AMD 2004 Annual Report Download - page 119

Table of Contents
During 2003, management approved the sale of additional equipment primarily used in the SDC that was identified as no longer useful in the Company’s
operations. As a result, the Company recorded approximately $11 million of asset impairment charges in the first quarter of 2003, including $3.3 million of
charges for decommission costs necessary to complete the sale of the equipment.
During 2003, the Company revised its estimates of the number of positions to be eliminated pursuant to the 2002 Restructuring Plan from 2,000 to 1,800 in
response to the additional resources required due to the Spansion LLC transaction. As a result, the Company reversed $8.9 million of the estimated severance and
fringe benefit accrual. As of December 26, 2004, 1,786 employees had been terminated pursuant to the 2002 Restructuring Plan resulting in cumulative cash
payments of $60 million in severance and employee benefit costs.
During 2004, the Company adjusted the restructuring accrual related to the 2002 Restructuring Plan, which resulted in an additional $5.2 million
restructuring charge for the period. The adjustment was primarily related to a change in the Company’s estimate of potential sublease opportunities associated
with abandoned facilities located in Sunnyvale, California.
With the exception of the exit costs consisting primarily of remaining lease payments on abandoned facilities, net of estimated sublease income that are
payable through 2011, the Company has completed the activities associated with the 2002 Restructuring Plan.
The following table summarizes activities under the 2002 Plan through December 26, 2004:
Severance
and
Employee
Benefits
Asset
Impairment
Exit and
Equipment
Decommission
Costs
Other
Restructuring
Charges Total
(in thousands)
2002 provision $ 68,770 $ 118,590 $ 138,900 $ 4,315 $ 330,575
Non-cash charges — (118,590) — — (118,590)
Cash charges (14,350) — (795) — (15,145)
Accruals at December 29, 2002 $ 54,420 $ — $ 138,105 $ 4,315 $ 196,840
2003 Provision — 7,791 3,314 — 11,105
Cash charges (38,816) — (20,796) (4,300) (63,912)
Non-cash charges — (7,791) — — (7,791)
Non-cash adjustments (8,864) — — (15) (8,879)
Accruals at December 28, 2003 $ 6,740 $ — $ 120,623 $ — $ 127,363
Cash charges (6,789) (20,150) (26,939)
Non-cash adjustments 49 5,203 5,252
Accruals at December 26, 2004 $ — $ — $ 105,676 $ — $ 105,676
2001 Restructuring Plan
In 2001, in response to the continued slowdown in the semiconductor industry and a resulting decline in revenues, the Company implemented a
restructuring plan (the 2001 Restructuring Plan). The Company completed its execution of the 2001 Restructuring Plan as of December 26, 2004.
During 2003, the Company reduced the estimated accrual of the facility and equipment decommission costs by $12.2 million based on the most current
information available and the Company realized a recovery of approximately $3.9 million for the excess of the sale price over the estimated fair value of
equipment that the Company determined was impaired as a result of the 2001 Restructuring Plan. Both amounts were included in restructuring and other special
charges (recoveries), net.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005