10-K/A: Annual report pursuant to Section 13 and 15(d)
Published on September 23, 1999
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A (No. 1)
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the fiscal year ended December 27, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-7882
ADVANCED MICRO DEVICES, INC.
(Exact name of registrant as specified in its charter)
Registrant's telephone number, including area code: (408) 732-2400
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No______
-------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Aggregate market value of the voting stock held by non-affiliates as of March 1,
1999.
$2,665,120,199
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
146,161,636 shares as of March 1, 1999.
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DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Annual Report to Stockholders for the fiscal year ended
December 27, 1998 are
incorporated into Parts II and IV hereof.
(2) Portions of the Proxy Statement for the Annual Meeting of Stockholders to
be held on April 29, 1999, are
incorporated into Part III hereof.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)
1. Financial Statements
The financial statements listed on page F-1 in the Index to Consolidated
Financial Statements and Financial Statement Schedule covered by Report of
Independent Auditors are set forth on pages F-2 through F-27 of this Annual
Report on Form 10-K.
2. Financial Statement Schedule
The financial statement schedule listed on page F-1 in the Index to
Consolidated Financial Statements and Financial Statement Schedule covered by
the Report of Independent Auditors is set forth on page S-1 of this Annual
Report on Form 10-K.
All other schedules have been omitted because the required information is
not present or is not present in amounts sufficient to require submission of the
schedules, or because the information required is included in the Consolidated
Financial Statements or Notes thereto.
3. Exhibits
The exhibits listed in the accompanying Index to Exhibits are filed as part
of, or incorporated by reference into, this Annual Report on Form 10-K. The
following is a list of such Exhibits:
2
3
4
5
6
Exhibit
Number Description of Exhibits
- ------ -----------------------
*10.34 Form of indemnification agreements with current officers and directors
of AMD, filed as Exhibit 10.38 to AMD's Annual Report on Form 10-K for
the fiscal year ended December 25, 1994, is hereby incorporated by
reference.
*10.35 Agreement to Preserve Goodwill dated January 15, 1996, between AMD and
S. Atiq Raza, filed as Exhibit 10.36 to AMD's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, is hereby
incorporated by reference.
*10.36 1995 Stock Plan of NexGen, Inc., as amended, filed as Exhibit 10.36 to
AMD's Annual Report on Form 10-K for the fiscal year ended December
29, 1996, is hereby incorporated by reference.
**10.37 Patent Cross-License Agreement dated December 20, 1995, between AMD
and Intel Corporation, filed as Exhibit 10.38 to AMD's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995, is hereby
incorporated by reference.
10.38 Contract for Transfer of the Right to the Use of Land between AMD
(Suzhou) Limited and China-Singapore Suzhou Industrial Park
Development Co., Ltd., filed as Exhibit 10.39 to AMD's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995, is hereby
incorporated by reference.
*10.39 NexGen, Inc. 1987 Employee Stock Plan, filed as Exhibit 99.3 to Post-
Effective Amendment No. 1 on Form S-8 to AMD's Registration Statement
on Form S-4 (No. 33-64911), is hereby incorporated by reference.
*10.40 1995 Stock Plan of NexGen, Inc. (assumed by AMD), as amended, filed as
Exhibit 10.37 to AMD's Quarterly Report on Form 10-Q for the period
ended June 30, 1996, is hereby incorporated by reference.
*10.41 Form of indemnity agreement between NexGen, Inc. and its directors and
officers, filed as Exhibit 10.5 to the Registration Statement of
NexGen, Inc. on Form S-1 (No. 33-90750), is hereby incorporated by
reference.
10.42 Series E Preferred Stock Purchase Warrant of NexGen, Inc. issued to
PaineWebber Incorporated, filed as Exhibit 10.14 to the Registration
Statement of NexGen, Inc. on Form S-1 (No. 33-90750), is hereby
incorporated by reference.
10.43 Series F Preferred Stock Purchase Warrant of NexGen, Inc., filed as
Exhibit 10.15 to the Registration Statement of NexGen, Inc. on Form S-
1 (No. 33-90750), is hereby incorporated by reference.
10.44 Series G Preferred Stock Purchase Warrant of NexGen, Inc., filed as
Exhibit 10.16 to the Registration Statement of NexGen, Inc. on Form S-
1 (No. 33-90750), is hereby incorporated by reference.
