AMD 2010 Annual Report Download - page 67

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) a lower average grant date fair value in
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.
In 2010 and 2009, we did not have employee stock-based compensation expense for discontinued
operations. For the year ended December 27, 2008, employee stock-based compensation expense included in
discontinued operations and excluded from continuing operations was $2 million.
As of December 25, 2010, we had $19 million of total unrecognized compensation expense, net of estimated
forfeitures, related to stock options that will be recognized over the weighted average period of 1.71 years. Also,
as of December 25, 2010, we had $99 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 1.93 years.
International Sales
International sales as a percentage of net revenue were 88% in 2010, 87% in 2009 and 88% in 2008. We
expect that international sales will continue to be a significant portion of total sales in the foreseeable future.
Substantially all of our sales transactions were denominated in U.S. dollars.
FINANCIAL CONDITION
Liquidity
As of December 25, 2010, our cash, cash equivalents and marketable securities balances were
approximately $1.8 billion. In comparison, cash, cash equivalents and marketable securities as of December 26,
2009 were approximately $2.7 billion, of which $904 million represented GF cash and cash equivalents. Without
taking into account GF’s financial position, our cash, cash equivalents and marketable securities were essentially
flat in 2010 when compared to 2009.
Our debt and capital lease obligations as of December 25, 2010 were $2.4 billion, which reflects a debt
discount adjustment of $103 million on our 6.00% Notes and 8.125% Notes. This amount also includes
approximately $229 million related to our accounts receivable financing arrangement with IBM, which is not a
cash obligation. Our financing arrangement with IBM is described in more detail below and under “Contractual
Obligations—Receivable financing arrangement.” Without taking into account GF’s indebtedness, we reduced
our debt by approximately $357 million during 2010.
For 2010, our adjusted free cash flow was $355 million. Adjusted free cash flow is a non-GAAP measure,
which we calculated by taking GAAP net cash used in operating activities of $412 million and adding an amount
of $915 million, which represents payments made by certain of our distributor customers to IBM Credit LLC and
certain of its subsidiaries (collectively, the IBM Parties) pursuant to an accounts receivable financing
arrangement among AMD, certain AMD subsidiaries and the IBM Parties. We adjusted the resulting amount of
$503 million by subtracting capital expenditures, which were $148 million for 2010. Prior to 2010, we did not
calculate adjusted non-GAAP free cash flow.
We have various supplier agreements with the IBM Parties pursuant to which we sold invoices of selected
distributor customers. Because we do not recognize revenue until our distributors sell our products to their
customers, under U.S. GAAP, we classify funds received from the IBM Parties as debt on the balance sheet.
Moreover, for cash flow purposes, we classify these funds as cash flows from financing activities. When a
distributor pays the applicable IBM Party, we reduce the distributor’s accounts receivable and the corresponding
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