AMD 2004 Annual Report Download - page 28

Table of Contents
jurisdiction. If our estimates of these taxes are greater or less than actual results, an additional tax benefit or charge will result.
Results Of Operations
In March 1993, we and Fujitsu formed Fujitsu AMD Semiconductor Limited, a joint venture for the purpose of manufacturing Flash memory devices.
Through the Manufacturing Joint Venture, we and Fujitsu constructed and operated advanced integrated circuit manufacturing facilities in Aizu-Wakamatsu,
Japan. Effective June 30, 2003, we and Fujitsu executed agreements to integrate our Flash memory operations. The Manufacturing Joint Venture was contributed
to a new entity, Spansion LLC, which is owned 60 percent by us and 40 percent by Fujitsu. As a result of this transaction, we began consolidating Spansion’s
results of operations on June 30, 2003. Prior to June 30, 2003, we accounted for our share of the Manufacturing Joint Venture’s operating results under the equity
method.
As Spansion did not exist prior to June 30, 2003, the results of our operations for periods prior to the third quarter of 2003 do not include the consolidation
of Spansion’s results of operations. Accordingly, our operating results for the years ended December 26, 2004 and December 28, 2003 are not fully comparable
with our results for prior periods. Also, because we have a 60 percent controlling interest in Spansion, Fujitsu’s 40 percent share in the net income (loss) of
Spansion is reflected as a minority interest adjustment to our consolidated financial statements. This minority interest adjustment does not correspond to
operating income (loss) of our Memory Products segment because operating income (loss) for our Memory Products segment includes operations incremental to
those of Spansion. In addition, the minority interest calculation is based on Spansion’s net income (loss) rather than operating income (loss).
We review and assess operating performance using segment revenues and operating income before interest, taxes and minority interest. These performance
measures include the allocation of expenses to the operating segments based on management judgment. Prior to the third quarter of 2003, we had two reportable
segments: the Core Products segment, which consisted of the microprocessor, memory products and other IC products operating segments, and the Foundry
Services segment, which consisted of fees for products sold to Vantis Corporation, our former programmable logic devices subsidiary, and Legerity Inc., our
former voice communication products subsidiary.
Beginning in the third quarter of 2003, we changed our reportable segments to the Computation Products segment, which includes microprocessor
products for desktop and mobile PCs, servers and workstations and chipset products, and the Memory Products segment, which includes Flash memory products.
In addition, in the fourth quarter of 2004, we began presenting our Personal Connectivity Solutions operating segment as a separate reportable segment because
the operating loss from this operating segment exceeded 10 percent of the combined profit of all our operating segments and therefore this operating segment
became a reportable segment under the requirements of Statement of Financial Standards 131, “Segment Reporting” (FAS 131). Previously, we included our
Personal Connectivity Solutions operating segment in our All Other category. The Personal Connectivity Solutions segment includes primarily low power, high
performance x86 and MIPS architecture-based embedded microprocessors. In addition to our three reportable segments, we also have the All Other category,
which is not a reportable segment, and which includes certain operating expenses and credits that are not allocated to the operating segments. Prior period
segment information has been reclassified to conform to the current period presentation. However, because Spansion did not exist prior to June 30, 2003, the
results of operations for periods prior to June 30, 2003 did not include the consolidation of Spansion’s operations. Accordingly, the segment operating
information for the Memory Products segment for the year ended December 26, 2004, is not comparable to the reclassified segment information for the prior
periods presented.
We use a 52- to 53-week fiscal year ending on the last Sunday in December. The years ended December 26, 2004, December 28, 2003 and December 29,
2002, each included 52 weeks.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005