AMD 2008 Annual Report Download - page 148

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Restricted Stock. Restricted stock awards can be granted to any employee, director or consultant. The
purchase price for an award of restricted stock is $0.00 per share. Restricted stock based on continued service
may not fully vest for three years from the date of grant. Restricted stock that is performance based generally
may not fully vest for at least one year from the date of grant.
Restricted Stock Units. Restricted stock units are awards that can be granted to any employee, director or
consultant and that obligate the Company to issue a specific number of shares of the Company’s common stock
in the future if the vesting terms and conditions are satisfied. The purchase price for the shares is $0.00 per share.
Restricted stock units based on continued service may not fully vest for at least three years from the date of grant.
Restricted stock units that are performance based generally do not vest for at least one year from the date of
grant.
In October 2006, the Company completed the acquisition of ATI. In connection with the acquisition, the
Company assumed substantially all issued and outstanding ATI stock options, restricted stock units and other
stock-based awards that were outstanding under existing ATI equity plans as of October 24, 2006 by issuing
options to purchase approximately 17.1 million shares of the Company’s common stock and approximately
2.2 million comparable AMD restricted stock units in exchange. In addition, the Company also assumed certain
outstanding ATI restricted stock units which will be settled in cash upon vesting by issuing approximately
655,000 comparable AMD restricted stock units in exchange. These restricted stock units are accounted for as
liability awards.
Valuation and Expense Information
Stock-based compensation expense related to employee stock options, restricted stock and restricted stock
units and employee stock purchases under the Company’s Employee Stock Purchase Plan was allocated in the
consolidated statements of operations as follows:
Year Ended
December 27,
2008
Year Ended
December 29,
2007
Year Ended
December 31,
2006
(In millions)
Cost of sales ................................... $ 10 $ 11 $ 8
Research and development ........................ 44 50 28
Marketing, general, and administrative ............... 23 48 39
Total stock-based compensation expense ............. 77 109 75
Tax benefit ..................................... — — —
Stock-based compensation expense, net of tax ......... $ 77 $109 $ 75
Stock-based compensation included in discontinued operations was $2 million, $3 million and $2 million
for the years ended December 27, 2008, December 29, 2007 and December 31, 2006, respectively. The Company
did not capitalize stock-based compensation cost as part of the cost of an asset because the cost was insignificant.
The Company’s employee stock options have various restrictions including vesting provisions and
restrictions on transfer, and must be exercised prior to their expiration date. The Company believes that the
lattice-binomial model is more capable of incorporating the features of the Company’s employee stock options
than closed-form models such as the Black-Scholes model.
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