AMD 2013 Annual Report Download - page 82

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The table below summarizes the changes in accumulated other comprehensive loss by component for the
years ended December 28, 2013 and December 29, 2012:
December 28,
2013
December 29,
2012
Unrealized
gains (losses)
on available-
for-sale
securities
Unrealized
gains (losses)
on cash flow
hedges Total
Unrealized
gains (losses)
on available-
for-sale
securities
Unrealized
gains (losses)
on cash flow
hedges Total
(In millions)
Beginning balance ............... — (3) (3) (1) (4) (5)
Unrealized gains (losses) arising
during the period, net of tax
effects ................... (1) (6) (7) 1 1 2
Reclassification adjustment for
losses realized and included in
net loss, net of tax effects .... 2 6 8 — — —
Total other comprehensive income . . 1 — 1 1 1 2
Ending balance .................. 1 (3) (2) — (3) (3)
Stock-Based Compensation. The Company estimates stock-based compensation cost for stock options at
the grant date based on the option’s fair-value as calculated by the lattice-binomial option-pricing model. For
restricted stock and restricted stock units, fair value is based on the closing price of the Company’s common
stock on the grant date. The Company estimates the grant-date fair value of stock options, restricted stock and
restricted stock units that involve a market condition using a Monte Carlo simulation model. The expense is
recognized using the single option method which is ratable on a straight-line basis over the requisite service
period.
The application of the lattice-binomial option-pricing model requires the use of extensive actual employee
exercise behavior data and the use of a number of complex assumptions including expected volatility of the
Company’s common stock, risk-free interest rate and expected dividends. Significant changes in any of these
assumptions could materially affect the fair value of stock options granted in the future.
Forfeiture rates are estimated at the time of grant and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates in order to derive the Company’s best estimate of awards ultimately
expected to vest.
NOTE 3: GLOBALFOUNDRIES
Formation and Accounting
On March 2, 2009, the Company consummated the transactions contemplated by the Master Transaction
Agreement among the Company, Advanced Technology Investment Company LLC (ATIC) and West Coast
Hitech L.P. (WCH), pursuant to which the Company formed GLOBALFOUNDRIES, Inc. (GF). In connection
with the consummation of the transactions contemplated by the Master Transaction Agreement, the Company,
ATIC and GF entered into a Wafer Supply Agreement (the WSA), a Funding Agreement (the Funding
Agreement) and a Shareholders’ Agreement (the Shareholders’ Agreement) on March 2, 2009.
At GF’s formation on March 2, 2009 and through December 26, 2009, GF was deemed a variable-interest
entity and the Company was deemed to be GF’s primary beneficiary. Accordingly, the Company consolidated
GF under applicable accounting rules. As a result of certain GF governance changes, the Company
deconsolidated GF and accounted for its GF ownership under the equity method of accounting as of
December 27, 2009. Following the deconsolidation, GF became the Company’s related party.
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