under the Credit Facility. Furthermore, subsequent to year end,
the Company was informed that amounts borrowed by FMI under the Credit Facility
do not become due until the end of March 2002. Accordingly, under the terms of
the Guarantee, the Company believes it is not at this time, and was not at
December 30, 2001, obligated to make any payments to Fujitsu. However,
subsequent to year end, Fujitsu requested that the Company pay the entire $125
million under the Guarantee. Although the Company disagrees with Fujitsu as to
the amount, if any, of its obligations under the Guarantee, Fujitsu has
indicated its belief that the Company is obligated to pay the full $125 million.
The Company cannot predict the outcome of this matter. Accordingly, the Company
has not recorded any liability in its consolidated financial statements
associated with the Guarantee.
NOTE 14: RESTRUCTURING AND OTHER SPECIAL CHARGES
On September 25, 2001, due to the continued slowdown in the semiconductor
industry, and a resulting decline in revenues, the Company announced a
restructuring plan to accelerate key components of its strategy to reduce costs
and enhance the financial performance of its core products. In connection with
the plan, the Company will close Fabs 14 and 15 in Austin, Texas. These
facilities support certain of the Company's older products and its Foundry
Service operations, which will be discontinued as part of the plan. The Company
will also reorganize other manufacturing facilities and reduce activities
primarily in Penang, Malaysia along with associated administrative support.
The restructuring plan will result in the reduction of approximately 2,300
direct manufacturing and related administrative support positions, or
approximately 15 percent of the Company's worldwide workforce, by the end of the
second quarter of 2002. Approximately 1,000 of these positions are associated
with closing Fabs 14 and 15 in Austin. The balance of the reductions will result
from reorganizing activities primarily in Penang, Malaysia.
Pursuant to the September 25, 2001 plan, the Company recorded restructuring
costs and other special charges of $89.3 million, consisting of $34.1 million of
anticipated severance and fringe benefit costs, $16.2 million of anticipated
exit costs to close facilities in Austin and Penang and $39.0 million of
non-cash asset
Source: ADVANCED MICRO DEVIC, 10-K, March 07, 2002