AMD 2005 Annual Report Download - page 56

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Table of Contents
December 31, 2006. In connection with the modification of the terms of these options to accelerate their vesting, $1.2 million was recorded as non-cash
compensation expense on a pro forma basis in accordance with SFAS 123, and this amount was included in the pro forma stock compensation expense for the
year ended December 25, 2005.
The primary purpose for accelerating the vesting of these awards was to minimize future compensation expense that we and Spansion would otherwise
have been required to recognize in Spansion’s and our respective statements of operations with respect to these awards. If we had not accelerated the vesting of
these awards, they would have been subject to variable accounting in accordance with the guidance provided in EITF Issue 96-18 and 00-12. This accounting
treatment would have applied because following Spansion’s IPO, we no longer consolidate Spansion’s results of operations in our financial statements.
Accordingly, Spansion employees are no longer considered our employees. Under variable fair value accounting, we would have been required to re-measure the
fair value of unvested stock-based awards of our common stock held by Spansion employees after Spansion’s IPO at the end of each accounting period until such
awards were fully vested.
In connection with the acceleration of the vesting of these awards, we recorded a compensation charge in the fourth quarter of 2005 of $1.5 million.
In addition to the acceleration of vesting of certain stock awards as indicated above, there are approximately 684,000 unvested AMD stock options and
restricted stock units that are still held by Spansion employees which are currently subject to variable accounting. In accordance with EITF 00-12, the resulting
compensation charge will be recorded in the Company’s consolidated statements of operations in the same caption as the equity in income ( loss) of
unconsolidated investee.
Section II. General Option Information
The following is a summary of stock option activity for the years ended December 25, 2005 and December 26, 2004:
Year Ended
December 25, 2005
Year Ended
December 26, 2004
Number of
Shares
Weighted-
Average
Exercise
Price
Number of
Shares
Weighted-
Average
Exercise
Price
(In thousands except share price)
Options:
Outstanding at beginning of year 53,702 $ 13.58 40,969 $ 12.92
Granted 8,145 $ 18.42 26,121 $ 14.54
Canceled (1,081) $ 15.22 (3,425) $ 23.20
Exercised (14,838) $ 11.31 (9,981) $ 10.08
Outstanding at end of year 45,928 $ 15.14 53,684 $ 13.58
Exercisable at end of year 36,832 $ 14.94 32,250 $ 13.72
Available for grant at beginning of year 23,901 29,613
Available for grant at end of year 15,668 23,901
51
Source: ADVANCED MICRO DEVIC, 10-K, February 27, 2006