**10.45 Agreement for Purchase of IBM Products between IBM and NexGen, Inc.
dated June 2, 1994, filed as Exhibit 10.17 to the Registration
Statement of NexGen, Inc. on Form S-1 (No. 33-90750), is hereby
incorporated by reference.
*10.46 Letter Agreement dated as of September, 1988, between NexGen, Inc. and
S. Atiq Raza, First Promissory Note dated October 17, 1988, and Second
Promissory Note dated October 17, 1988, as amended, filed as Exhibit
10.20 to the Registration Statement of NexGen, Inc. on Form S-1 (No.
33-90750), are hereby incorporated by reference.
10.47 Series B Preferred Stock Purchase Warrant of NexGen, Inc. issued to
Kleiner, Perkins, Caufield and Byers IV, as amended, filed as Exhibit
10.23 to the Registration Statement of NexGen, Inc. on Form S-1 (No.
33-90750), is hereby incorporated by reference.
7
Exhibit
Number Description of Exhibits
- ------ -----------------------
**10.48(a) C-4 Technology Transfer and Licensing Agreement dated June 11,
1996, between AMD and IBM Corporation, filed as Exhibit 10.48 to
AMD's Amendment No. 1 to its Quarterly Report on Form 10-Q/A for
the period ended September 29, 1996, is hereby incorporated by
reference.
**10.48(b) Amendment No. 1 to the C-4 Technology Transfer and Licensing
Agreement, dated as of February 23, 1997, between AMD and
International Business Machine Corporation, filed as Exhibit
10.48(a) to AMD's Quarterly Report on Form 10-Q for the period
ended March 30, 1997, is hereby incorporated by reference.
**10.49(a) Design and Build Agreement dated November 15, 1996, between AMD
Saxony Manufacturing GmbH and Meissner and Wurst GmbH, filed as
Exhibit 10.49(a) to AMD's Annual Report on Form 10-K for the fiscal
year ended December 29, 1996, is hereby incorporated by reference.
10.49(b) Amendment to Design and Build Agreement dated January 16, 1997,
between AMD Saxony Manufacturing GmbH and Meissner and Wurst GmbH
filed as Exhibit 10.49(b) to AMD's Annual Report on Form 10-K for
the fiscal year ended December 29, 1996, is hereby incorporated by
reference.
**10.50(a-1) Syndicated Loan Agreement with Schedules 1, 2 and 17, dated as of
March 11, 1997, among AMD Saxony Manufacturing GmbH, Dresdner Bank
AG and Dresdner Bank Luxemborg S.A., filed as Exhibit 10.50(a) to
AMD's Quarterly Report on Form 10-Q for the period ended March 30,
1997, is hereby incorporated by reference.
**10.50(a-2) Supplemental Agreement to the Syndicated Loan Agreement dated
February 6, 1998, among AMD Saxony Manufacturing GmbH, Dresdner
Bank AG and Dresdner Bank Luxemborg S.A., filed as Exhibit 10.50(a-
2) to AMD's Annual Report on Form 10-K/A (No.1) for the fiscal year
ended December 28, 1997, is hereby incorporated by reference.
**10.50(b) Determination Regarding the Request for a Guarantee by AMD Saxony
Manufacturing GmbH, filed as Exhibit 10.50(b) to AMD's Quarterly
Report on Form 10-Q for the period ended March 30, 1997, is hereby
incorporated by reference, filed as Exhibit 10.50(b) to AMD's
Annual Report on Form 10-K for the fiscal year ended December 28,
1997, is hereby incorporated by reference.
**10.50(c) AMD Subsidy Agreement, between AMD Saxony Manufacturing GmbH and
Dresdner Bank AG, filed as Exhibit 10.50(c) to AMD's Quarterly
Report on Form 10-Q for the period ended March 30, 1997, is hereby
incorporated by reference.
**10.50(d) Subsidy Agreement, dated February 12, 1997, between Sachsische
Aufbaubank and Dresdner Bank AG, with Appendices 1, 2a, 2b, 3 and
4, filed as Exhibit 10.50(d) to AMD's Quarterly Report on Form 10-Q
for the period ended March 30, 1997, is hereby incorporated by
reference.
