AMD 2008 Annual Report Download - page 43

During 2008, under the guidance of SFAS 157 we determined that the fair value of our ARS was less than
their carrying value and as a result, we recorded an “other than temporary” impairment charge of $24 million. At
this time, we believe that the current illiquidity of these investments is temporary. Because of the unprecedented
events in the ARS market, we cannot predict with certainty when liquidity in the ARS market will return. If this
market illiquidity continues or worsens, we may be required to record additional impairment charges with respect
to these investments in the future, which could materially adversely impact our results of operations.
In October 2008, UBS offered to repurchase all of our ARS that we purchased from UBS prior to
February 13, 2008. As of December 27, 2008, we owned $82 million par value of these securities. We accepted
this offer. From June 30, 2010 through July 2, 2012, we have the right, but not the obligation, to sell, at par, these
ARS to UBS. Prior to June 30, 2010, we will continue to earn and receive all interest that is payable for these
ARS. Furthermore, prior to June 30, 2010, UBS, at its sole discretion, may sell, or otherwise dispose of, and/or
enter orders in the auctions process with respect to these securities on our behalf so long as we receive par value
for the ARS sold. UBS has also agreed to use their best efforts to facilitate issuer redemptions and/or to resolve
the liquidity concerns of holders of their ARS through restructurings and other means. However, during the
course of our exercise period with respect to the UBS ARS, UBS may not have financial resources to satisfy its
financial obligations. In the event UBS cannot satisfy its financial obligations, we would no longer have the
certainty as to the liquidity of these UBS ARS.
We have not realized all of the anticipated benefits of our acquisition of ATI and may continue to incur
future impairments of goodwill and assets related to the business acquired from ATI.
We have not realized all of the anticipated benefits of our acquisition of ATI, and since October 2006 we
have incurred goodwill impairment charges of approximately $2.7 billion, of which approximately $800 million
was included in discontinued operations as well as acquisition-related impairment charges of approximately $488
million, of which $140 million was included in discontinued operations.
These impairment charges were taken following revisions to our long-term financial outlook for the
businesses of the former ATI in light of then-current market conditions and economic outlook, which we
conducted as part of our annual strategic planning cycles and based on the preliminary findings of our annual and
interim goodwill impairment testing. For 2008, the conclusion was also due to the deterioration in the price of
our common stock and the resulting reduced market capitalization, which was an additional indicator of
impairment.
As of December 27, 2008, the carrying amounts of goodwill and acquisition-related intangible assets were
$4 million for our Handheld business unit, $9 million for our Computing Solutions segment and $478 million for
our Graphics segment (which now includes revenue from royalties received in connection with sales of game
console systems that incorporate our technology). We considered the income approach in determining the
implied fair value of the goodwill, which requires estimates of future operating results and cash flows of each of
the reporting units discounted using estimated discount rates taking into consideration the estimated sales
proceeds that we expect to receive from any divestiture of these businesses. 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.
Our operations in foreign countries are subject to political and economic risks, which could have a
material adverse effect on us.
We maintain operations around the world, including in the United States, Canada, Europe and Asia.
Currently, all of our wafer manufacturing facilities are concentrated in Germany. Nearly all product assembly
and final testing of our microprocessor products is performed at manufacturing facilities in China, Malaysia and
Singapore. In addition, our graphics and chipset products are manufactured, assembled and tested by independent
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