AMD 2007 Annual Report Download - page 245

Spansion Inc.
Notes to Consolidated Financial Statements—(Continued)
Statement No. 43.” Issue 06-2 provides guidelines under which sabbatical leave or other similar benefits provided to an employee are considered to accumulate.
If such benefits are deemed to accumulate, they should be accrued for, as compensation expense over the employee’s requisite service period. The provisions of
this Issue are effective for fiscal years beginning after December 15, 2006 and allow for either retrospective application or a cumulative effect adjustment
approach upon adoption. The Company adopted this Issue beginning January 1, 2007 using the cumulative effect adjustment approach. The effect of this
adoption resulted in an additional increase to the Company’s sabbatical liability and accumulated deficit of approximately $10 million as of the beginning of
fiscal 2007.
The Company’s Sabbatical Program provides for eight weeks of paid leave for salaried (exempt) employees in the United States upon the completion of
seven years of service. In addition, the Company’s Recognition Trip Program provides for one week of paid leave and a fixed cash compensation for hourly
(non-exempt) employees in the United States who have completed seven years of service. Prior to the adoption of the Issue, the Company accounted for the
above programs only after the completion of the seven years by the eligible employees because none of the benefits vested or accreted to the employee until
completion of the full seven years of service. With the adoption of Issue 06-2, the Company account for the programs by recording the estimated total program
payouts upon attaining the requisite service conditions as compensation expense ratably over each employee’s requisite service period.
In July 2006, the FASB issued Financial Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, which applies to all tax positions
related to income taxes subject to Statement 109, Accounting for Income Taxes. FIN 48 requires a new evaluation process for all tax positions taken. If the
probability for sustaining a tax position is greater than 50 percent, then the tax position is warranted and recognition should be at the largest amount that is
more-likely-than-not to be realized upon ultimate settlement. FIN 48 requires expanded disclosure at each annual reporting period unless a significant change
occurs in an interim period. Differences between the amounts recognized in the statements of financial position prior to the adoption of FIN 48 and the amounts
reported after adoption are to be accounted for as an adjustment to the beginning balance of retained earnings. The Company is currently evaluating the impact of
adoption of FIN 48, and the Company expect to adopt FIN 48 as required for the fiscal year beginning January 1, 2007.
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and
Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106 and 132(R). This Statement requires balance sheet recognition of the
overfunded or underfunded status of pension and postretirement benefit plans. Under Statement 158, actuarial gains and losses, prior service costs or credits, and
any remaining transition assets or obligations that have not been recognized under previous accounting standards must be recognized in accumulated other
comprehensive income in equity, net of tax effects, until they are amortized as a component of net periodic benefit cost. In addition, the measurement date, the
date at which plan assets and the benefit obligation are measured, is required to be the company’s fiscal year end. Statement 158’s provisions regarding the
change in the measurement date of postretirement benefit plans are not applicable to the Company because the Company already uses a year end measurement
date for its pension plan. On December 31, 2006, the Company adopted the recognition and disclosure provisions of SFAS 158, the effect of which is disclosed
in Note 14.
4. Stock-Based Compensation
AMD Stock Options
Through December 25, 2005, AMD granted stock options to the Company’s employees with an aggregate grant-date value of approximately $19.4 million.
The Company paid AMD approximately $8.5 million and $0.9
Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008