10.50(e) AMD, Inc. Guaranty, dated as of March 11, 1997, among AMD, Saxony
Manufacturing GmbH and Dresdner Bank AG, filed as Exhibit 10.50(e)
to AMD's Quarterly Report on Form 10-Q for the period ended March
30, 1997, is hereby incorporated by reference.
10.50(f-1) Sponsors' Support Agreement, dated as of March 11, 1997, among AMD,
AMD Saxony Holding GmbH and Dresdner Bank AG, filed as Exhibit
10.50(f) to AMD's Quarterly Report on Form 10-Q for the period
ended March 30, 1997, is hereby incorporated by reference.
10.50(f-2) First Amendment to Sponsors' Support Agreement, dated as of
February 6, 1998, among AMD, AMD Saxony Holding GmbH and Dresdner
Bank AG, filed as Exhibit 10.50(f-2) to AMD's Annual Report on Form
10-K for the fiscal year ended December 28, 1997, is hereby
incorporated by reference.
10.50(g-1) Sponsors' Loan Agreement, dated as of March 11, 1997, among AMD,
AMD Saxony Holding GmbH and Saxony Manufacturing GmbH, filed as
Exhibit 10.50(g) to AMD's Quarterly Report on Form 10-Q for the
period ended March 30, 1997, is hereby incorporated by reference.
8
Exhibit
Number Description of Exhibits
- ------ -----------------------
10.50(g-2) First Amendment to Sponsors' Loan Agreement, dated as of February
6, 1998, among AMD, AMD Saxony Holding GmbH and AMD Saxony
Manufacturing GmbH, filed as Exhibit 10.50(g-2) to AMD's Annual
Report on Form 10-K for the fiscal year ended December 28, 1997, is
hereby incorporated by reference.
10.50(h) Sponsors' Subordination Agreement, dated as of March 11, 1997,
among AMD, AMD Saxony Holding GmbH, AMD Saxony Manufacturing GmbH
and Dresdner Bank AG, filed as Exhibit 10.50(h) to AMD's Quarterly
Report on Form 10-Q for the period ended March 30, 1997, is hereby
incorporated by reference.
10.50(i) Sponsors' Guaranty, dated as of March 11, 1997, among AMD, AMD
Saxony Holding GmbH and Dresdner Bank AG, filed as Exhibit 10.50(i)
to AMD's Quarterly Report on Form 10-Q for the period ended March
30, 1997, is hereby incorporated by reference.
**10.50(j) AMD Holding Wafer Purchase Agreement, dated as of March 11, 1997,
among AMD and AMD Saxony Holding GmbH, filed as Exhibit 10.50(j) to
AMD's Quarterly Report on Form 10-Q for the period ended March 30,
1997, is hereby incorporated by reference.
**10.50(k) AMD Holding Research, Design and Development Agreement, dated as of
March 11, 1997, between AMD Saxony Holding GmbH and AMD, filed as
Exhibit 10.50(k) to AMD's Quarterly Report on Form 10-Q for the
period ended March 30, 1997, is hereby incorporated by reference.
**10.50(l-1) AMD Saxonia Wafer Purchase Agreement, dated as of March 11, 1997,
between AMD Saxony Holding GmbH and AMD Saxony Manufacturing GmbH,
filed as Exhibit 10.50(l) to AMD's Quarterly Report on Form 10-Q
for the period ended March 30, 1997, is hereby incorporated by
reference.
10.50(l-2) First Amendment to AMD Saxonia Wafer Purchase Agreement, dated as
of February 6, 1998, between AMD Saxony Holding GmbH and AMD Saxony
Manufacturing GmbH, filed as Exhibit 10.50 (l-2) to AMD's Annual
Report on Form 10-K for the fiscal year ended December 28, 1997, is
hereby incorporated by reference.
**10.50(m) AMD Saxonia Research, Design and Development Agreement, dated as of
March 11, 1997, between AMD Saxony Manufacturing GmbH and AMD
Saxony Holding GmbH, filed as Exhibit 10.50(m) to AMD's Quarterly
Report on Form 10-Q for the period ended March 30, 1997, is hereby
incorporated by reference.
