AMD 2006 Annual Report Download - page 103

Table of Contents
Included in other assets on the consolidated balance sheets are balances related to certain technology licenses. The balances related to these licenses, net of
amortization, were $204 million and $154 million at December 31, 2006 and December 25, 2005. Estimated future amortization expense related to these licenses
is as follows:
In millions
Fiscal Year
2007 $ 81
2008 81
2009 26
2010 8
2011 5
Thereafter 3
Total $ 204
Commitments and Contingencies. From time to time the Company is a defendant or plaintiff in various legal actions that arise in the normal course of
business. The Company is also a party to environmental matters, including local, regional, state and federal government clean-up activities at or near locations
where the Company currently or has in the past conducted business. The Company is also a guarantor of various third-party obligations and commitments. The
Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A
determination of the amount of reserves required for these commitments and contingencies, if any, that would be charged to earnings, includes assessing the
probability of adverse outcomes and estimating the amount of potential losses. The required reserves, if any, may change in the future due to new developments
in each matter or changes in circumstances, such as a change in settlement strategy. Changes in required reserves could increase or decrease the Company’s
earnings in the period the changes are made. (See Note 17).
Cash Equivalents. Cash equivalents consist of financial instruments that are readily convertible into cash and have original maturities of three months or
less at the time of purchase.
Marketable Securities. The Company classifies its marketable debt and equity securities at the date of acquisition as either held to maturity or
available-for-sale. Substantially all of the Company’s investments in marketable debt and equity securities are classified as available-for-sale. These securities are
reported at fair market value with the related unrealized gains and losses included in accumulated other comprehensive income (loss), net of tax, a component of
stockholders equity. Realized gains and losses and declines in the value of securities determined to be other-than-temporary are included in other income
(expense), net. The cost of securities sold is based on the specific identification method.
The Company classifies investments with remaining time to maturity of more than three months as marketable securities. Marketable securities generally
consist of money market auction rate preferred stocks and debt securities such as commercial paper, corporate notes, certificates of deposit and marketable direct
obligations of United States governmental agencies. Available-for-sale securities with remaining time to maturity greater than twelve months are classified as
current when they represent investments of cash that are intended to be used in current operations.
Derivative Financial Instruments. The Company is primarily subject to foreign currency risks for transactions denominated in euros and Canadian
dollars. Therefore, in the normal course of business, the Company’s financial position is routinely subjected to market risk associated with foreign currency rate
fluctuations. The Company’s general practice is to ensure that material business exposure to foreign exchange risks are identified, measured and minimized using
the most effective and efficient methods to eliminate or reduce such exposures. To protect against the fluctuation in value of forecasted euro and Canadian dollar
denominated cash flows resulting from these transactions, the Company has instituted a foreign currency cash flow hedging program. Under this program, the
Company purchases foreign currency forward contracts and sells
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007