AMD 2005 Annual Report Download - page 112

Table of Contents
Interest Expense
2005 2004 2003
(In thousands)
Total interest charges $ 140,053 $ 121,726 $ 111,433
Less: interest capitalized (35,093) (9,398) (1,473)
Net interest expense recorded $ 104,960 $ 112,328 $ 109,960
In 2005, interest expense consisted primarily of interest on the Company’s 7.75% Notes issued in October 2004, 4.50% Notes issued in November 2002,
4.75% Debentures issued in January 2002 and interest on other Spansion LLC’s long-term debt and capital lease obligations. The Company also capitalized
interest during 2005 of $35 million in connection with its Fab 36 construction activities in Dresden, Germany.
In 2004 and 2003, interest expense consisted primarily of interest incurred under the Fab 30 Term Loan, interest on the Company’s 4.75% Debentures
issued in January 2002 and 4.50% Notes issued in November 2002, interest on the July 2003 Spansion Term Loan and interest on other Spansion LLC’s
long-term debt and capital lease obligations. The Company also capitalized interest during 2004 of $9 million in connection with its Fab 36 construction
activities in Dresden, Germany.
NOTE 10: Segment Reporting
Management, including the Chief Operating Decision Maker (CODM), who is the Company’s chief executive officer, reviews and assesses operating
performance using segment revenues and operating income (loss) before interest, taxes and minority interest. These performance measures include the allocation
of expenses to the operating segments based on management’s judgment.
Prior to the third quarter of 2003, the Company 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, the
Company’s former programmable logic devices subsidiary, and Legerity Inc., the Company’s former voice communication products subsidiary.
Effective June 30, 2003, the Company and Fujitsu executed agreements to integrate their Flash memory operations including the Company’s existing joint
manufacturing venture, Fujitsu AMD Semiconductor Limited, or FASL, was contributed to a new entity, Spansion LLC, (formerly known as FASL LLC) which
was owned 60 percent by the Company and 40 percent by Fujitsu. As a result of this transaction, the Company began consolidating Spansion’s results of
operations on June 30, 2003. Prior to June 30, 2003 the Company accounted for its share of FASL’s operating results under the equity method.
As a result of the formation of Spansion LLC effective June 30, 2003 (See Note 3), the Company reorganized its operating segments and created the
following two reportable segments:
• 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 Spansion Flash memory products.
In addition to the reportable segments, the Company also has the All Other category that is not a reportable segment. It includes several operating
segments as well as certain operating expenses and credits that are not allocated to any of the operating segments because the CODM does not consider these
operating expenses and credits in evaluating the operating performance of the operating segments.
In the fourth quarter of 2004, the Company began presenting its Personal Connectivity Solutions operating segment as a separate reportable segment
because this operating segment’s operating losses exceeded 10 percent
107
Source: ADVANCED MICRO DEVIC, 10-K, February 27, 2006