AMD 2009 Annual Report Download - page 70

As of December 26, 2009 substantially all of our U.S. and foreign deferred tax assets other than German
deferred tax assets, net of deferred tax liabilities, continue to be subject to a valuation allowance. The realization
of these assets is dependent on substantial future taxable income which, at December 26, 2009, in management’s
estimate, is not more likely than not to be achieved.
Stock-Based Compensation Expense
Stock-based compensation expense related to employee stock options, restricted stock and restricted stock
units for the years ended December 26, 2009, December 27, 2008 and December 29, 2007 as well as employee
stock purchases pursuant to our Employee Stock Purchase Plan for the year ended December 29, 2007 was
allocated in our consolidated statements of operations as follows:
2009 2008 2007
(In millions)
Cost of sales .......................................................... $ 3 $ 10 $ 11
Research and development ............................................... 40 44 50
Marketing, general and administrative ...................................... 32 23 48
Total stock-based compensation expense .................................... 75 77 109
Tax benefit ........................................................... — — —
Stock-based compensation expense, net of tax ............................... $ 75 $ 77 $109
Stock-based compensation expenses of $75 million in 2009 decreased $2 million compared to $77 million in
2008. This decrease was primarily a result of: (i) a cumulative catch up adjustment of expenses to reflect the
effect of applying a higher forfeiture rate retrospectively in 2009, (ii) lower average grant date fair value 2009 as
compared to 2008, and (iii) the forfeiture of certain stock option and RSU grants from employees transferring to
GF. The decreases were substantially offset by the charges associated with the accelerated vesting of stock
awards upon the retirement of our former Executive Chairman and Chairman of the Board in 2009.
Stock-based compensation expense of $77 million in 2008 decreased $32 million compared to $109 million
in 2007 primarily due to the suspension of our Employee Stock Purchase Plan in late 2007, which resulted in no
corresponding charges in 2008, the reversal of previously recognized stock-based compensation expenses related
to certain performance based restricted stock unit grants because we concluded that the performance criteria were
no longer achievable and a net decrease in overall stock-based compensation expense as a result of the lower
average grant date fair value in 2008 as compared to 2007.
For the year ended December 26, 2009, we did not have employee stock-based compensation expense for
discontinued operations. For the year ended December 27, 2008 and December 29, 2007, employee stock-based
compensation expense included in discontinued operations and excluded from continuing operations was $2
million and $3 million, respectively.
As of December 26, 2009, we had $28 million of total unrecognized compensation expense, net of estimated
forfeitures, related to stock options that will be recognized over the weighted average period of 1.49 years. Also,
as of December 26, 2009, we had $74 million of total unrecognized compensation expense, net of estimated
forfeitures, related to restricted stock and restricted stock units that will be recognized over the weighted average
period of 2.34 years.
In June 2009, we launched a tender offer to exchange certain outstanding stock options with an exercise
price greater than $6.34 per share, a grant date on or before June 28, 2008 and an expiration date after July 27,
2010, held by eligible employees for replacement options to be granted under our 2004 Equity Incentive Plan
(the Option Exchange). The Option Exchange expired on July 27, 2009. As a result, employees tendered options
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