10.50(n) License Agreement, dated March 11, 1997, among AMD, AMD Saxony
Holding GmbH and AMD Saxony Manufacturing GmbH, filed as Exhibit
10.50(n) to AMD's Quarterly Report on Form 10-Q for the period
ended March 30, 1997, is hereby incorporated by reference.
10.50(o) AMD, Inc. Subordination Agreement, dated March 11, 1997, among AMD,
AMD Saxony Holding GmbH and Dresdner Bank AG, filed as Exhibit
10.50(o) to AMD's Quarterly Report on Form 10-Q for the period
ended March 30, 1997, is hereby incorporated by reference.
**10.50(p-1) ISDA Agreement, dated March 11, 1997, between AMD and AMD Saxony
Manufacturing GmbH, filed as Exhibit 10.50(p) to AMD's Quarterly
Report on Form 10-Q for the period ended March 30, 1997, is hereby
incorporated by reference.
**10.50(p-2) Confirmation to ISDA Agreement, dated February 6, 1998, between AMD
and AMD Saxony Manufacturing GmbH, filed as Exhibit 10.50(p-2) to
AMD's Annual Report on Form 10-K for the fiscal year ended December
28, 1997, is hereby incorporated by reference.
+ 13 1998 Annual Report to Stockholders, portions of which have been
incorporated by reference into Parts II and IV of this annual
report.
+ 21 List of AMD subsidiaries.
9
Exhibit
Number Description of Exhibits
- ------ -----------------------
+ 23 Consent of Ernst & Young LLP, Independent Auditors, refer to page
F-2 herein.
+ 24 Power of Attorney.
+ 27 Financial Data Schedule.
_____________
* Management contracts and compensatory plans or arrangements required to be
filed as an Exhibit to comply with Item 14(a)(3).
** Confidential treatment has been granted as to certain portions of these
Exhibits.
+ Previously filed.
AMD will furnish a copy of any exhibit on request and payment of AMD's
reasonable expenses of furnishing such exhibit.
(b) Reports on Form 8-K
During the fourth quarter of AMD's fiscal year ended December 27, 1998, a
Current Report on Form 8-K dated October 23, 1998 reporting under Item 5--Other
Events was filed announcing AMD's third quarter earnings.
10
(d) Fujitsu AMD Semiconductor Limited Financial Statements
This Form 10-K/A is being filed to reflect additional information relating to
Fujitsu AMD Semiconductor Limited (FASL), for which the fiscal year end is March
31. FASL, a joint venture formed by AMD and Fujitsu Limited (Fujitsu), was
formed in 1993 for the development and manufacture of non-volatile memory
devices. AMD has a 49.992% interest in FASL, and Fujitsu has the remaining
interest.
11
See accompanying notes.
12
See accompanying notes.
13
See accompanying notes.
14
FUJITSU AMD SEMICONDUCTOR LIMITED
STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED MARCH 31, 1999
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(Thousands)
See accompanying notes.
15
FUJITSU AMD SEMICONDUCTOR LIMITED
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS
In 1993, Advanced Micro Devices (AMD) and Fujitsu Limited (Fujitsu) formed a
joint venture, Fujitsu AMD Semiconductor Limited (FASL or the Company), for the
development and manufacture of non-volatile memory devices. Through FASL, the
two companies have constructed and are operating an advanced integrated circuit
(IC) manufacturing facility in Aizu-Wakamatsu, Japan, to produce Flash memory
devices. AMD has a 49.992% interest in FASL, and Fujitsu has the remaining
interest.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR. The Company's fiscal year ends March 31.
ACCOUNTING PRINCIPLES. The accounting records of the Company are maintained in
accordance with accounting practices prevailing in Japan. The accompanying
financial statements, however, include adjustments that have not been recorded
in the legal books of account of the Company but are necessary to conform to
generally accepted accounting principles in the United States of America (U.S.
GAAP). These adjustments consist principally of depreciation under a different
method and its impact on the valuation of inventories, provision of deferred
income taxes, and adjustments stemming from the translation of the Company's
financial statements into the U.S. dollar for reporting purposes.
CASH EQUIVALENTS. Cash equivalents consist of financial instruments which are
readily convertible into cash and have original maturities of three months or
less at the time of acquisition.
