AMD 2006 Annual Report Download - page 65

Table of Contents
On December 21, 2005, Spansion Inc., our former majority-owned subsidiary, completed its initial public offering, or IPO. Following the IPO, our
ownership interest in Spansion was reduced from 60 percent to approximately 38 percent of Spansion’s outstanding common stock. In November 2006, we sold
21 million shares of Spansion’s Class A common stock in an underwritten public offering. As a result of this sale, as of December 31, 2006 we owned
approximately 21 percent of Spansion’s outstanding common stock.
As a result of Spansion’s IPO, our 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 our financial results.
Instead, we applied the equity method of accounting to reflect our share of Spansion’s net income (loss) from December 21, 2005 through December 31, 2006.
Accordingly, our operating results, including the segment operating results for the Memory Products segment, for the year ended December 25, 2005 are not
fully comparable with our results for 2004 or 2006. Because we currently report our interest in Spansion’s results of operations using the equity method of
accounting, our share of Spansion’s net income (loss) will impact our net income (loss).
Following Spansion’s IPO, from December 21, 2005 through October 24, 2006, we had two reportable segments: the Computation Products segment and
the Embedded Products segment, which prior to the first quarter of 2006, we referred to as the Personal Connectivity Solutions segment. In addition we also had
an All Other category, which was not a reportable segment. This category included sales of Personal Internet Communicator (PIC) products, which the
Company’s Chief Operating Decision Maker (CODM), who is also our Chief Executive Officer, began to review separately starting in the third quarter of 2005,
and certain operating expenses and credits that were not allocated to any of our reportable segments because the CODM did not consider these operating
expenses and credits in evaluating the operating performance of our reportable segments. Effective as of the third quarter of 2006, PIC products have not been
manufactured.
As a result of the acquisition of ATI, effective October 25, 2006, we now have the following four reportable segments:
• the Computation Products segment, which includes microprocessors, chipset products that we manufactured prior to the ATI acquisition and related
revenue;
• the Embedded Products segment, which includes embedded processors and related revenue;
• the Graphics and Chipsets segment, which includes 3D graphics, video and multimedia products and chipsets sold by ATI prior to the acquisition for
use in desktop and notebook PCs, including home media PCs, professional workstations and servers, and related revenue; and
• the Consumer Electronics segment, which includes products used in handheld devices, such as mobile phones and PDAs, digital televisions and other
consumer electronics products as well as related revenue and revenue for royalties received in connection with sales of game console systems that
incorporate our products.
In addition to the reportable segments, we have an All Other category, which is not a reportable segment. The All Other category includes 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. Also, following the acquisition of ATI, we began including employee stock-based
compensation expense, profit sharing expense, and ATI acquisition-related and integration charges in the All Other category. We reclassified prior period
segment information to conform to the current period’s presentation.
We use a 52- to 53-week fiscal year ending on the last Sunday in December. The year ended December 31, 2006 consisted of 53 weeks, and the years
ended December 25, 2005, and December 26, 2004 each included 52 weeks. References in this report to 2006, 2005 and 2004 shall refer to the fiscal year unless
explicitly stated otherwise. Commencing in 2007, we will use a 52- to 53-week fiscal year ending on the last Saturday in December.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007