AMD 2009 Annual Report Download - page 72

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While economic conditions have improved, there can be no assurance that this will continue in the future. If
market conditions do not continue to improve or deteriorate, it may limit our ability to access the capital markets
to meet liquidity needs, on favorable terms or at all, resulting in adverse effects on our financial condition and
results of operations.
Auction Rate Securities
The ongoing uncertainties in the credit markets continue to affect all of our auction rate securities (ARS)
and auctions for these securities have failed to settle on their respective settlement dates. While these securities
are currently illiquid, there have been no defaults and we have received all interest payments as they became due.
As of December 26, 2009, the par value of all our ARS was $165 million with an estimated fair value of
$159 million. We have had redemptions, at par, totaling $19 million and $26 million, during 2009 and 2008,
respectively. Total ARS, at fair value, represented 6 percent of our total investment portfolio as of December 26,
2009.
In October 2008, UBS AG (UBS) offered to repurchase all of the ARS that we purchased from them prior to
February 13, 2008. We accepted this offer. From June 30, 2010 through July 2, 2012, we have the right, but not
the obligation, to sell, at par, these ARS to UBS. As of December 26, 2009, we owned $69 million par value with
an estimated fair value of $67 million of these securities, classified in marketable securities. We classified the
amounts related to our UBS ARS holdings as current assets.
As of December 26, 2009, we classified our non-UBS student loan ARS holdings as non-current assets
because there have been limited redemptions since the failures began. These ARS had a fair value of $58 million
at December 26, 2009.
Operating Activities
Net cash provided by operating activities was $473 million in 2009, which includes $1.25 billion from the
settlement of our litigation with Intel. Net income of $293 million was adjusted for non-cash charges consisting
primarily of $1.1 billion of depreciation and amortization expense, $121 million of interest expense primarily
related to GF’s Class A Notes and Class B Notes and our 6.00% Notes, $75 million of stock-based compensation
expense, $28 million net loss from the sale and disposal of property, plant and equipment and $11 million net
loss primarily related to the redemption of all of our 7.75% Notes. These charges were offset by a net gain of
$180 million related to our repurchase of an aggregate of $344 million principal amount of our 6.00% Notes for
$161 million in cash and $1,015 million principal amount of our 5.75% Notes for $1,002 million in cash,
amortization of foreign grants and allowances of $110 million and a gain of $28 million from the sale of certain
Handheld assets. The net changes in operating assets at December 26, 2009 compared to December 27, 2008
included an increase in accounts receivable of $960 million, which included the non-cash impact of our financing
arrangement with IBM Credit LLC, IBM United Kingdom Financial Services Ltd and IBM Factoring (CHINA)
Co., Ltd (IBM parties). Under these arrangements, we sell to the IBM parties certain accounts receivable of our
distributor customers. Because we do not recognize revenue until the distributors sell our products to their
customers, we classify the funds that we receive from the IBM parties as debt. IBM’s collections of accounts
receivable from our customers reduces our reported accounts receivable but does not affect cash flows from
operations. During 2009, IBM collected approximately $535 million from our customers pursuant to this
arrangement. Therefore, without considering IBM’s collections of the accounts receivables that we sold to them,
the increase in accounts receivable was $425 million. This increase was primarily due to timing of sales and
collections during 2009. There was also a decrease in accounts payable and accrued liabilities of $105 million,
primarily due to lower purchases reflecting the effect of our cost cutting efforts and timing of payments.
Net cash used in operating activities was $692 million in 2008. Net loss of $3.1 billion was adjusted for
non-cash charges consisting primarily of $1.7 billion of goodwill and acquisition-related intangible impairment
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