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2013 ANNUAL REPORT ON FORM 10-K

Table of contents

  • Page 1
    2013 ANNUAL REPORT ON FORM 10-K

  • Page 2

  • Page 3
    ... an increasingly diversified product portfolio and a focus on driving to 50 percent of AMD revenue from five high-growth markets by the end of 2015: semi-custom solutions, ultra-low power client PC, embedded, dense server, and professional graphics. We will measure our success in 2014 and beyond as...

  • Page 4
    ...Series Mobile Accelerated Processing Units (APUs) for notebooks and desktop PCs, focusing on increased performance and power efficiency, as well as superior gaming and graphics capabilities. We launched the 2013 AMD Elite Mobility APU (codenamed "Temash") - the world's first 28nm, quad-core x86 SoC...

  • Page 5
    ... strategic customer relationships with the world's top technology brands. We will continue taking steps to transform into a more predictable and balanced business, by driving a richer product mix and focusing on the parts of the market where our unique IP gives us a competitive advantage. Sincerely...

  • Page 6
    ... Opteron X-Series has double the number of cores of Intel Atom S1200 series, it has the double the density among small core x86 processors. Most power efficient small core x86 processor as measured by SPECint®_rate_base2006 estimates divided by TDP. In tests by AMD as of 28 February, 2013, the AMD...

  • Page 7
    ...$2.5 billion based on the reported closing sale price of $4.08 per share as reported on the New York Stock Exchange on June 28, 2013, which was the last business day of the registrant's most recently completed second fiscal quarter. Indicate the number of shares outstanding of each of the registrant...

  • Page 8
    ... CONDITION AND RESULTS OF OPERATIONS ...QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK ...FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ...CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE ...CONTROLS AND PROCEDURES ...OTHER INFORMATION ... 37 39 41 62...

  • Page 9
    ... to a semi-custom business model; the level of international sales as compared to total sales; that we will sample our first ARM technology-based AMD Opteronâ„¢ processor for servers in the first quarter of 2014; that our cash, cash equivalents and marketable securities and available external...

  • Page 10
    ...as an accelerated processing unit (APU), chipsets, embedded processors and dense servers; and Graphics and Visual Solutions-comprised of graphics processing units (GPUs), including professional graphics, semi-custom System-on-Chip (SOC) products, development services and technology for game consoles...

  • Page 11
    ... power consumption. Other factors impacting microprocessor performance include the number of cores in a microprocessor, the bit rating of the microprocessor, memory size and data access speed. Developments in circuit design and manufacturing process technologies have resulted in significant advances...

  • Page 12
    ...to processor design and software development, delivering serial, parallel and visual compute capabilities for high definition (HD) video, 3D and data-intensive workloads in the APU. APUs combine high-performance serial and parallel processing cores with other specialpurpose hardware accelerators. We...

  • Page 13
    ...-core architecture, are designed for multitasking, high resolution gaming and HD media processing and come in eight-, six- and quad-core versions. Notebook, Tablet, Hybrid. Consumers continue to demand thinner and lighter mobile platforms with better entertainment performance and longer battery life...

  • Page 14
    ...launched our Opteronâ„¢ X Series processors, a new family of high density, low power servers. Also in January 2014, we announced that we would sample AMD Opteron A-Series processor, codenamed "Seattle," in the first quarter of 2014, our first 64-bit ARM-based server CPU using 28nm process technology...

  • Page 15
    ... color definition. We develop our products for use in desktop PCs, notebooks, tablets, professional workstations, servers and gaming consoles. In addition, our semi-custom products are tailored, high-performance customer-specific solutions based on AMD's CPU, GPU and APU technology. We work closely...

  • Page 16
    ... graphic card series support our Mantle and AMD True Audio technology. Discrete Notebook Graphics. When selecting a graphics solution, key considerations for notebook manufacturers are graphics performance, visual experience, power efficiency, dedicated memory support and ease of design integration...

  • Page 17
    ...our CPU, GPU and APU technology. Customers pay us non-recurring engineering fees for design and development services and a purchase price for our semi-custom products. Collectively, our top five customers accounted for approximately 54% of our net revenue during the year ended 2013. In 2013, Hewlett...

  • Page 18
    ... our costs. Competition in the Microprocessor Market Intel Corporation has dominated the market for microprocessors for many years. Intel's market share, margins and significant financial resources enable it to market its products aggressively, to target our customers and our channel partners with...

  • Page 19
    ... to products that we offer for low-cost notebooks. As long as Intel remains in this dominant position, we may be materially adversely affected by Intel's business practices, including rebating and allocation strategies and pricing actions, designed to limit our market share and margins; product mix...

  • Page 20
    ... of low-power integrated platforms to serve key markets, including commercial clients, mobile computing and gaming and media computing, as well as developing an HSA, which is designed for software developers to easily program APUs by combining scalar processing on the CPU with parallel processing on...

  • Page 21
    ...primary effect of the first amendment was to change the pricing methodology applicable to wafers delivered in 2011 for our microprocessors and APU products. The first amendment also modified our existing commitments regarding the production of certain GPU and chipset products at GF. On March 4, 2012...

