AMD 2004 Annual Report Download - page 83

Table of Contents
grants and allowances in connection with the construction and facilitization of Fab 36 in Dresden, Germany. Accounting for these grants and allowances is
similar to those for Fab 30.
Advertising Expenses. Advertising expenses for 2004, 2003 and 2002 were approximately $225 million, $148 million and $199 million, respectively.
Cooperative advertising funding obligations under customer incentive programs are accrued and the costs recorded at the same time the related revenue is
recognized. Cooperative advertising expenses are recorded as marketing, general and administrative expense to the extent the cash paid does not exceed the fair
value of the advertising benefit received. Any excess of cash paid over the fair value of the advertising benefit received is recorded as a reduction of revenue in
accordance with EITF 01-09, “Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products).”
Net Income (Loss) Per Common Share. Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding
during the period. Potential dilutive common shares may include incremental shares that would be issued upon the assumed exercise of outstanding employee
stock options and the shares issuable upon the assumed conversion of outstanding convertible notes and debentures. Basic and diluted net income per common
share for 2004 were both 0.25 per share. Weighted-average common shares outstanding used to calculate basic net income per share were approximately 359
million and weighted average common shares used to calculate diluted net income per share were approximately 371 million, which included approximately 12
million incremental shares assuming exercise of outstanding employee stock options. Potential dilutive common shares of approximately 48.7 million for the
year ended December 26, 2004, which were associated with the assumed conversion of outstanding convertible notes and debentures, were not included in the
net income per common share calculation, as their inclusion would have been antidilutive. The Company incurred net losses for 2003 and 2002. Potential dilutive
common shares of approximately 79.0 million and 27.4 million for the years ended December 28, 2003, and December 29, 2002, which included both shares
issuable upon the assumed exercise of outstanding employee stock options and the assumed conversion of outstanding convertible notes and debentures, were not
included in the net loss per common share calculation, as their inclusion would have been antidilutive.
Accumulated Other Comprehensive Income (Loss). Unrealized gains or losses on the Company’s available-for-sale securities, deferred gains and losses
on derivative financial instruments qualifying as cash flow hedges, changes in minimum pension liabilities, and foreign currency translation adjustments are
included in accumulated other comprehensive income (loss).
The following are the components of accumulated other comprehensive income (loss):
2004 2003
(in thousands)
Net unrealized gains on available-for-sale securities, net of taxes of $1,010 in 2004
and $3,479 in 2003 $ 1,997 $ 6,139
Net unrealized gains on cash flow hedges, net of taxes of $0 in 2004 and $7,976 in
2003 30,200 18,022
Minimum Pension Liability (3,874) (3,874)
Cumulative translation adjustments 352,647 237,797
$ 380,970 $ 258,084
Stock-based Compensation and Employee Stock Plans. The Company has elected to use the intrinsic value method under Accounting Principles Board
Opinion No. 25, “Accounting for Stock Issued to Employee” (APB 25), as permitted by Statement of Financial Accounting Standard No. 123, “Accounting for
Stock-Based Compensation” (SFAS 123), subsequently amended by SFAS 148, “Accounting for Stock-Based Compensation—Transition and Disclosure” to
account for stock options issued to its employees under its stock option plans, and amortizes deferred compensation, if any, ratably over the vesting period of the
options.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005