AMD 2011 Annual Report Download - page 63

Settlement Agreement as well as foreign taxes in profitable locations offset by benefits, including the
monetization of U.S. research and development credits, an alternative minimum tax refund on net operating loss
carryback in the United States and the reversal of unrecognized tax benefits in foreign jurisdictions.
The income tax provision in 2009 was primarily due to a one-time loss of deferred tax assets for German net
operating loss carryovers upon transfer of our ownership interests in our Dresden subsidiaries to GF plus foreign
taxes in profitable locations offset by discrete tax benefits, including the monetization of U.S. research and
development credits.
As of December 31, 2011, substantially all of our U.S. and foreign deferred tax assets, net of deferred tax
liabilities, continued to be subject to a valuation allowance. The realization of these assets is dependent on
substantial future taxable income which, at December 31, 2011, in management’s estimate, is not more likely
than not to be achieved.
Equity Income (Loss) and Dilution Gain in Investee, Net
During the time that we applied the equity method of accounting for our ownership interest in GF, our
equity in net loss of investee primarily consisted of our proportionate share of GF’s losses for the period based on
our ownership percentage of GF’s Class A Preferred Shares, our portion of the non-cash accretion on GF’s Class
B Preferred Shares, the elimination of intercompany profit, reflecting the mark-up on inventory that remained on
our consolidated balance sheet at the end of the period, the amortization of basis differences identified from the
purchase price allocation process, based on the fair value of GF upon deconsolidation and, to the extent
applicable, the gain or loss on dilution of our ownership interest as a result of the capital infusion into GF by
ATIC.
Stock-Based Compensation Expense
Stock-based compensation expense related to employee stock options, restricted stock and restricted stock
units for the years ended December 31, 2011, December 25, 2010 and December 26, 2009 was allocated in our
consolidated statements of operations as follows:
2011 2010 2009
(In millions)
Cost of sales ................................................................. $ 6 $ 4 $ 3
Research and development ...................................................... 46 46 40
Marketing, general and administrative ............................................ 38 37 32
Total stock-based compensation expense, net of tax of $0 ............................. $90 $87 $75
During 2011, 2010 and 2009, we did not realize any excess tax benefits related to stock-based compensation
and therefore we did not record any related financing cash flows.
Stock-based compensation expenses of $90 million in 2011 increased $3 million compared to $87 million in
2010. This increase was primarily due to the acceleration of vesting of all unvested equity awards held by our
former Chief Executive Officer in the first quarter of 2011 as a result of his resignation from AMD, effective
January 10, 2011, and a higher number of employee stock options and restricted stock units granted in 2011
compared to 2010, partially offset by a lower average grant date fair value in 2011 as compared to 2010.
Stock-based compensation expenses of $87 million in 2010 increased $12 million compared to $75 million
in 2009. This increase was primarily due to a higher average grant date fair value in 2010 as compared to 2009.
As of December 31, 2011, we had $21 million of total unrecognized compensation expense, net of estimated
forfeitures, related to stock options that will be recognized over the weighted average period of 2.08 years. Also,
as of December 31, 2011, we had $103 million of total unrecognized compensation expense, net of estimated
forfeitures, related to restricted stock and restricted stock units that will be recognized over the weighted average
period of 1.79 years.
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