  • Page 22
    ...-level graphics product manufacturing to thirdparty manufacturers. We also outsource board-level and system-level product manufacturing to third-party manufacturers for our SeaMicro dense server and storage products. Assembly, Test, Mark and Packaging Facilities We own and operate two assembly, test...

  • Page 23
    ... quarter sales. In addition, with respect to our semi-custom SOC products for game consoles, we expect sales patterns to follow the seasonal trends of a consumer business with sales in the first half of the year being lower than sales in the second half of the year. Employees As of December 28, 2013...

  • Page 24
    ... EU, Australia and China are developing or have finalized market entry or public procurement regulations for computers and servers based on ENERGY STAR specifications as well as additional energy consumption limits. There is the potential for certain of our products being excluded from some of these...

  • Page 25
    ... graphics interface or other useful information. As long as Intel remains in this dominant position, we may be materially adversely affected by Intel's business practices, including rebating and allocation strategies and pricing actions, designed to limit our market share and margins; product...

  • Page 26
    ... for Intel platforms; and marketing and advertising expenditures in support of positioning the Intel brand over the brand of its OEM customers. • Intel's dominant position in the microprocessor market and integrated graphics chipset market, its introduction of competitive new products, its...

  • Page 27
    ...yields, remain competitive using or implementing advanced leading-edge process technologies needed to manufacture future generations of our products, manufacture our products on a timely basis at competitive prices, or meet our capacity requirements, then we may experience delays in product launches...

  • Page 28
    ... manufacturing yields for our products could negatively impact our financial results. Semiconductor manufacturing yields are a result of both product design and process technology, which is typically proprietary to the manufacturer, and low yields can result from design failures, process technology...

  • Page 29
    ... conditions will remain challenging. The goal of our long-term strategy is to derive approximately 50% of our revenue from high growth markets by the end of 2015. In the third and fourth quarters of 2013, revenue from sales of our semi-custom SOC and embedded products represented more than 30% of...

  • Page 30
    ... less leveraged competitors; and increase our vulnerability to the impact of adverse economic and industry conditions. The agreements governing our notes and our Secured Revolving Line of Credit impose restrictions on us that may adversely affect our ability to operate our business. The indentures...

  • Page 31
    ... economic times. Some competitors may have greater access or rights to companion technologies, including interface, processor and memory technical information. With the introduction of our APU products and other competing solutions, we believe that demand for additional discrete graphic cards...

  • Page 32
    .... The success of our semi-custom SOC products is dependent on securing customers for our semi-custom design pipeline and consumer market conditions, including the success of the Sony PlayStation®4 and Microsoft Xbox One game console systems. Our ability to design and introduce new products in...

  • Page 33
    ... to develop and maintain their operating systems to support our graphics products, independent software providers may forego designing their software applications to take advantage of our innovations and customers may not purchase PCs with our products. In addition, some software drivers sold with...

  • Page 34
    ... PCs) that incorporate our products; and excess inventory levels. Global economic uncertainty and weakness have also impacted the semiconductor market as consumers and businesses have deferred purchases, which negatively impacted demand for our products. Our financial performance has been, and may...

  • Page 35
    ... operations, or our third-party foundries or manufacturing suppliers are unable to procure materials for manufacturing our products, our business would be materially adversely affected. Our issuance to West Coast Hitech L.P. (WCH) of warrants to purchase 35,000,000 shares of our common stock...

  • Page 36
    ... work-in-process and finished products among our facilities, to our manufacturing suppliers and to our customers. In addition, we rely on third parties to provide certain information technology services to us, including help desk support, desktop application services, business and software support...

  • Page 37
    ... to transition certain key information technology applications and business systems from various AMD development locations to centralized consolidated data centers. There can be no assurance that our business and operations will not experience any disruption in connection with this transition. Our...

  • Page 38
    ... levels of product returns. Our agreements with AIBs protect their inventory of our products against price reductions. We defer the gross margins on our sales to distributors and AIBs, resulting from both our deferral of revenue and related product costs, until the applicable products are re-sold...

  • Page 39
    ... fault lines in California. Any conflict or uncertainty in the countries in which we operate, including public health issues (for example, an outbreak of a contagious disease such as Avian Influenza), safety issues, natural disasters, fire, disruptions of service from utilities, nuclear power plant...

  • Page 40
    ...gray market products enter the market, we and our distribution channels compete with these heavily discounted gray market products, which adversely affects demand for our products and negatively impact our margins. In addition, our inability to control gray market activities could result in customer...

  • Page 41
    ... disposal or treatment facilities when such facilities are found to be contaminated. Such persons can be responsible for cleanup costs even if they never owned or operated the contaminated facility. We have been named as a responsible party at three Superfund sites in Sunnyvale, California. Although...

  • Page 42
    ... "conflict" minerals report covering the 2013 calendar year is due to the SEC by June 2, 2014. A number of jurisdictions including the EU, Australia and China are developing or have finalized market entry or public procurement regulations for computers and servers based on ENERGY STAR specifications...

