AMD 2007 Annual Report Download - page 98

Table of Contents
Advanced Micro Devices Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 29, 2007, December 31, 2006 and December 25, 2005
NOTE 1: Nature of Operations
Advanced Micro Devices, Inc. (the Company or AMD) is a global semiconductor company with manufacturing, research and development, and sales and
administrative facilities throughout the world. References herein to the “Company” mean AMD and its consolidated subsidiaries, including prior to
December 21, 2005, Spansion Inc. (Spansion, formerly, Spansion LLC) and its subsidiaries. The Company provides processing solutions for the computing,
graphics and consumer electronics markets. Prior to the initial public offering (IPO) of Spansion Inc. on December 21, 2005, the Company also manufactured
and sold Flash memory devices through its formerly majority-owned, consolidated subsidiary, Spansion LLC. On October 25, 2006 the Company completed the
acquisition of ATI Technologies Inc. (ATI) (see Note 3). As a result of the acquisition, AMD began to supply 3D graphic, video and multimedia products and
chipsets for personal computers, or PCs, including desktop and notebook PCs, professional workstations, and servers and products for consumer electronic
devices such as mobile phones, digital TVs and game consoles.
NOTE 2: Summary of Significant Accounting Policies
Fiscal Year. The Company uses a 52- to -53 week fiscal year. Prior to December 31, 2006, the Company’s fiscal year ended on the last Sunday in
December. Commencing in 2007, the Company began using a 52- to -53 week fiscal year ending on the last Saturday in December. Fiscal 2007, 2006 and 2005
ended December 29, December 31 and December 25, respectively. Fiscal 2007, 2006 and 2005 consisted of 52 weeks, 53 weeks and 52 weeks, respectively.
Principles of Consolidation. The consolidated financial statements include the Company’s accounts and those of its wholly-owned and majority-owned
subsidiaries, including the operations of ATI from October 25, 2006. Upon consolidation, all significant intercompany accounts and transactions are eliminated,
and amounts pertaining to the noncontrolling ownership interests held by third parties in the operating results and financial position of the Company’s
majority-owned subsidiaries are reported as minority interest.
Due to the IPO of Spansion on December 21, 2005, the Company used the equity method of accounting to reflect its share of Spansion’s net losses from
December 21, 2005 through September 19, 2007. Because the Company’s share ownership in Spansion has decreased, coupled with other factors that removed
the Company’s ability to significantly influence the strategic operating, investing and financing decisions of Spansion, the Company changed its accounting for
this investment from the equity method of accounting to accounting for the investment as “available-for-sale” marketable securities under Financial Accounting
Standards Board (FASB) Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities (SFAS 115). Effective September 20, 2007, the
Company reclassified its remaining investment in Spansion to marketable securities.
Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results are likely to differ from those
estimates, and such differences may be material to the financial statements. Areas where management uses subjective judgment include, but are not limited to,
revenue reserves, inventory valuation, goodwill and the valuation of acquisition related intangible assets, impairment of long-lived assets, including goodwill and
acquisition related intangible assets, and deferred income taxes.
Reclassifications. Certain reclassifications have been made to prior year balances in order to conform to the current year’s presentation of financial
information (see Note 11).
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Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008