AMD 2014 Annual Report Download - page 85

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During the fourth quarter of 2014, the Company conducted its annual impairment test of goodwill. In step
one of the impairment test, the Company compared the fair value of each of the reporting units to its carrying
value. The Company determined that the carrying value of the Computing and Graphics reporting unit exceeded
its fair value, indicating potential goodwill impairment existed based on a combination of factors such as a
decline in stock price. Therefore, the Company performed the second step of the impairment test, in which the
fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit on a fair value
basis, including any unrecognized intangible assets, with any excess representing the implied fair value of
goodwill. The fair value was determined using an income approach, which estimates the present value of future
cash flows based on management’s forecast of revenue growth rates and operating margins. Based on this
analysis, the implied fair value of the goodwill of the Computing and Graphics reporting unit was zero. The
Company concluded that the carrying amount of goodwill assigned to the Computing and Graphics segment
exceeded the implied fair values and recorded an impairment charge of $233 million, which is included in
“Goodwill impairment charge” on the Company’s consolidated statement of operations.
The Company determined that the estimated fair value exceeded the carrying value of the remaining two
reporting units, indicating that there was no goodwill impairment with respect to these reporting units. In
connection with completing the goodwill impairment analysis, the Company reviewed its long-lived tangible and
intangible assets within the Computing and Graphics reporting unit under ASC 360, “Accounting for the
Impairment or Disposal of Long-Lived Assets.” The Company determined that the forecasted undiscounted cash
flows related to these assets or asset groups were in excess of their carrying values, and therefore these assets
were not impaired.
In the fourth quarters of 2013 and 2012, the Company conducted its annual impairment tests of
goodwill. Based on the results of the Company’s analysis of goodwill, each reporting unit’s fair value exceeded
its carrying value, indicating that there was no goodwill impairment in 2013 or 2012.
Acquisition-related intangible assets
The balances of acquisition-related intangible assets as of December 27, 2014 and December 28, 2013 were
as follows:
December 27, 2014 December 28, 2013
Gross
Accumulated
Amortization Net
Weighted-
average
amortization
period Gross
Accumulated
Amortization Net
(In millions, except years)
Developed technology .......... $258 $(201) $57 5.15 years $258 $(189) $69
In-process research and
development ............... 6 — 6 N/A 6 — 6
Customer relationships ......... 168 (167) 1 1.25 years 168 (166) 2
Trademark and trade name ...... 37 (36) 1 1.25 years 37 (36) 1
Total ....................... $469 $(404) $65 4.56 years $469 $(391) $78
The following table summarizes amortization expense associated with acquisition-related intangible assets:
2014 2013 2012
(In millions)
Developed technology .................................... $ 13 $ 13 $ 9
Customer relationships ...................................111
Trademark and trade name ................................ — 4 4
Total ................................................. $ 14 $ 18 $ 14
79