AMD 2005 Annual Report Download - page 113

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Table of Contents
of the combined operating income (loss) of all the Company’s operating segments. Therefore this operating segment became a reportable segment under the
requirements of SFAS 131 “Disclosures about Segments of an Enterprise and Related Information” (SFAS 131). Previously, the Company included its Personal
Connectivity Solutions operating segment in its All Other category. The Personal Conductivity Solutions segment includes primarily low-power, high-
performance x86 and MIPS architecture-based embedded microprocessors and products for global commercial and consumer markets.
The Company’s All Other category also includes Personal Internet Communicator (PIC) products, which were reviewed separately by the CODM
beginning in the third quarter of 2005. PIC is not a reportable segment because the net operating results for the PIC operating segment constitute less than 10
percent of the combined operating income of all the operating segments. Prior to 2005, revenue from sales of PIC products was not material.
As a result of Spansion’s IPO in December 2005 and the deconsolidation of Spansion’s operating results effective December 21, 2005 discussed above, the
Company allocated profit sharing and bonus expenses to the specific operating segments that earned them. Therefore, these expenses are no longer included in
the All Other category.
As a result of Spansion’s IPO, the Company’s financial results of operations include Spansion’s financial results of operations as a consolidated subsidiary
only through December 20, 2005. From December 21, 2005, Spansion’s operating results and financial position are not consolidated as part of the Company’s
financial results. Instead, the Company applied the equity method of accounting to reflect its share of Spansion’s net income (loss) from December 21, 2005
through December 25, 2005. Accordingly, the Company’s operating results, including the segment operating results for the Memory Products segment, for the
year ended December 25, 2005 are not fully comparable with the results for 2004.
In addition, because prior to Spansion’s IPO, the Company held a 60 percent controlling interest in Spansion, Fujitsu’s 40 percent share in the net income
(loss) of Spansion was reflected as a minority interest adjustment to the consolidated financial statements through December 20, 2005. This minority interest
adjustment does not correspond to operating income (loss) of the Company’s Memory Products segment because operating income (loss) for its Memory
Products segment includes operations incremental to those of Spansion. Furthermore, the minority interest calculation is based on Spansion’s net income (loss)
rather than operating income (loss).
Prior to the formation of Spansion LLC on June 30, 2003, the results of operations for periods prior to June 30, 2003 did not include the consolidation of
Spansion’s results of operations. Accordingly, the segment operating information for the Memory Products segment for the year ended December 26, 2004, is not
fully comparable to the reclassified segment information for the prior period presented.
108
Source: ADVANCED MICRO DEVIC, 10-K, February 27, 2006