AMD 2004 Annual Report Download - page 86

Table of Contents
percent but in no event can the interest rate exceed seven percent (5.98 percent at December 26, 2004). Interest is payable quarterly.
The following table summarizes the final purchase price allocation to the assets and liabilities of Spansion LLC at June 30, 2003, the effective date of the
transaction, including the fair values of the assets and liabilities attributable to the Manufacturing Joint Venture, the Company’s contributions and Fujitsu’s
contributions. Upon consolidation, all amounts pertaining to Fujitsu’s interest in Spansion LLC are reported as minority interest on the accompanying financial
statements. Management considered a number of factors, including independent appraisals and valuations, in determining the final purchase price allocation.
Manufacturing
Joint Venture
AMD’s
Contributions
Fujitsu’s
Contributions Total
(Dollars in millions)
Cash $ — $ 122 $ 189 $ 311
Inventory 55 220 128 403
Fixed assets 963 1,017 33 2,013
Intangible assets 46 24 1 71
Debt and capital lease obligations (148) (609) (40) (797)
Other assets (liabilities), net (100) (2) (1) (103)
Fair value of net assets exchanged/acquired on acquisition date 816 772 310 1,898
Percent of fair value recorded in the purchase business combination 10.008% 40% 60%
Fair value recorded $ 82 $ 309 $ 186 $ 577
Net book value of contributions on acquisition date 762 629 293 1,684
Percent of book value recorded in the purchase business combination 89.992% 60% 40%
Historical carrying value recorded $ 686 $ 377 $ 117 $ 1,180
Initial purchase combination basis of net assets acquired $ 768 $ 686 $ 303 $ 1,757
The intangible assets recorded consist of the estimated fair value of the manufacturing and product distribution contracts between Spansion LLC and the
Company and Spansion LLC and Fujitsu, which are determined to have an estimated useful life of four years, as well as the estimated fair value of the assembled
work force, which is reflected as goodwill. No value was assigned to in-process research and development because the Company and Fujitsu performed all
research and development activities for the Manufacturing Joint Venture, and the Company and Fujitsu did not convey in-process technology rights to Spansion
LLC. Additionally, Spansion LLC pays intellectual property royalties to the Company and Fujitsu for technological know-how used in its business operations at
royalty rates deemed to approximate fair market values. No additional intangible assets were identified in connection with the transaction.
The following unaudited pro forma financial information includes the combined results of operations of the Company and the Manufacturing Joint Venture
as though the Manufacturing Joint Venture had been consolidated by the Company at the beginning of the years ended December 28, 2003 and December 29,
2002. The historically reported operating results of the Manufacturing Joint Venture do not include Flash memory sales and related operating expenses recorded
by Fujitsu’s former Flash memory operations in periods preceding June 30, 2003 because the information is not available to the Company. Depreciation and
amortization expenses were estimated for the unaudited pro forma periods based on the amounts at which fixed and intangible assets were recorded at the
acquisition date. Unaudited pro forma interest income and expense are not material and are not included in the unaudited pro forma financial information. On an
unaudited pro forma basis, had the transaction occurred at the beginning of fiscal 2003, revenue, net loss and net loss per share for 2003 would have been $3.7
billion, $278 million and $0.80. On an unaudited pro forma basis, had the transaction occurred at the beginning
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005