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NOTE 6: Goodwill and Acquired Intangible Assets
The Company recorded goodwill as a result of the ATI acquisition in 2006. The changes in the carrying
amounts of goodwill by segment through December 26, 2009 were as follows:
Computing
Solutions Graphics All Other(1) Total
(In millions)
Balance at December 31, 2006 ............................. $— $1,237 $1,007 $2,244
Reclassification due to change in segments ............... 166 (166) — —
Goodwill adjustments(2) .............................. (4) (34) (7) (45)
Impairment charges(3) ................................ — (504) (409) (913)
Balance at December 29, 2007 ............................. 162 533 591 1,286
Reclassification due to change in segments ............... — 254 (254) —
Goodwill adjustments(2) .............................. (1) (3) (1) (5)
Impairment charges(3) ................................ (161) (461) (336) (958)
Balance at December 27, 2008 ............................. — 323 — 323
Goodwill adjustments ................................ — — — —
Impairment charges ................................. — — — —
Balance at December 26, 2009 ......................... $— $ 323 $ — $ 323
Goodwill(4) ........................................ $161 $1,288 $ 745 $2,194
Accumulated impairment losses ........................ (161) (965) (745) (1,871)
Balance at December 26, 2009 ......................... $— $ 323 $ — $ 323
(1) Includes goodwill related to the Handheld business unit. Goodwill related to the Digital Television business
unit has been excluded due to its discontinued operations classification. The amount of goodwill excluded
from the balance as of December 31, 2006 related to the Digital Television business unit was $973 million.
(2) Adjustments to goodwill primarily represented changes in assumed pre-acquisition income tax liabilities as
a result of the ATI acquisition, which were applied to goodwill until ultimately settled with the tax
authorities and prior to the adoption of the provisions of the new accounting standard related to business
combinations at the beginning of fiscal year 2009. Future changes will be recorded in the statement of
operations.
(3) The Company’s Chief Operating Decision Maker does not consider certain expenses, including goodwill
impairment, in evaluating the performance of reportable segments. Accordingly, the Computing Solutions
and Graphics impairment charges are not included in Computing Solutions and Graphics operating income
(loss) in the Company’s segment disclosures in Note 14.
(4) Includes reclassifications due to change in segments and goodwill adjustments.
2009 Impairment Analysis
In the fourth quarter of 2009 the Company conducted its annual impairment test of goodwill. The Company
considered the income and market approaches in determining the implied fair value of the goodwill. The income
approach required estimates of future operating results and cash flows of each of the reporting units discounted
using estimated discount rates ranging from 16 percent to 18 percent. Based on the results of the Company’s
annual analysis of goodwill, the fair values exceeded their carrying values by a significant amount, indicating
that there was no goodwill impairment.
The Company’s cost basis of goodwill deductible for tax was $2.6 billion. The Company’s adjusted basis
after tax deductions through 2009 is $1.7 billion.
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