Summary
Advanced Micro Devices, Inc. (AMD) filed an 8-K report on July 10, 2008, detailing significant financial events impacting its second fiscal quarter of 2008. The company announced a substantial goodwill and intangible asset impairment charge of approximately $880 million, primarily related to its Handheld and DTV reporting units acquired from ATI Technologies. This impairment arises from these business segments not performing as expected and is a non-cash charge. Additionally, AMD is implementing a restructuring plan aimed at reducing its breakeven point, which involves employee terminations and is expected to result in a restructuring charge of approximately $32 million, with a majority already paid in severance. The company also anticipates other-than-temporary investment impairment charges of about $36 million, including $24 million related to its investment in Spansion Inc. and $12 million from Auction Rate Securities.
Key Highlights
- 1AMD recorded an estimated $880 million goodwill and intangible asset impairment charge for its Handheld and DTV reporting units.
- 2The impairment is attributed to underperformance of acquired ATI Technologies segments and is a non-cash charge.
- 3The company is undertaking a restructuring plan to lower its breakeven point, expecting a $32 million charge for employee terminations.
- 4A significant portion of the restructuring charge relates to employee severance, with most payments already made.
- 5AMD expects to recognize approximately $36 million in other-than-temporary investment impairment charges.
- 6These investment impairments include $24 million for Spansion Inc. and $12 million for Auction Rate Securities.
- 7The company anticipates a materially favorable impact on its Q2 2008 gross margin of approximately $190 million from the sale of certain 200mm wafer fabrication tools.