AMD 2008 Annual Report Download - page 111

Guarantees. The Company accounts for guarantees in accordance with FASB Interpretation No. 45,
Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others (FIN 45). Under FIN 45, a liability for the fair value of the obligation undertaken in issuing
the guarantee is recognized. However, this is limited to those guarantees issued or modified after December 31,
2002. The recognition of fair value is not required for certain guarantees such as the parent’s guarantee of a
subsidiary’s debt to a third party or guarantees on product warranties. For those guarantees excluded from FIN 45’s
fair value recognition provision, financial statement disclosures of their terms are made (see Note 13).
Foreign Subsidies. The Company receives or has received investment grants and allowances from the
Federal Republic of Germany and the State of Saxony in connection with the construction and operation of Fab
30/38 and Fab 36 in Dresden, Germany. Generally, such grants and allowances are subject to forfeiture in
declining amounts over the life of the agreement, if the Company does not maintain certain levels of employment
or meet other conditions specified in the relevant subsidy documents. Investment allowances have to be fully
repaid if the binding period of investment or other conditions specified in the Investment Allowance Act are not
met. Accordingly, amounts received are initially recorded as a current and long-term liability on the Company’s
financial statements, and then are amortized as a reduction to cost of sales. Fab 30 related grants and allowances
have been amortized to operations ratably from 1998 through December 29, 2007. Fab 36 and Fab 38 related
allowances are being amortized to operations ratably over the lives of the underlying assets associated with the
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 2008, 2007 and 2006 were approximately $520
million, $555 million and $515 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.
Net Income (Loss) Per Share. Basic net income (loss) per share is computed using the weighted-average
number of common shares outstanding. Diluted net income (loss) per 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 share for the years ended:
2008 2007 2006
(In millions except per share data)
Numerator:
Numerator for basic and diluted income (loss) from continuing operations per
share .............................................................. $(2,414) $(2,828) $ (136)
Numerator for basic and diluted income (loss) from discontinued operations per
share .............................................................. $ (684) $ (551) $ (30)
Numerator for basic and diluted net income (loss) per share ..................... $(3,098) $(3,379) $ (166)
Denominator:
Denominator for basic net income (loss) per share—weighted-average shares ....... 607 558 492
Effect of dilutive potential common shares: .................................. — — —
Denominator for diluted net income (loss) per share—weighted-average shares ..... 607 558 492
Basic and diluted income (loss) from continuing operations per share ............. $ (3.98) $ (5.07) $(0.28)
Basic and diluted income (loss) from discontinued operations per share ............ $ (1.12) $ (0.99) $(0.06)
Basic and diluted net income (loss) per share ................................. $ (5.10) $ (6.06) $(0.34)
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