AMD 2009 Annual Report Download - page 63

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expenses for the Graphics segment and $23 million of expenses in connection with the formation of GF.
Graphics’ marketing, general and administrative expenses increased due to higher marketing and cooperative
advertising costs related to the launch of new products.
Legal Settlement
On November 12, 2009, we entered into an agreement with Intel to end all outstanding legal disputes
between the companies including antitrust litigation and patent cross license disputes. Under the terms of the
agreement:
• AMD and Intel agreed to a new 5-year patent cross license agreement that gives AMD broad rights and
the freedom to operate a business utilizing multiple foundries;
• Intel and AMD waived all claims of breach from the previous license agreement;
• Intel paid us $1.25 billion;
• Intel agreed to abide by a set of business practice provisions going forward;
• We dropped all pending litigation, including the case in U.S. District Court in Delaware and two cases
pending in Japan; and
• We withdrew all of our regulatory complaints worldwide;
This settlement encompasses all antitrust litigation and disputes and there are no future obligations that we
need to perform to earn this settlement payment. That is, the patent cross license agreement represents fully paid
up licenses by both AMD and Intel for which no future payments or delivery is required. Accordingly, we
recognized the entire settlement amount in our fiscal 2009 operating results.
Amortization of Acquired Intangible Assets and Integration Charges, and Impairment of Goodwill and
Acquired Intangible Assets.
Amortization of Acquired Intangible Assets and Integrations Charges
Amortization of acquired intangible assets and integration charges decreased $67 million, or 49 percent,
from $137 million in 2008 to $70 million in 2009. This decrease was due to the write-down of certain acquired
intangible assets as a result of the 2008 impairment analyses.
Amortization of acquired intangible assets and integration charges decreased $99 million, or 42 percent,
from $236 million in 2007 to $137 million in 2008. This decrease was primarily attributable to a $27 million
decrease in charges related to the integration of AMD and ATI operations and a $72 million decrease in
amortization of acquired intangible assets due to the write-down of certain acquired intangible assets as a result
of the impairment analyses.
Impairment of Goodwill and Acquired Intangible Assets
2009 Impairment Analysis
In the fourth quarter of 2009 we conducted our annual impairment test of goodwill. We considered the
income and market approaches in determining the implied fair value of the goodwill. The income approach
required estimates of future operating results and cash flows of each of the reporting units discounted using
estimated discount rates ranging from 16 percent to 18 percent. Based on the results of our annual analysis of
goodwill, the fair values exceeded the carrying values of each of our reporting units by a significant amount
(Step 1), indicating that there was no goodwill impairment. As of December 26, 2009 we did not have any
reporting units that were at risk of failing Step 1 of the goodwill impairment test. Our cost basis of goodwill
deductible for tax was $2.6 billion. Our adjusted basis after tax deductions through 2009 is $1.7 billion.
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