AMD 2011 Annual Report Download - page 84

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:
2011 2010
(In millions)
Net unrealized holding losses on available-for-sale securities, net of taxes of $0 in
2011 and 2010. ....................................................... $— $(1)
Net unrealized holding gains (losses) on cash flow hedges, net of taxes of $0 in 2011
and 2010. ............................................................ (5) 3
Cumulative translation adjustments ......................................... — (1)
$ (5) $ 1
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, 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 Issued Accounting Standards
In May 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-04, Fair Value Measurement
(Topic 820) – Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S.
GAAP and IFRSs, which amends the fair value measurement guidance and includes some enhanced disclosure
requirements. The most significant change in disclosures is an expansion of the information required for Level 3
measurements based on unobservable inputs. The standard is effective for fiscal years beginning after
December 15, 2011. The Company adopted this standard in the first quarter of 2012. The adoption of this
standard will not materially impact the Company’s consolidated financial statements.
In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220) – Presentation of
Comprehensive Income, which requires disclosure of comprehensive income, the components of net income, and
the components of other comprehensive income either in a single continuous statement of comprehensive income
or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of
other comprehensive income as part of the statement of changes in shareholders’ equity. ASU 2011-05 is
effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. In
December 2011, the FASB has issued ASU 2011-12, Comprehensive Income (Topic 220), that deferred the
requirement to separately present within net income reclassification adjustments of items out of accumulated
other comprehensive income. The Company adopted this standard during the first quarter of 2012. The adoption
of this standard will only impact the presentation format of the Company’s consolidated financial statements.
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