AMD 2006 Annual Report Download - page 113

Table of Contents
The balances of acquisition related intangible assets as of December 31, 2006 were as follows:
December 31, 2006
Weighted
Average
Amortization
Period (in
months)
Cost of
ATI
Acquisition
Related
Intangible
Assets
Accumulated
Amortization Net
(In millions)
Developed product technology 60 $ 752 (25) $ 727
Game console royalty agreements 60 147 (5) 142
Customer relationships 48 257 (11) 246
Trademarks and trade names 84 62 (1) 61
Customer backlog 14 36 (5) 31
Total $ 1,254 (47) $ 1,207
The total amortization expense for acquisition related intangible assets was $47 million for the year ended December 31, 2006, and is included in the
caption, “Amortization of acquired intangible assets and integration charges,” on the Company’s consolidated statements of operations. Estimated future
amortization expense related to acquisition related intangible assets is as follows:
In millions
Fiscal Year
2007 $ 284
2008 253
2009 253
2010 242
2011 159
Thereafter 16
Total $ 1,207
NOTE 4: Spansion Inc.
On December 21, 2005, the Company’s majority owned subsidiary, Spansion Inc. (Spansion), completed its initial public offering (IPO) of 47,264,000
shares of its Class A common stock as well as offerings of senior notes to the Company and institutional investors with an aggregate principal amount of
approximately $425 million. In addition, the Company cancelled $60 million of the aggregate principal amount outstanding under Spansion LLC’s promissory
note issued to the Company on June 30, 2003 in exchange for 5,000,000 shares of Spansion’s Class A common stock. As a result, immediately after the IPO, the
Company owned a total of 48,529,403 shares, or approximately 38 percent, of Spansion’s outstanding common stock. The Company did not receive any proceeds
from Spansion’s IPO.
Dilution in Ownership Interest
Prior to the IPO, the Company held a 60 percent controlling ownership interest in Spansion. Consequently, Spansion’s financial position, results of
operations and cash flows through December 20, 2005 were included in the Company’s consolidated statements of operations and cash flows. Following the IPO,
the Company’s ownership interest was diluted from 60 percent to approximately 38 percent, and the Company no longer exercised control over Spansion’s
operations. Therefore, the Company used the equity method of accounting to reflect its share of Spansion’s net income from December 21, 2005 through
December 31, 2006. In connection with the Company’s reduction in its ownership interest in Spansion, the Company recorded a loss of $110 million in 2005
which represents the difference between Spansion’s book value per share before and after the IPO multiplied by the number of shares owned by the Company.
108
Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007