AMD 2008 Annual Report Download - page 113

measurement should therefore be based on the assumptions that market participants would use in pricing the
asset or liability. The Company adopted SFAS 157 on December 30, 2007, the first day of fiscal 2008. In
February 2008, the FASB issued Staff Position (FSP) No. 157-1 to exclude SFAS 13, Accounting for Leases, and
its related interpretive accounting pronouncements that address leasing transactions from the scope of FAS 157.
Also in February 2008, the FASB issued FSP No. 157-2 to defer the effective date of SFAS 157 for one year for
nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in
the financial statements on a recurring basis at least annually, which are deferred until fiscal years beginning after
November 15, 2008 and interim periods within those fiscal years.
In order to determine the implications of adopting SFAS 157, the Company reviewed all the assets and
liabilities recorded on its consolidated balance sheet. Based on the results of its review, the Company determined
that a majority of its assets and liabilities are either not required to be measured at fair value in its financial
statements, are outside the scope of SFAS 157, or are subject to the deferred implementation provisions of FSP
No. 157-2. Therefore, the only assets and liabilities in the Company’s financial statements subject to SFAS 157
(i.e. measured at fair value on a recurring basis) at December 27, 2008 are the Company’s investment portfolio
and derivative contracts.
The Company made the fair value accounting election as permitted by FASB Statement No. 159, The Fair
Value Option for Financial Assets and Financial Liabilities (SFAS 159) to account for its UBS put option.
Accordingly, the Company initially recorded the put option at its estimated fair value as an other asset on its
consolidated balance sheet, with the corresponding gain recorded in earnings. Going forward, this put option will
be marked to market each quarter, with changes in its estimated fair value recorded in earnings.
Recently Issued Accounting Pronouncements. In December 2007, the FASB issued Statement No. 141
(revised 2007), Business Combinations (SFAS 141(R)). Under SFAS 141(R), an entity is required to recognize
the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair value
on the acquisition date. It further requires that acquisition-related costs be recognized separately from the
acquisition and expensed as incurred; that restructuring costs generally be expensed in periods subsequent to the
acquisition date; and that changes in accounting for deferred tax asset valuation allowances and acquired income
tax uncertainties after the measurement period be recognized as a component of the provision for taxes. In
addition, acquired in-process research and development is measured at fair value, capitalized as an indefinite-life
intangible asset and tested for impairment pursuant to FASB Statement No. 142, Goodwill and Other Intangible
Assets (SFAS 142). The adoption of SFAS 141(R) will change the Company’s accounting treatment for business
combinations on a prospective basis beginning in the first quarter of 2009.
In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated Financial
Statements—An Amendment of ARB No. 51 (SFAS 160). SFAS 160 will require that noncontrolling interests in
subsidiaries be reported as a component of stockholders’ equity in the consolidated balance sheet. SFAS 160 also
requires that earnings or losses attributed to the noncontrolling interests be reported as part of consolidated
earnings and not as a separate component of income or expense, as well as requires disclosure of the attribution
of consolidated earnings to the controlling and noncontrolling interests on the face of the consolidated statement
of operations. SFAS 160 is effective for fiscal years beginning after December 15, 2008 and must be applied on a
prospective basis. Upon consummation of the transactions contemplated by the Master Transaction Agreement in
2009, the Company will account for the non-controlling interest held by ATIC in accordance with this new
accounting pronouncement. The Company does not believe that this pronouncement will have a material impact
on the Company’s financial position, results of operations and cash flows.
In March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging
Activities—An Amendment of FASB Statement No. 133 (SFAS 161). This statement requires enhanced disclosures
about an entity’s derivative and hedging activities and is effective for financial statements issued for fiscal years
and interim periods beginning after November 15, 2008, with earlier application encouraged. The Company will
adopt SFAS 161 in the first quarter of 2009. Since SFAS 161 requires additional disclosures concerning
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