AMD 2006 Annual Report Download - page 279

Spansion Inc.
Notes to Consolidated Financial Statements—(Continued)
Accumulated Other Comprehensive Loss
The following are the components of accumulated other comprehensive loss:
Dec. 31,
2006
Dec. 25,
2005
(in thousands)
Minimum pension liability, net of tax benefits of ($5,429) in 2006 and 2005 $ (298) $ 3,043
Cumulative translation adjustment (79,408) (67,607)
Net unrealized gains on marketable securities, net of taxes of $0 — 7,291
Total accumulated other comprehensive loss $ (79,706) $ (57,273)
Total other comprehensive loss for fiscal 2006 includes reclassification adjustment of $6.9 million realized gain, net of tax of $0, from sale of marketable
securities. There was no reclassification adjustment for fiscal 2005 and fiscal 2004.
Stock-Based Compensation
Accounting Treatment for AMD Options Held by Spansion Employees
Prior to the IPO, the Company did not provide stock-based compensation to its employees or third parties. However, certain of the Company’s employees
received stock options to purchase shares of AMD common stock from the Company’s then majority and controlling member, AMD who consolidated
Spansion’s financial statements for financial reporting purposes. The Company accounted for AMD’s stock option grants and restricted stock unit, or RSU,
awards to its employees under the intrinsic value recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for
Stock Issued to Employees and related interpretations, consistent with the accounting method followed by AMD for stock options and RSU awards issued to
employees of the consolidated AMD group. The exercise price of these stock options was equal to the market price of AMD’s common stock on the date of
grant. The Company reimbursed AMD for these stock options based on an agreed amount equal to the grant-date fair value of the stock options calculated using
the Black-Scholes-Merton valuation model, less a 15 percent discount (the “grant-date fair value”). The Company recorded a liability for amounts due to AMD
under this arrangement with a corresponding reduction to additional paid-in capital. Reimbursements to AMD, which commenced on the last day of the quarter
following the quarter in which the stock options were granted, were payable in sixteen equal quarterly installments through fiscal 2009 (See Note 4).
Subsequent to the Company’s IPO and the cessation of AMD’s consolidation of Spansion’s financial statements, these awards were being accounted for
under variable fair value accounting following the guidance in Emerging Issues Task Force (EITF) Issue No. 96-18, “Accounting for Equity Instruments That
Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Good or Services,” and EITF Issue No. 00-12, “Accounting by an Investor
for Stock-Based Compensation Granted to Employee of an Equity Method Investee,” and continued to be remeasured to their fair value in future periods until
they were fully vested (See Note 4).
Spansion Stock-Based Incentive Compensation Plans
Effective December 26, 2005, the Company adopted FASB Statement No. 123(R), Share-Based Payment, which requires a public entity to reflect on its
income statement, instead of pro forma disclosures in its financial footnotes, the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award. Statement 123(R) supersedes the Company’s previous accounting under Opinion 25 for periods
beginning in fiscal 2006.
Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007