AMD 2009 Annual Report Download - page 91

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Included in “Other assets” on the Company’s consolidated balance sheet are amounts related to certain
technology licenses. The balances related to such technology licenses, net of amortization, were $288 million and
$222 million at December 26, 2009 and December 27, 2008. Estimated future amortization expense related to
these licenses is as follows:
In millions
Fiscal Year
2010 ............................................................ $ 89
2011 ............................................................ 79
2012 ............................................................ 55
2013 ............................................................ 27
2014 ............................................................ 17
Thereafter ........................................................ 21
Total ............................................................ $288
Commitments and Contingencies. From time to time the Company is a defendant or plaintiff in various
legal actions that arise in the normal course of business. The Company is also a party to environmental matters,
including local, regional, state and federal government clean-up activities at or near locations where the
Company currently or has in the past conducted business. The Company is also a guarantor of various third-party
obligations and commitments. The Company is required to assess the likelihood of any adverse judgments or
outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of
reserves required for these commitments and contingencies, if any, that would be charged to earnings, includes
assessing the probability of adverse outcomes and estimating the amount of potential losses. The required
reserves, if any, may change in the future due to new developments in each matter or changes in circumstances,
such as a change in settlement strategy. Changes in required reserves could increase or decrease the Company’s
earnings in the period the changes are made (see Notes 17 and 19).
Cash Equivalents. Cash equivalents consist of financial instruments that are readily convertible into cash
and have original maturities of three months or less at the time of purchase.
Investments in Certain Debt and Equity Securities. The Company classifies its investments in debt and
marketable securities at the date of acquisition as either held to maturity, available-for-sale or trading securities.
Held to maturity securities are carried at amortized cost. Unrealized holding gains and losses are not reported in
the financial statements until realized or until a decline in fair value below cost is deemed to be other-than-
temporary. Available-for-sale securities are reported at fair value with the related unrealized gains and losses
included, net of tax, in accumulated other comprehensive income (loss), a component of stockholders’ equity.
Realized gains and losses and declines in the value of available-for-sale securities determined to be other than
temporary are included in other income (expense), net. Trading securities are reported at fair value with changes
in the related unrealized gains and losses included in earnings. The cost of securities sold is determined based on
the specific identification method.
The Company classifies investments in debt securities with remaining time to maturity of more than three
months as marketable securities on its consolidated balance sheets. Classification of current versus long-term
depends on whether the Company has the intent and ability to sell these securities within 12 months. Investments
in debt securities with remaining time to maturity greater than 12 months are classified as current when they
represent investments of cash that are intended for use in current operations within the next twelve months.
In October 2008, UBS AG (UBS) offered to repurchase all of the Company’s auction rate securities (ARS)
that were purchased from UBS prior to February 13, 2008. The Company accepted this offer. The ARS are
classified as trading securities. Starting June 30, 2010 and ending July 2, 2012, the Company has the right, but
not the obligation, to sell, at par, these ARS to UBS (i.e. this is a put option). The Company’s put option is a
freestanding financial instrument between UBS and the Company because it is non-transferable and cannot be
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