AMD 2002 Annual Report Download - page 25

Table of Contents
charge of $32.5 million relating to a license associated with discontinued logic process development activities that has no future use, asset impairment charges of
$30.6 million resulting from the abandonment of equipment previously used in logic process development and manufacturing activities, anticipated exit costs of
$138.9 million primarily to vacate and consolidate our facilities and $55.5 million resulting from the abandonment of partially completed ERP software and other
information technology implementation activities.
We began activities pursuant to the 2002 Plan during the fourth quarter of 2002, and expect to substantially complete the activities associated with the
2002 Plan by the end of June 2003. As of December 29, 2002, 929 employees were terminated pursuant to the 2002 Plan resulting in cash payments of $14
million in severance and employee benefit costs.
The following table summarizes activities under the 2002 Plan through December 29, 2002:
Severance
and employee
benefits Asset impairment Exit costs
Other
restructuring
charges Total
(Thousands)
2002 provision $ 68,770 $ 118,590 $ 138,900 $ 4,315 $ 330,575
Q4 2002 non-cash charges — (118,590) — — (118,590)
Q4 2002 cash charges (14,350) — (795) — (15,145)
Accruals at December 29, 2002 $ 54,420 $ — $ 138,105 $ 4,315 $ 196,840
As a result of the 2002 Plan, we expect to realize overall cost reductions of $350 million in 2003.
In 2001, we announced a restructuring plan (the 2001 Plan) due to the continued slowdown in the semiconductor industry, and a resulting decline in
revenues. In connection with the plan, we closed Fabs 14 and 15 in Austin, Texas. These facilities supported certain of our older products and our Foundry
Service operations, which have been discontinued as part of the plan. We also reorganized related manufacturing facilities and reduced activities primarily in
Penang, Malaysia along with associated administrative support.
Pursuant to the 2001 Plan, we recorded restructuring costs and other special charges of $89.3 million, consisting of $34.1 million of anticipated severance
and fringe benefit costs, $13.0 million and $3.2 million of anticipated exit costs to close facilities in Austin and Asia, mostly in Penang, and $28.7 million and
$10.3 million of non-cash asset impairment charges in Austin and Asia, primarily Penang. The asset impairment charges related primarily to buildings and
production equipment and have been incurred as a result of our decision to implement the plan. We substantially completed execution of the 2001 Plan by the
end of 2002. As of December 29, 2002, 2,209 employees had been terminated pursuant to the 2001 Plan resulting in cash payments of approximately $35.8
million for severance and employee benefit costs, of which $1.7 million was included in current year results of operations. 720 of these positions were associated
with closing Fabs 14 and 15. The balance of the reductions resulted from reorganizing activities, primarily in Penang, Malaysia, along with associated
administrative support. In addition, the planned facilities closures had been completed as of December 29, 2002 and related decommissioning costs will be
incurred over the next six months.
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Source: ADVANCED MICRO DEVIC, 10-K, March 14, 2003