AMD 2007 Annual Report Download - page 60

Table of Contents
economic environment on our customer base, or a material negative change in our relationships with significant customers.
Impairment of Long-Lived Assets. We consider quarterly whether indicators of impairment of long-lived assets are present. These indicators may include,
but are not limited to, significant decreases in the market value of an asset and significant changes in the extent or manner in which an asset is used. If these or
other indicators are present, we test for recoverability of the asset by determining whether the estimated undiscounted cash flows attributable to the assets in
question are less than their carrying value. If less, we recognize an impairment loss based on the excess of the carrying amount of the assets over their respective
fair values. Fair value is determined by discounted future cash flows, appraisals or other methods. Significant judgment is involved in estimating future cash
flows and deriving the discount rate to apply to the estimated future cash flows and in evaluating the results of appraisals or other valuation methods. If the asset
determined to be impaired is to be held and used, we recognize an impairment loss through a charge to our operating results which also reduces the carrying basis
of the related asset. The new carrying value of the related asset is depreciated over the remaining estimated useful life of the asset. We also must make subjective
judgments regarding the remaining useful life of the asset. We may incur additional impairment losses in future periods if factors influencing our estimates of the
undiscounted cash flows change.
Income Taxes. In determining taxable income for financial statement reporting purposes, we must make certain estimates and judgments. These estimates
and judgments are applied in the calculation of certain tax liabilities and in the determination of the recoverability of deferred tax assets, which arise from
temporary differences between the recognition of assets and liabilities for tax and financial statement reporting purposes.
We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we must increase our provision for taxes by
recording a charge to income tax expense, in the form of a valuation allowance, for the deferred tax assets that we estimate will not ultimately be recoverable. We
consider past performance, future expected taxable income and prudent and feasible tax planning strategies in determining the need for a valuation allowance.
In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax rules and the potential for future
adjustment of our uncertain tax positions by the Internal Revenue Service or other taxing jurisdiction. If our estimates of these taxes are greater or less than actual
results, an additional tax benefit or charge will result.
Results of Operations
We review and assess operating performance using segment net revenues and operating income (loss) before interest, other income (expense), equity in net
loss of Spansion Inc. and other, income taxes and minority interest. These performance measures include the allocation of expenses to the operating segments
based on management’s judgment.
Prior to December 21, 2005, we had the following three reportable segments:
• the Computation Products segment, which included microprocessor products for desktop and mobile PCs, servers and workstations and AMD chipset
products;
• the Memory Products segment, which included Spansion Flash memory products; and
• the Personal Connectivity Solutions segment, which included embedded processors for global commercial and consumer markets.
On December 21, 2005, Spansion completed its 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
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Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008