AMD 2008 Annual Report Download - page 75

Marketing, general and administrative expenses increased $222 million, or 20 percent, from $1.1 billion in
2006 to $1.4 billion in 2007. The increase was primarily attributable to: a $112 million increase in marketing,
general and administrative expenses attributable to our Graphics segment, a $91 million increase in marketing,
general and administrative expenses attributable to our Computing Solutions segment and an $11 million
increase in severance charges for workforce reductions. Marketing, general and administrative expenses
attributable to our Graphics segment increased primarily due to the inclusion of the operations related to this
segment for the full year in 2007 compared to nine weeks in 2006. Marketing, general and administrative
expenses attributable to our Computing Solutions segment increased due to expansion of marketing programs for
our microprocessor products, increased legal expenses and additional investments in information technology,
partially offset by a $9 million reduction in bonus expense.
In-process research and development, amortization of acquired intangible assets and integration charges,
and impairment of goodwill and acquired intangible assets.
Amortization of acquired intangible assets and integration charges decreased $99 million, or 42 percent,
from $236 million in 2007 to $137 million in 2008. This decrease was primarily attributable to a $27 million
decrease in charges related to the integration of AMD and ATI operations and a $72 million decrease in
amortization of acquired intangible assets due to the write-down of certain acquired intangible assets as a result
of the impairment analyses. See Part II, Item 7 “MD&A—ATI Acquisition” above, for additional information.
Impairment charges of goodwill and acquired intangible assets decreased by $43 million, or 4 percent, from $1.1
billion in 2007 to $1.1 billion in 2008.
In-process research and development charges of $416 million in 2006 related to projects acquired in
connection with the acquisition of ATI. Amortization of acquired intangible assets and integration charges
increased $169 million, or 252 percent, from $67 million in 2006 to $236 million in 2007. This increase was
primarily attributable to a $173 million increase in amortization of acquired intangible assets, partially offset by a
$4 million decrease in charges related to the integration of AMD and ATI operations. Amortization of acquired
intangible assets increased primarily due to the inclusion of charges for the full year in 2007 compared to nine
weeks in 2006. See Part II, Item 7 “MD&A—ATI Acquisition” above, for additional information.
Gain on sale of 200 millimeter equipment and the license of related process technology
During 2008, in conjunction with the conversion of Fab 30 from 200 millimeter to 300 millimeter
fabrication, we sold certain 200 millimeter manufacturing equipment and licensed certain process technology to a
third party. We evaluated this multiple-element arrangement in accordance with EITF No. 00-21, and determined
that each component was considered a separate unit of accounting. In addition, the arrangement consideration
was allocated to each unit based on their relative fair values.
In the second quarter of 2008, upon delivery of a majority of the manufacturing equipment to the applicable
third party, we recognized a gain of approximately $167 million, which is classified in the caption “Gain on sale
of 200 millimeter equipment” in our 2008 consolidated statement of operations. The difference between the $167
million gain recognized in the transaction described above and the $193 million gain shown in the consolidated
statement of operations for 2008 represents gains recognized on sales of 200 millimeter equipment to other third
parties. In addition, we have deferred recognizing approximately $49 million of payments received pending the
future delivery of the remaining manufacturing equipment, which is classified under the caption “Other current
liabilities” in our 2008 consolidated balance sheet.
In the third quarter of 2008, upon delivery of the process technology, we recognized revenue of
approximately $191 million, which is included under the caption “Net revenue” in our 2008 consolidated
statement of operations.
65