FOREIGN CURRENCY TRANSLATION. The functional currency of the Company is the
Japanese yen. Financial statements are translated into the U.S. dollar using the
exchange rate at each balance sheet date for assets and liabilities and a
weighted-average exchange rate for each period for income statement items.
Translation adjustments are recorded as a separate component of stockholders'
equity in the U.S. dollar financial statements.
REVENUE RECOGNITION. Revenue is recognized from sales when products are shipped
to the customer.
INVENTORIES. Inventories are stated at the lower of actual cost (average method)
or market (net realizable value).
PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment is stated at cost.
Depreciation for U.S. GAAP purposes is provided on the straight-line basis over
the estimated useful lives of the assets for financial reporting purposes and on
accelerated methods for tax purposes. Estimated useful lives for financial
reporting purposes are as follows: machinery and equipment 3 to 5 years;
buildings up to 26 years.
NET INCOME PER COMMON SHARE. Net income per share has been computed using the
weighted-average common shares outstanding. The Company has no potentially
dilutive securities.
16
FUJITSU AMD SEMICONDUCTOR LIMITED
NOTES TO FINANCIAL STATEMENTS
RECENT ACCOUNTING PRONOUNCEMENTS. In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133 (SFAS
133), "Accounting for Derivative Instruments and Hedging Activities." SFAS 133
is required to be adopted for fiscal years beginning after June 15, 2000. This
Statement will require recognition of all derivatives on the balance sheet at
fair value and the changes in fair value will be recognized through earnings or
other comprehensive income, depending on the nature of the derivatives. The
Company does not have any derivative instruments; therefore, SFAS 133 will have
no impact on the Company's financial position, results of operation or cash
flows.
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results inevitably will differ from those estimates,
and such differences may be material to the financial statements.
FINANCIAL PRESENTATION. The Company has reclassified certain prior year amounts
on the financial statements to conform to the current year presentation.
3. RELATED PARTY TRANSACTIONS
The Company is 100 percent owned by AMD and Fujitsu, with AMD having a 49.992%
interest, and Fujitsu having the remaining interest. Under the terms of the
joint venture agreement, FASL production is allocated nearly equally between AMD
and Fujitsu. All of the Company's accounts receivable and sales as of and for
the years ended March 31, 1999, 1998 and 1997 were with these related parties.
FASL made purchases from AMD, Fujitsu and Fujitsu's subsidiaries totaling $49
million, $62 million and $46 million in 1999, 1998, and 1997, respectively. At
March 31, 1999 and 1998, FASL owed AMD, Fujitsu and Fujitsu's subsidiaries
approximately $142 million and $125 million, respectively, which consisted of
loan, trade and royalty payables.
The Company has an agreement with Fujitsu Capital Limited (FCAP), a wholly owned
subsidiary of Fujitsu, to provide financing to FASL at lower interest rates than
banks. Had the Company obtained financing from a lender other than FCAP, the
additional interest expense would have been immaterial. FASL completed
construction of the building for a second Flash memory device wafer fabrication
facility, FASL II, in the third quarter of 1997 at a site contiguous to the
existing FASL facility in Aizu-Wakamatsu, Japan. Equipment installation is in
progress and the facility, including equipment, the completion of which is
anticipated in the second quarter of 2000, is expected to cost approximately $1
billion. Approximately $368 million of such cost has been funded as of March
31, 1999. Capital expenditures for FASL II construction to date have been
funded by cash generated from FASL operations and borrowings by FASL. However,
to the extent that FASL is unable to secure the necessary funds for FASL II, AMD
and Fujitsu may be required to contribute cash or guarantee third-party loans in
proportion to their respective interests in FASL. At March 31, 1999, AMD and
Fujitsu had loan guarantees outstanding totaling $114 million with respect to
such loans. The planned FASL II costs are denominated in yen and are therefore
subject to change due to foreign exchange rate fluctuations.
17
FUJITSU AMD SEMICONDUCTOR LIMITED
NOTES TO FINANCIAL STATEMENTS
The Company has a severance benefit package for employees formerly employed by
Fujitsu. FASL accrues the Company's share of severance benefits at year-end in
an amount to be settled with Fujitsu if the eligible employee terminates their
service with FASL and returns to Fujitsu or another Fujitsu group company.
