AMD 2008 Annual Report Download - page 97

Discontinued Operations
During the second quarter of 2008, we evaluated the viability of our non-core businesses and determined
that our Handheld and Digital Television business units were not directly aligned with our core strategy of
computing and graphics market opportunities. As a result of this evaluation, we decided to divest our Handheld
and Digital Television business units.
As a result of our decision to divest these business units, we performed an interim impairment test of
goodwill and acquired intangible assets in the second quarter of 2008 and concluded that the carrying amounts of
goodwill and certain acquisition-related intangible assets associated with the Handheld and Digital Television
business units were impaired and recorded an impairment charge of $876 million. See Part II, Item 7 “MD&A—
2008 Impairment,” above.
During the third quarter of 2008, we entered into an agreement with Broadcom Corporation to sell the
Digital Television business unit for $192.8 million. The agreement was subsequently amended to reduce the
purchase price to $141.5 million and the transaction was completed on October 27, 2008. Based on the final
terms of the sale transaction, we recorded an additional goodwill impairment charge of $135 million. As a result
of the decisions and transactions described above, pursuant to FASB Statement No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (SFAS 144), the assets related to the Digital Television business
are presented as assets of discontinued operations on the 2007 consolidated balance sheet and the operating
results of the Digital Television business are presented in discontinued operations in the consolidated statements
of operations for all periods presented.
Although our plans and negotiations through the end of the third quarter of 2008 indicated that the
discontinued operations criteria of SFAS 144 were met for the Handheld business unit, during the fourth quarter
of 2008, we determined that, based on the ongoing negotiations related to the divestiture of our Handheld
business unit, the discontinued operations classification criteria for this business unit were no longer met as of
December 27, 2008. As a result, we classified the assets, liabilities, and operating results of the Handheld
business unit back into continuing operations. Our consolidated balance sheets and consolidated statements of
operations for all periods presented have been recast to conform to this reclassification.
In January 2009, we completed the sale of certain graphics and multimedia technology assets and intellectual
property that were formerly the basis of our Handheld business unit to Qualcomm Incorporated for $65 million in
cash. In addition, certain employees of the Handheld business were transferred to Qualcomm. The assets that we
sold to Qualcomm had a carrying value of approximately $32 million and were recorded as assets held for sale and
were included in the caption, “Prepaid expenses and other current assets” in our 2008 consolidated balance sheet.
As part of our agreement with Qualcomm, we retained the AMD Imageon™ media processor brand and the right to
continue selling the products that were part of the Handheld business unit. We intend to support our existing
handheld products and customers through the current product lifecycles. However, we do not intend to develop any
new handheld products or engage new customer programs beyond those already committed.
The results from discontinued operations relative to our Digital Television business unit are as follows:
2008 2007 2006
(In millions)
Revenue ............................................................. $ 73 $155 $ 22
Expenses ............................................................. (147) (230) (52)
Impairment of goodwill and acquired intangible assets ......................... (609) (476) —
Restructuring charges ................................................... (1) — —
Loss from discontinued operations ......................................... $(684) $(551) $ (30)
The carrying value of the assets of discontinued operations was $759 million as of December 29, 2007.
Included in this balance is goodwill and acquired intangible assets in the amounts of $743 million. Assets of
87