AMD 2007 Annual Report Download - page 28

Table of Contents
• consolidating corporate and administrative infrastructures and information technology systems;
• coordinating sales and marketing functions;
• preserving our customer, supplier, ecosystem partner and other important relationships;
• aligning and executing on new product roadmaps;
• minimizing the diversion of management’s attention from ongoing business concerns; and
• coordinating geographically separate organizations.
We cannot assure you that our integration of ATI will result in the realization of the full benefits that we anticipated. For example, it is possible that as a
result of the acquisition, previous ATI customers of discrete GPUs may decide to purchase our competitors’ graphics products for use with their computer
systems that incorporate Intel platforms, or that ecosystem partners will cease doing business with us because they view the former ATI operations as
competitive with portions of their business. Any inability to integrate successfully could have a material adverse effect on us.
In the fourth quarter of 2007, we performed our annual impairment analysis with respect to the goodwill and, based on the outcome of that analysis, we
also evaluated our acquisition-related intangible assets for impairment. We determined that goodwill recorded as a result of the acquisition of ATI was impaired,
and incurred a goodwill impairment charge of $1.3 billion, as well as an impairment charge of $349 million related to acquisition-related identifiable intangible
assets acquired from ATI. These charges resulted in a reduction of the carrying values of goodwill and acquisition related intangible assets as recorded on our
balance sheet. They are based on an updated long-term financial outlook for the former ATI operations that is lower than previously calculated. However, actual
performance in the near-term and longer-term could be materially different from these forecasts, which could impact future estimates of fair value of our
reporting units and may result in further impairment of goodwill.
We cannot be certain that our substantial investments in research and development will lead to timely improvements in product designs or technology
used to manufacture our products or that we will have sufficient resources to invest in the level of research and development that is required to remain
competitive.
We make substantial investments in research and development for process technologies in an effort to design and manufacture leading-edge
microprocessors. We also make substantial investments in research and development related to product designs, including new integrated platforms and our
design initiative called “Fusion,” and we anticipate that we will continue to invest in research and development in the future. We cannot be certain that we will be
able to develop, obtain or successfully implement leading-edge process technologies needed to manufacture future generations of our products profitably or on a
timely basis or that our competitors will not develop new technologies, products or processes that render our products uncompetitive or obsolete. If new
competitors, technological advances by existing competitors or other competitive factors require us to invest significantly greater resources than anticipated in
our research and development efforts, our operating expenses would increase. If we are required to invest significantly greater resources than anticipated in
research and development efforts without an increase in revenue, our operating results could decline. Moreover, in connection with the ATI acquisition, we
committed to the Minister of Industry of Canada to increase total expenditures on research and development in Canada when compared to ATI’s expenditures in
this area in prior years. However, we cannot assure you that we will have sufficient resources to achieve planned investments in research and development or to
otherwise maintain the level of investment in research and development that is required for us to remain competitive.
We have a joint development agreement with IBM, pursuant to which we have agreed to work together to develop new process technologies through
December 31, 2011. We anticipate that under this agreement, we will pay fees to IBM of approximately $400 million in connection with joint development
projects between 2008 and 2011.
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Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008