4. COMPREHENSIVE LOSS
In 1998, the Company adopted Statement of Financial Accounting Standards No. 130
(SFAS 130), "Reporting Comprehensive Income." SFAS 130 establishes new rules
for the reporting and display of comprehensive loss and its components; however,
the adoption of this statement had no impact on the net income or stockholders'
equity. SFAS 130 requires unrealized gains or losses on available-for-sale
securities and the foreign currency translation adjustments, which prior to
adoption were reported separately in stockholders' equity, to be included in
other comprehensive loss. Prior year financial statements have been
reclassified to conform to the requirements of SFAS 130.
As of March 31, 1999 and 1998 components of accumulated other comprehensive
loss, consisting only of cumulative translation adjustments, were $71,057,000
and $111,191,000 respectively.
5. INCOME TAXES
Provision for income taxes consists of:
Significant components of the Company's deferred tax assets and liabilities as
of March 31, 1999 and 1998 are as follows:
18
FUJITSU AMD SEMICONDUCTOR LIMITED
NOTES TO FINANCIAL STATEMENTS
The following is a reconciliation between statutory Japanese income taxes and
the total provision for income taxes:
6. SEGMENT REPORTING
In June 1997, the Financial Accounting Standards Board issued the Statement of
Financial Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments
of an Enterprise and Related Information," which the Company has adopted in the
current year. As required by SFAS 131, the Company has determined it has only
one principle business and one reportable segment: non-volatile memory devices.
FASL derives all of its revenues from sales of only one product, Flash memory
devices, and is not organized by multiple operating segments for the purposes of
making operating decision or assessing performance. Accordingly, the Company
operates in one reportable segment.
The Company derives revenues from its sales to AMD and Fujitsu. All long-lived
assets are located in Japan.
19
FUJITSU AMD SEMICONDUCTOR LIMITED
NOTES TO FINANCIAL STATEMENTS
7. COMMITMENTS
At March 31, 1999, the Company had commitments of approximately $24 million for
the purchase and installation of equipment in FASL facilities.
The Company leases the land from Fujitsu under an agreement that expires May 31,
2023. The lease fee is revised every three years based on the fair market value
of the land. In addition, certain manufacturing equipment is used under
operating lease contracts. For each of the next five years and beyond, lease
obligations are:
Rent expense was $5,402,000, $1,151,000 and $573,000 in 1999, 1998 and 1997,
respectively.
8. RETAINED EARNINGS
The amount of retained earnings available for dividends under the Commercial
Code in Japan is based on the amount recorded in the Company's books maintained
in accordance with Japanese accounting practices. The adjustments included in
the accompanying financial statements but not recorded in the books as explained
in Note 2 have no effect on the determination of retained earnings available for
dividends under the Commercial Code in Japan.
9. SUBSEQUENT EVENT
In June 1999, a new transfer price agreement, which includes the basis for
determining the unit selling price, was approved by the Board of Directors.
Under the old transfer price agreement, the unit selling price was calculated
based on a percentage of AMD's ultimate average selling price at a
predetermined, nonnegotiable exchange rate. Under the new transfer price
agreement, the unit selling price is calculated using approximately 106 percent
of cost of sales based on the Commercial Code in Japan. Under the Commercial
Code in Japan, property, plant and equipment are depreciated using the declining
balance method. The change is effectively applied to the unit selling price of
products shipped on and after April 1, 1999.
20
Report of Independent Auditors
The Board of Directors and Stockholders
Fujitsu AMD Semiconductor Limited
We have audited the accompanying balance sheets of Fujitsu AMD Semiconductor
Limited as of March 31, 1999 and 1998, and the related statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended March 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
We have also reported separately on the financial statements of Fujitsu AMD
Semiconductor Limited for the same years prepared in accordance with accounting
principles generally accepted in Japan.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Fujitsu AMD Semiconductor
Limited at March 31, 1999 and 1998, and the results of its operations and its
cash flows for each of the three years in the period ended March 31, 1999, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Ernst & Young
Tokyo, Japan
September 17, 1999
21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ADVANCED MICRO DEVICES, INC.
September 22, 1999
By: /s/ Francis P. Barton
-------------------------------------
Francis P. Barton
Senior Vice President,
Chief Financial Officer
22