AMD 2006 Annual Report Download - page 76

Table of Contents
period of 1.05 years. Also, as of December 31, 2006, we had $110 million of total unrecognized compensation expense, net of estimated forfeitures, related to
restricted stock and restricted stock units that will be recognized over the weighted average period of 1.64 years. For additional information on stock-based
compensation expense, see Note 2 to our consolidated financial statements.
On April 27, 2005, we accelerated the vesting of all stock options outstanding under the 2004 Equity Incentive Plan and our prior equity compensation
plans that had exercise prices per share higher than the closing price of our stock on April 27, 2005, which was $14.51. Options to purchase approximately
12 million shares of our common stock became exercisable immediately. Options held by non-employee directors were not included in the vesting acceleration.
The primary purpose for accelerating the vesting was to eliminate future compensation expense we would otherwise recognize in our statement of
operations with respect to these accelerated options upon the adoption of SFAS 123R. The acceleration of the vesting of these options did not result in a charge
based on U.S. generally accepted accounting principles.
On December 15, 2005, we accelerated the vesting of all outstanding AMD stock options and restricted stock units held by Spansion employees that would
otherwise have vested from December 16, 2005 to December 31, 2006. In connection with the modification of the terms of these options to accelerate their
vesting, $1.2 million was recorded as non-cash compensation expense on a pro forma basis in accordance with SFAS 123, and this amount was included in the
pro forma stock compensation expense for the year ended December 25, 2005.
The primary purpose for accelerating the vesting of these awards was to minimize future compensation expense that we and Spansion would otherwise
have been required to recognize in Spansion’s and our respective statements of operations with respect to these awards. If we had not accelerated the vesting of
these awards, they would have been subject to variable accounting in accordance with the guidance provided in EITF Issue No. 96-18, Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Service and EITF Issue No. 00-12, Accounting by
an Investor for Stock-Based Compensation Granted to Employees of an Equity Method Investee. This accounting treatment would have applied because
following Spansion’s IPO, we no longer consolidate Spansion’s results of operations in our financial statements. Accordingly, Spansion employees are no longer
considered our employees. Under variable fair value accounting, we would have been required to re-measure the fair value of unvested stock-based awards of our
common stock held by Spansion employees after Spansion’s IPO at the end of each accounting period until such awards were fully vested.
In connection with the acceleration of the vesting of these awards, we recorded a compensation charge in the fourth quarter of 2005 of $1.5 million, which
was based on the estimated forfeiture rate of 7.94 percent. The actual forfeitures for 2006 were not materially different from the estimate used.
International Sales
International sales as a percent of net revenue were 75 percent in 2006, 79 percent in 2005 and 79 percent in 2004. In 2006, all of our net revenue was
denominated in U.S. dollars. During 2005 and 2004, approximately 14 and 22 percent of our net revenue was denominated in currencies other than the U.S.
dollar, primarily the Japanese yen. However, as a result of the closing of Spansion’s IPO on December 21, 2005, we do not expect to have significant sales
denominated in the Japanese yen in the future.
FINANCIAL CONDITION
Our cash, cash equivalents and marketable securities at December 31, 2006 totaled $1.5 billion and our debt and capital lease obligations totaled $3.8
billion.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007