AMD 2005 Annual Report Download - page 38

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Table of Contents
Marketing, General and Administrative Expenses
Marketing, general and administrative expenses of $1,016 million in 2005 increased 26 percent compared to $807 million in 2004, primarily due to an
increase of $110 million in marketing and cooperative advertising costs and other expenses related to the 17 percent increase in revenue in 2005 compared to
2004. In addition, in 2005 we wrote off goodwill of $16 million, which was originally recorded in 2003, as a result of the formation of Spansion LLC.
Marketing, general and administrative expenses of $807 million in 2004 increased 37 percent compared to $587 million in 2003, primarily due to
increased sales and cooperative advertising and marketing expenses of $112 million primarily associated with our AMD 64-based processors, expenses from
Spansion of $153 million for 12 months of 2004 compared to $78 million for six months in 2003 and new regulatory compliance costs of $15 million.
Effects of 2002 Restructuring Plan
In December 2002, we began implementing a restructuring plan (the 2002 Restructuring Plan) to further align our cost structure to industry conditions
resulting from weak customer demand and industry-wide excess inventory.
The 2002 Restructuring Plan resulted in the consolidation of facilities, primarily at our Sunnyvale, California site and at sales offices worldwide. We
vacated and are attempting to sublease certain facilities currently occupied under long-term operating leases through 2011. We also terminated the
implementation of certain partially completed enterprise resource planning (ERP) software and other information technology implementation activities, resulting
in the abandonment of certain software, hardware and capitalized development costs.
With the exception of exit costs consisting primarily of remaining lease payments on abandoned facilities net of estimated sublease income that are
payable through 2011, we have completed the activities associated with the 2002 Restructuring Plan.
The following table summarizes activities under the 2002 Restructuring Plan through December 25, 2005:
Severance
and
Employee
Benefits
Asset
Impairment
Facility
Exit and
Equipment
Decommission
Costs
Other
Restructuring
Charges Total
(In thousands)
Accruals at December 29, 2002 $ 54,420 $ — $ 138,105 $ 4,315 $ 196,840
2003 Provision — 7,791 3,314 — 11,105
Cash payments (38,816) — (20,796) (4,300) (63,912)
Non-cash charges — (7,791) — — (7,791)
Non-cash adjustments (8,864) — — (15) (8,879)
Accruals at December 28, 2003 $ 6,740 $ — $ 120,623 $ — $ 127,363
Cash payments (6,789) — (20,150) — (26,939)
Non-cash adjustments 49 — 5,203 — 5,252
Accruals at December 26, 2004 $ — $ — $ 105,676 $ — $ 105,676
Cash payments — — (20,773) — (20,773)
Accruals at December 25, 2005 $ — $ — $ 84,903 $ — $ 84,903
33
Source: ADVANCED MICRO DEVIC, 10-K, February 27, 2006