AMD 2012 Annual Report Download - page 88

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GF continues to be a related party of AMD. The Company’s expenses related to GF’s wafer manufacturing
were $1.2 billion, $904 million and $1.2 billion in 2012, 2011 and 2010. The Company’s expenses related to
GF’s research and development activities were $49 million, $79 million and $114 million for 2012, 2011 and
2010.
NOTE 4: Acquisition
On March 23, 2012, AMD acquired SeaMicro, Inc. (SeaMicro), a privately held company that produces
energy-efficient, high-bandwidth microservers. Through the acquisition of SeaMicro, AMD plans to accelerate
its strategy to deliver disruptive server technology to its original equipment manufacturers (OEM) customers
serving Cloud-centric data centers.
The total consideration paid to acquire SeaMicro was $312 million, not including cash acquired of $19
million. In addition, AMD incurred $6 million in transaction costs, which were included in marketing, general
and administrative expenses on AMD’s consolidated statement of operations. AMD paid $293 million in cash to
the holders of all outstanding shares of SeaMicro capital stock. As part of the acquisition, AMD assumed all
outstanding vested and unvested SeaMicro stock options and unvested restricted stock held by continuing
SeaMicro employees as of March 23, 2012. The assumed options were exchanged for approximately 1,652,000
vested and 4,792,000 unvested AMD stock options. The assumed restricted stock was exchanged for
approximately 322,000 AMD restricted shares. The stock options and restricted shares continue to have the same
terms and conditions as under SeaMicro’s option plan. The fair value attributable to pre-combination employee
service as of the March 23, 2012 closing for the stock options and restricted shares assumed, which was part of
the consideration paid to acquire SeaMicro, was $19 million. The fair value for the stock options assumed was
determined using a binomial option-pricing valuation model.
The total cash consideration of $293 million included $29 million deposited into an escrow account as
security for any breaches by SeaMicro of representations, warranties and covenants under the acquisition
agreement. The escrow funds, less amounts of any valid indemnification claims, if any, will be disbursed by the
escrow agent to the former stockholders of SeaMicro in March 2013.
The acquisition was accounted for using the purchase method of accounting in accordance with Accounting
Standard Codification (ASC) 805, Business Combinations. Accordingly, the total consideration was assigned to
the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values
as of the acquisition date. Fair values were determined by AMD’s management based on information available at
the date of acquisition. After the closing of the acquisition, the results of operations of SeaMicro are included in
the Computing Solutions segment in AMD’s consolidated financial statements.
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