AMD 2010 Annual Report Download - page 90

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Potential common shares (i) from outstanding equity incentive awards totaling approximately 17 million,
43 million and 69 million, and (ii) issuable under the Company’s 5.75% Notes due 2012 (5.75% Notes) totaling
24 million, 73 million and 75 million for the years ended December 25, 2010, December 26, 2009
and December 27, 2008, respectively, were not included in the per share calculations as their inclusion would
have been anti-dilutive.
Accumulated Other Comprehensive Income (Loss). Unrealized holding gains or losses on the Company’s
available-for-sale securities, unrealized holding gains and losses on derivative financial instruments qualifying as
cash flow hedges, changes in minimum pension liabilities, and foreign currency translation adjustments are
included in other comprehensive income (loss).
The following are the components of accumulated other comprehensive income:
2010 2009
(In millions)
Net unrealized holding gains (losses) on available-for-sale securities, net of
taxes of $0 in 2010 and $0 in 2009. $(1) $ 14
Net unrealized holding losses on cash flow hedges, net of taxes of $0 in 2010
and $0 in 2009. 3 (1)
Cumulative translation adjustments (1) 141
$ 1 154
Stock-Based Compensation. The Company estimates stock-based compensation cost for stock options at
the grant date based on the award’s fair-value as calculated by the lattice-binomial option-pricing model. For
restricted stock units and awards, fair value is based on the closing price of the Company’s common stock on the
grant date. The expense is recognized using the single option method which is ratable on a straight-line basis
over the requisite service period.
The application of the lattice-binomial option-pricing model requires the use of extensive actual employee
exercise behavior data and the use of a number of complex assumptions including expected volatility of the
Company’s common stock, risk-free interest rate, and expected dividends. Significant changes in any of these
assumptions could materially affect the fair value of stock options granted in the future.
Forfeiture rates are estimated at the time of grant and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates in order to derive the Company’s best estimate of awards ultimately
expected to vest.
Recently Adopted Accounting Standards
Noncontrolling Interest. In June 2009, the FASB issued guidance that amends the evaluation criteria to
identify the primary beneficiary of a variable interest entity. Additionally, this guidance requires ongoing
reassessments of whether an enterprise is the primary beneficiary of the variable interest entity. This guidance
became effective for interim and annual reporting periods after November 15, 2009. The Company adopted this
new guidance as of the beginning of 2010 and has applied such guidance in evaluating whether it should continue
to consolidate GF given the changes in governance over the operations of GF that occurred effective
December 28, 2009. (See Note 3).
NOTE 3: GLOBALFOUNDRIES
Formation and Accounting in 2009
On March 2, 2009, the Company consummated the transactions contemplated by the Master Transaction
Agreement among the Company, Advanced Technology Investment Company LLC (ATIC), a limited liability
82