AMD 2006 Annual Report Download - page 278

Spansion Inc.
Notes to Consolidated Financial Statements—(Continued)
contracts to reduce its exposure to foreign currency exchange rate fluctuations. Realized and unrealized gains and losses associated with these foreign currency
contracts are reflected in the Company’s balance sheet and recorded in other current asset or accrued liabilities. Changes in fair value and premiums paid for
foreign currency contracts are recorded directly in cost of sales. The objective of these contracts is to reduce the impact of foreign currency exchange rate
movements on the Company’s operating results. All of the Company’s foreign currency forward contracts mature within the next twelve months. The Company
does not use derivatives for speculative or trading purposes, nor does the Company designate its derivative instruments as hedging instruments, as defined by the
Financial Accounting Standard Board, or FASB, under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.”
Research and Development Expenses
The Company expenses such research and development costs in the period in which such costs are incurred.
Advertising Expenses
Advertising costs are expensed as incurred. Advertising expenses for the year ended December 31, 2006, December 25, 2005 and December 26, 2004 were
approximately $8.1 million, $4.8 million and $3.4 million, respectively.
Net Loss per Share
Basic net loss per share is computed based on the weighted-average number of common shares outstanding during the period. Diluted net income per share
reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in
the issuance of common stock that then shared in the net income of the Company.
In connection with the IPO, certain employees have been awarded initial stock option and restricted stock unit grants to purchase Class A common stock of
the Company. For the years ended December 31, 2006 and December 25, 2005, respectively, the Company excluded approximately 16.8 million and 5.5 million
shares issuable upon exercise of outstanding stock options, upon vesting of outstanding restricted stock units and upon conversion of Spansion LLC’s 2.25%
Exchangeable Senior Subordinated Debentures because they had an antidilutive effect due to net losses recorded.
The Company has presented basic and diluted net loss per share amounts for periods prior to the IPO as if the exchange of AMD’s and Fujitsu’s
contributed capital for the Company’s common stock had occurred at the beginning of the periods presented. Prior to the completion of the IPO, the Company
had approximately 43.5 million shares of Class A common stock, 1 share of Class B common stock, 1 share of Class C common stock and approximately
29.0 million shares of Class D common stock outstanding as a result of the contribution from AMD and Fujitsu. On November 21, 2006, the Company closed a
secondary stock offering of its Class A common stock held by AMD and Fujitsu, and subsequently issued and sold 5,247,000 shares of its Class A common stock
in such offering in December 5, 2006. As a result of this offering, the Company has approximately 134.2 million shares of Class A common stock, 1 share of
Class B common stock, and 1 share of Class C common stock as of December 31, 2006. In connection with this offering, all the Class D common stock
converted to Class A common stock.
Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007