AMD 2011 Annual Report Download - page 79

Advanced Micro Devices, Inc.
Notes to Consolidated Financial Statements
December 31, 2011, December 25, 2010 and December 26, 2009
NOTE 1: Nature of Operations
Advanced Micro Devices, Inc. (the Company or AMD) is a global semiconductor company with facilities
throughout the world. References herein to the “Company” means AMD and its subsidiaries, and for 2009 also
includes GLOBALFOUNDRIES (GF) and its subsidiaries. The Company provides:
(i) x86 microprocessors, as standalone devices or as incorporated as an accelerated processing unit (APU),
for the commercial and consumer markets, embedded microprocessors for commercial, commercial
client and consumer markets and chipsets for desktop and mobile devices, including mobile PCs and
tablets, professional workstations and servers; and
(ii) graphics, video and multimedia products for desktop and mobile devices, including mobile PCs and
tablets, home media PCs and professional workstations, servers and technology for game consoles.
NOTE 2: Summary of Significant Accounting Policies
Fiscal Year. The Company uses a 52 or 53 week fiscal year ending on the last Saturday in December.
Fiscal 2011, 2010 and 2009 ended December 31, 2011, December 25, 2010 and December 26, 2009,
respectively. Fiscal 2011, 2010 and 2009 consisted of 53, 52 and 52 weeks, respectively.
Principles of Consolidation. The consolidated financial statements include the Company’s accounts and
those of its wholly-owned 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 subsidiaries are reported as
noncontrolling interest.
In the beginning of 2010, the Company concluded that it is no longer the primary beneficiary of GF.
Accordingly, it ceased consolidating the results of operations and financial position of GF and started accounting
for GF under the equity method of accounting. Subsequently, in the beginning of 2011, the Company changed
the method of accounting for its investment in GF from the equity method to the cost method of accounting. (See
Note 3).
Therefore, users of the Company’s financial statements should consider the effect of the deconsolidation
and further the change to the cost method of accounting when comparing 2011 to prior periods.
Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. generally
accepted accounting principles (GAAP) 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 allowances, 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
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