National Semiconductor acquisition-related costs

6 Months Ended

Jun. 30, 2012

Business Combinations [Abstract]

National Semiconductor acquisition-related costs

National Semiconductor acquisition-related costs

For the periods presented, we incurred total acquisition-related costs associated with the National acquisition, which are included in Other for segment reporting purposes, as follows:

	For Three Months Ended June 30,				For Six Months Ended June 30,
	2012		2011		2012		2011
Acquisition charges:
Amortization of intangible assets	$	81	$	—	$	162	$	—
Retention bonuses	7		—		48		—
Announced employment reductions	3		—		15		—
Stock-based compensation	4		—		10		—
Transaction and other costs	9		13		22		15
As recorded in Acquisition charges	104		13		257		15
Distributor contract termination recorded in COR	—		—		21		—
Total acquisition-related costs	$	104	$	13	$	278	$	15

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. About 350 jobs will be eliminated by the end of 2012 as a result of redundancies and cost efficiency measures. As of June 30, 2012, a total of $44 million in charges has been recognized, of which $29 million has been paid. The remaining $15 million will be paid later in the year. In addition, approximately $3 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 various expenses incurred in connection with the National acquisition. In 2011, we also incurred bridge financing costs.

In 2011, we discontinued using 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 in 2012.