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Advanced Micro Devices Inc.
Notes to Consolidated Financial Statements
December 26, 2009, December 27, 2008 and December 29, 2007
NOTE 1: Nature of Operations
Advanced Micro Devices, Inc. (the Company or AMD) is a global semiconductor company with
manufacturing, research and development, and sales and administrative facilities throughout the world.
References herein to the “Company” mean AMD and its subsidiaries and GLOBALFOUNDRIES (GF) and its
subsidiaries. The Company provides processing solutions for the computing and graphics markets. AMD supplies
3D graphic, video and multimedia products and chipsets for personal computers, or PCs, including desktop and
notebook PCs, professional workstations, and servers and products for consumer electronic devices such as
mobile phones, digital televisions and game consoles. During the fourth quarter of 2008, the Company completed
the sale of its Digital Television business unit to Broadcom Corporation. As a result, the Company no longer sells
video processors used in digital television products.
NOTE 2: Summary of Significant Accounting Policies
Fiscal Year. The Company uses a 52- to -53 week fiscal year ending on the last Saturday in December.
Fiscal 2009, 2008 and 2007 ended December 26, December 27 and December 29, respectively. Fiscal 2009, 2008
and 2007 all consisted of 52 weeks.
Principles of Consolidation. The consolidated financial statements include the Company’s accounts and
those of its wholly-owned and majority-owned subsidiaries and GF and its subsidiaries. Upon consolidation, all
significant intercompany accounts and transactions are eliminated, and amounts pertaining to the noncontrolling
ownership interests held by third parties in the operating results and financial position of the Company’s
majority-owned subsidiaries are reported as noncontrolling interest.
Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting periods. Actual results are
likely to differ from those estimates, and such differences may be material to the financial statements. Areas
where management uses subjective judgment include, but are not limited to, revenue reserves, inventory
valuation, valuation of goodwill and acquisition-related intangible assets, impairment of long-lived assets,
including goodwill and acquisition-related intangible assets, valuation of investments in marketable securities
and deferred income taxes.
Revenue Recognition. The Company recognizes revenue from products sold directly to customers,
including original equipment manufacturers (OEMs), when persuasive evidence of an arrangement exists, the
price is fixed or determinable, delivery has occurred and collectibility is reasonably assured. Estimates of product
returns, allowances and future price reductions, based on actual historical experience and other known or
anticipated trends and factors, are recorded at the time revenue is recognized. The Company sells to distributors
under terms allowing the distributors certain rights of return and price protection on unsold merchandise held by
them. The distributor agreements, which may be cancelled by either party upon specified notice, generally
contain a provision for the return of those of the Company’s products that the Company has removed from its
price book or that are not more than twelve months older than the manufacturing code date. In addition, some
agreements with distributors may contain standard stock rotation provisions permitting limited levels of product
returns. Accordingly, the Company defers the gross margin resulting from the deferral of both revenue and
related product costs from sales to distributors with agreements that have the aforementioned terms until the
merchandise is resold by the distributors and reports such deferred amounts as “Deferred income on shipments to
distributors” on its consolidated balance sheet. Products are sold to distributors at standard published prices that
are contained in price books that are broadly provided to the Company’s various distributors. Distributors are
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