Intel 2008 Annual Report Download - page 49

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Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
We recorded the additional accruals, net of adjustments, as restructuring and asset impairment charges. The remaining accrual
as of December 27, 2008 was related to severance benefits that we recorded within accrued compensation and benefits.
From the third quarter of 2006 through the fourth quarter of 2008, we incurred a total of $1.6 billion in restructuring and asset
impairment charges related to this program. These charges included a total of $678 million related to employee severance and
benefit arrangements for approximately 11,900 employees, of which 10,800 employees had left the company as of
December 27, 2008. A substantial majority of these employee terminations affected employees within manufacturing,
information technology, and marketing. Of the employee severance and benefit charges incurred as of December 27, 2008, we
had paid $621 million. The restructuring and asset impairment charges also included $888 million in asset impairment charges.
We estimate that employee severance and benefit charges from the third quarter of 2006 to the fourth quarter of 2008 will
result in gross annual savings of approximately $1.1 billion, a portion of which we began to realize in the third quarter of
2006. We are realizing these savings within marketing, general and administrative expenses; cost of sales; and R&D.
Share
-Based Compensation
Share-based compensation totaled $851 million in 2008, $952 million in 2007, and $1.4 billion in 2006. Share-based
compensation was included in cost of sales and operating expenses. The decrease in share-based compensation from 2006 to
2007 was a result of fewer equity awards vesting in 2007 compared to 2006.
As of December 27, 2008, unrecognized share-based compensation costs and the weighted average periods over which the
costs are expected to be recognized were as follows:
Gains (Losses) on Equity Method Investments, Net
Net losses on equity method investments were $1.4 billion in 2008 compared to a net gain of $3 million in 2007. We
recognized higher impairment charges and higher equity method losses in 2008 compared to 2007. Impairment charges in
2008 included a $762 million impairment charge recognized on our investment in Clearwire LLC and a $250 million
impairment charge recognized on our investment in Numonyx. We recognized the impairment charge on our investment in
Clearwire LLC to write down our investment to its fair value, primarily due to the fair value being significantly lower than the
cost basis of our investment. The impairment charge on our investment in Numonyx was due to a general decline in the NOR
flash memory market segment. Our equity method losses were primarily related to Numonyx ($87 million in 2008) and the old
Clearwire Corporation ($184 million 2008 and $104 million in 2007). See “Note 6: Equity Method and Cost Method
Investments” in Part II, Item 8 of this Form 10-K.
Net gains on equity method investments were flat in 2007 compared to 2006. Approximately $110 million of income
recognized in 2007 due to the reorganization of one of our investments was offset by higher equity method losses, primarily
from our investment in the old Clearwire Corporation. Equity method losses were not significant in 2006.
43
Unrecognized
Share
-
Based
Weighted
Compensation
Average
(Dollars in Millions)
Costs
Period
Stock options
$
335
1.2 years
Restricted stock units
$
937
1.4 years
Stock purchase plan
$
18
1 month