National Semiconductor acquisition-related costs

3 Months Ended

Mar. 31, 2012

Business Combinations [Abstract]

National Semiconductor acquisition-related costs

National Semiconductor acquisition-related costs

For the first three months of 2012, we incurred an additional $174 million of total acquisition-related costs associated with the National acquisition in Other for segment reporting purposes as follows:

	For Three Months Ended March 31,
	2012		2011
Acquisition charges:
Amortization of intangible assets	$	81	$	—
Retention bonuses	41		—
Announced employment reductions	12		—
Stock-based compensation	6		—
Transaction and other costs	13		2
As recorded in Acquisition charges	153		2
Distributor contract termination recorded in COR	21		—
Total acquisition-related costs	$	174	$	2

The amount of recognized amortization of acquired intangible assets resulting from the National acquisition is based on estimated useful lives varying between two and ten years. See Note 7 for additional information.

Retention bonuses reflect amounts expected to be paid to former National employees who fulfill agreed-upon service period obligations and are recognized ratably over the required service period.

Announced employment reduction costs relate to former National employees who have been or will be terminated after the closing date. These costs for the first quarter of 2012 affect about 350 jobs that will be eliminated by the end of 2012 as a result of redundancies and cost efficiency measures. As of March 31, 2012, a total of $40 million in charges have been recognized, of which $18 million has been paid. The remaining $22 million will be paid later in the year. In addition, approximately $8 million of similar expense is expected to be recognized during the remainder of 2012.

Stock-based compensation is recognized over the remaining service periods as terminated employees fulfill agreed-upon service period obligations.

Transaction and other costs include expenses incurred in connection with the National acquisition, such as bridge financing costs, advisory services and other costs.

In 2011, we discontinued one of National’s distributors. We acquired the distributor’s inventory at fair value, resulting in an incremental charge of $21 million to COR upon sale of the inventory.