National Semiconductor acquisition-related costs

9 Months Ended

Sep. 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, as follows:

	For Three Months Ended September 30,				For Nine Months Ended September 30,
	2012		2011		2012		2011
Distributor contract termination	$	—	$	—	$	21	$	—
Inventory related	—		7		—		7
As recorded in COR	—		7		21		7
Amortization of intangible assets	81		6		244		6
Retention bonuses	5		6		53		6
Stock-based compensation	4		41		14		41
Severance and other benefits:
Employment reductions announced at closing	3		12		17		12
Change of control	—		41		—		41
Transaction and other costs	13		41		35		56
As recorded in Acquisition charges	106		147		363		162
Total acquisition-related costs	$	106	$	154	$	384	$	169

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. Also, at acquisition we adjusted National’s inventory valuation to reflect a fair-value write-up. In the third quarter of 2011, we expensed $7 million related to this adjustment as the inventory was sold.

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 already or expected to be paid to former National employees who fulfill agreed-upon service period obligations and are recognized ratably over the required service period.

At acquisition, stock-based compensation of $41 million was recognized for the accelerated vesting of equity awards upon the termination of employees. Additional acquisition-related stock-based compensation is being recognized over the applicable vesting period for each grantee.

Charges for employment reductions announced at closing relate to former National employees who have been or will be terminated. About 350 jobs have been eliminated as a result of redundancies and cost efficiency measures. As of September 30, 2012, a total of $45 million in charges has been recognized, of which $34 million has been paid. Of the remaining $11 million, $4 million will be paid in the fourth quarter of 2012. At acquisition we incurred $41 million of charges related to change of control provisions under existing employment agreements.

Transaction and other costs include various expenses incurred in connection with the National acquisition. In 2011, we also incurred bridge financing costs.