AMD 2006 Annual Report Download - page 109

Table of Contents
disclosures. FIN 48 will be effective for fiscal years beginning after December 15, 2006. The provisions of FIN 48 apply to all tax positions upon initial adoption
of FIN 48. Only tax positions that meet the recognition threshold criteria at the effective date may be recognized or continue to be recognized upon adoption of
FIN 48. The cumulative effect of applying the provisions of FIN 48 will be reported as an adjustment to the opening balance of retained earnings for that fiscal
year unless the adjustment relates to the tax positions taken by an acquired entity that existed at the time of the acquisition, in which case the adjustment would
be recorded to goodwill. The Company is currently evaluating the impact of the adoption of FIN 48 and will adopt it as required at the beginning of its fiscal year
2007.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). SFAS 157 does not require any new fair value measurements
but clarifies the fair value definition, establishes a fair value hierarchy that prioritizes the information used to develop assumptions used for measuring fair value,
and expands disclosures about fair value measurements. SFAS 157 clarifies that the fair value is the exchange price in an orderly transaction between market
participants to sell the asset or transfer the liability in the market. The fair value hierarchy gives the highest priority to quoted prices in active markets and the
lowest priority to unobservable data for example, the reporting entity’s own data. It emphasizes that fair value is a market-based measurement, not an
entity-specific measurement and a fair value measurement should therefore be based on the assumptions that market participants would use in pricing the asset or
liability. SFAS 157 expands disclosures about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial
recognition, including the inputs used to measure fair value and the effect of such measurements on earnings for the period. It will be effective for financial
statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years with earlier application encouraged. The
Company is currently evaluating the accounting and disclosure requirements of SFAS 157 and plans to adopt it as required at the beginning of its fiscal year
2008.
NOTE 3: ATI Acquisition
On October 25, 2006, the Company completed the acquisition of all of the outstanding shares of ATI Technologies Inc. (ATI), a publicly held company
headquartered in Markham, Ontario, Canada (the Acquisition) for a combination of cash and shares of the Company’s common stock. ATI is engaged in the
design, manufacture and sale of innovative 3D graphics and digital media silicon solutions. The Company believes that the acquisition of ATI will allow it to
deliver products that better fulfill the increasing demand for more integrated computing solutions.
The aggregate consideration paid by the Company for all outstanding ATI common shares consisted of approximately $4.3 billion of cash and 58 million
shares of the Company’s common stock. In addition, the Company also assumed substantially all issued and outstanding ATI stock options, restricted stock units
and other stock-based awards as of October 24, 2006 by issuing options to purchase approximately 17.1 million shares of the Company’s common stock and
approximately 2.2 million comparable AMD restricted stock units in exchange. To finance a portion of the cash consideration paid, the Company borrowed $2.5
billion under a term loan with a third party financial institution. (See Note 9 for further details of the term loan). The total purchase price for ATI was $5.6 billion
and is comprised of:
(In millions,
except share
amounts)
Acquisition of all of the outstanding shares, stock options, restricted stock units and other
stock-based awards of ATI in exchange for:
Cash $ 4,263
58 million shares of the Company’s common stock 1,172
Fair value of vested options and restricted stock units issued 144
Acquisition related transaction costs 25
Total purchase price $ 5,604
104
Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007