AMD 2007 Annual Report Download - page 103

Table of Contents
specified in the relevant subsidy grant documents. Accordingly, amounts received are initially recorded as a long-term liability on the Company’s financial
statements, and then are amortized as a reduction to cost of sales. Fab 30 related subsidies have been amortized to operations ratably through December 2007.
Fab 36 related investment allowances are being amortized to operations ratably over the lives of the underlying assets associated with the investment allowances.
Fab 36 related grants are being amortized to operations ratably through December 2013.
From time to time, the Company also applies for subsidies relating to certain research and development projects. These research and development
subsidies are recorded as a reduction of research and development expenses when all conditions and requirements set forth in the subsidy grant are met.
Advertising Expenses. Advertising expenses for fiscal 2007, 2006 and 2005 were approximately $555 million, $515 million and $333 million,
respectively. Cooperative advertising funding obligations under customer incentive programs are accrued and the costs recorded at the same time the related
revenue is recognized. Cooperative advertising expenses are recorded as marketing, general and administrative expense to the extent the cash paid does not
exceed the fair value of the advertising benefit received. Any excess of cash paid over the fair value of the advertising benefit received is recorded as a reduction
of revenue in accordance with EITF 01-9.
Net Income (Loss) Per Common Share. Basic net income (loss) per common share is computed using the weighted-average number of common shares
outstanding. Diluted net income (loss) per common share is computed using the weighted-average number of common shares outstanding plus any dilutive
potential common shares. Potential common shares include stock options, restricted stock units, restricted stock awards and shares issuable upon the conversion
of convertible debt. The following table sets forth the components of basic and diluted income (loss) per common share for the years ended:
2007 2006 2005
(In millions except per share data)
Numerator:
Numerator for basic income (loss) per common share $ (3,379) $ (166) $ 165
Effect of assumed conversion of 4.50% Convertible Senior Notes Due 2007:
Interest expense, net of tax — — 9
Numerator for diluted income (loss) per common share $ (3,379) $ (166) $ 174
Denominator:
Denominator for basic income (loss) per share—weighted-average shares 558 492 400
Effect of dilutive securities:
Employee stock options — — 15
4.50% Convertible Senior Notes Due 2007 — — 26
Dilutive potential common shares — — 41
Denominator for diluted income (loss) per common share-adjusted weighted-average shares 558 492 441
Net income (loss) per common share:
Basic $ (6.06) $ (0.34) $ 0.41
Diluted $ (6.06) $ (0.34) $ 0.40
The Company incurred a net loss for 2007. Potential common shares of approximately 54 million for 2007, which included both shares issuable upon the
assumed exercise of outstanding employee stock options and the assumed conversion of outstanding convertible securities, were not included in the net loss per
common share calculation, as their inclusion would have been antidilutive. Potential common shares of approximately 55 million and 21 million for the years
ended December 31, 2006 and December 25, 2005, which were associated
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Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008