AMD 2002 Annual Report Download - page 79

Table of Contents
December 29, 2002 December 30, 2001
(Thousands)
Current assets $ 287,050 $ 146,549
Non-current assets 1,056,107 1,056,061
Current liabilities 549,015 463,555
Non-current liabilities — 1,058
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. As of
December 29, 2002, FASL had $143 million of retained earnings that has not been distributed to the Company.
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 co-signer with FMI under
its global multicurrency revolving credit facility (the Credit Facility) with a third-party bank (the Fujitsu 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. Fujitsu has requested that the Company pay the entire $125 million under the Fujitsu Guarantee.
The Company continues to disagree with Fujitsu as to the amount, if any, of its obligations under the Fujitsu Guarantee. 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 Fujitsu Guarantee.
NOTE 14: Restructuring and Other Special Charges
2002 Restructuring Plan
In December 2002, the Company finalized a restructuring plan (the 2002 Plan) to align its cost structure to current industry conditions resulting from weak
customer demand and industry wide excess inventory. The 2002 Plan will result in the reduction of approximately 2,000 positions or 15% of the Company’s
employees, affecting all levels of its workforce in almost every organization. As a result of the Company’s agreement with IBM to develop future generations of
the Company’s logic process technology, the Company is ramping down its silicon processing associated with logic research and development in its Submicron
Development Center in Sunnyvale, California (SDC) and will eliminate most of those related resources, including the sale or abandonment of certain equipment
used in the Company’s SDC.
The 2002 Plan will also result in the consolidation of facilities, primarily at the Company’s Sunnyvale, California site and at sales offices worldwide. The
Company is vacating, and attempting to sublease, certain facilities currently occupied under long-term operating leases. The Company has also terminated the
implementation of certain partially completed enterprise resource planning (ERP) software and other information technology implementation activities, resulting
in the abandonment of certain software, hardware and capitalized development costs.
Pursuant to the 2002 Plan, the Company recorded restructuring costs and other special charges of $330.6 million, consisting primarily of $68.8 million of
anticipated severance and fringe benefit costs, an asset impairment 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
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Source: ADVANCED MICRO DEVIC, 10-K, March 14, 2003