AMD 2007 Annual Report Download - page 73

Table of Contents
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
because such options were out of the money.
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, we recorded $1.2 million 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 consolidated Spansion’s results of operations in our financial statements. Accordingly, Spansion employees were 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 87 percent in 2007, 75 percent in 2006 and 79 percent in 2005. The increase in international sales from
2006 to 2007 was attributable to the inclusion of sales of our graphics and chipsets products to contract manufacturers and add-in-board manufacturers based
outside the United States, principally in China and Taiwan, for the full year in 2007 compared to nine weeks in 2006. In 2007 and 2006, primarily all of our net
revenue was denominated in U.S. dollars. During 2005, approximately 14 percent of our net revenue was denominated in currencies other than the U.S. dollar,
primarily the Japanese yen.
FINANCIAL CONDITION
Our cash, cash equivalents and marketable securities at December 29, 2007 totaled $1.9 billion and our debt and capital lease obligations totaled $5.3
billion.
Net Cash Provided by (Used in) Operating Activities
Net cash used in operating activities was approximately $310 million in 2007. Our net loss of $3.4 billion was adjusted for non-cash charges consisting
primarily of $1.6 billion of goodwill and acquisition-related intangible impairment charges, $1.3 billion of depreciation and amortization expense, $154 million
of other-than-temporary impairment charges on our investment in Spansion stock and $112 million of stock-based compensation expense.
68
Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008