  • Page 43
    ... of space for engineering, manufacturing, warehouse and administrative use, including our headquarters in Sunnyvale, California, our principal administrative facilities in Austin, Texas, and a number of smaller regional sales offices located in commercial centers near customers, principally in the...

  • Page 44
    ...Orders from the California Regional Water Quality Control Board relating to the three sites. We have entered into settlement agreements with other responsible parties on two of the orders. During the term of such agreements other parties have agreed to assume most of the foreseeable costs as well as...

  • Page 45
    ...closing price of our common stock was $3.69 per share as reported at New York Stock Exchange. The following table sets forth on a per share basis the high and low intra-day sales prices on the New York Stock Exchange for our common stock for the periods indicated: High Low Fiscal Year 2013 Quarters...

  • Page 46
    ... 28, 2013. The past performance of our common stock is no indication of future performance. Comparison of Cumulative Five Year Total Return $500 $400 $300 $200 $100 $0 2008 2009 2010 2011 2012 2013 Advanced Micro Devices, Inc. S&P 500 Index S&P 500 Semiconductors Index Company / Index...

  • Page 47
    ... ...$4,337 $ 4,000 $4,954 $4,964 $9,078 (1) (2) (3) (4) 2013, 2012, 2010 and 2009 consisted of 52 weeks, whereas 2011 consisted of 53 weeks. In 2009, we entered into a comprehensive settlement agreement with Intel. Pursuant to the settlement agreement, Intel paid us $1.3 billion, and we recorded...

  • Page 48
    ... in 2013, 2012 and 2011, respectively, which primarily consisted of severance and related employee benefits. In 2013, we sold and leased back buildings in various locations and land in Austin, Texas, for which we recorded a net charge of $24 million. In 2008, we sold our Digital Television business...

  • Page 49
    ... our graphics products, we launched our AMD Radeon R7 and R9 series desktop graphics cards designed for enthusiast gamers, and we launched our AMD Radeon R7, R9 and R5 M200 series mobile discrete graphics processors based on our Graphics Core Next architecture for notebook GPUs in October 2013. For...

  • Page 50
    ... approximately 50% of revenue from high-growth adjacent markets by the end of 2015. GLOBALFOUNDRIES Formation and Accounting On March 2, 2009, we consummated the transactions contemplated by the Master Transaction Agreement among us, Advanced Technology Investment Company LLC (ATIC) and West Coast...

  • Page 51
    ...primary effect of the first amendment was to change the pricing methodology applicable to wafers delivered in 2011 for our microprocessors and APU products. The first amendment also modified our existing commitments regarding the production of certain GPU and chipset products at GF. On March 4, 2012...

  • Page 52
    ... charge to cost of sales, resulting in a net benefit to our gross margin in that period. Goodwill. Goodwill represents the excess of the purchase price over the fair value of net tangible and identifiable intangible assets acquired. Goodwill is not amortized, but rather is tested for impairment...

  • Page 53
    ... as an APU, chipsets, embedded processors and dense servers; and the Graphics and Visual Solutions segment, comprised of GPUs, including professional graphics, semicustom SOC products, revenue from development services and royalties for game consoles. In addition to these reportable segments, we...

  • Page 54
    ... first generation A-Series APU products, codenamed "Llano". In addition, operating loss for 2013 included a $57 million benefit from sales of inventory that had been previously reserved in the third quarter of 2012. Marketing, general and administrative expenses and research and development expenses...

  • Page 55
    ... the commencement of unit shipments of our semi-custom SOC products in the second quarter of 2013. Marketing, general and administrative expenses and research and development expenses increased for the reasons set forth under "Expenses" below. Graphics and Visual Solutions operating income was $105...

  • Page 56
    ... during the third quarter of 2012 as a result of lower than anticipated future demand for certain products, mainly first generation A-Series APU products, codenamed "Llano," which accounted for two gross margin percentage points. Gross margin in 2013 included a $57 million benefit from sales of...

  • Page 57
    ... in product engineering costs and a $41 million decrease in manufacturing process technology expenses, partially offset by a $20 million increase in other employee compensation and benefit expenses. The increase in research and development expenses attributable to our Graphics and Visual Solutions...

  • Page 58
    ...gain in the third quarter of 2013. In March 2013, we sold and leased back certain land and office buildings in Austin, Texas. We received net cash proceeds of $164 million in connection with the sale and recorded a $52 million charge in the first quarter of 2013. The operating lease expires in March...

  • Page 59
    ...and site closures, which were partially offset by the release of estimated employee-related severance costs of $5 million. The 2012 restructuring plan was completed as of the end of the third quarter of 2013. 2011 Restructuring Plan In the fourth quarter of 2011, we initiated a restructuring plan to...

  • Page 60
    ... exchange rate fluctuations. Income Taxes We recorded an income tax provision of $9 million in 2013 and an income tax benefit of $34 million and $4 million in 2012 and 2011, respectively. The income tax provision in 2013 was primarily due to $9 million of foreign taxes in profitable locations...

  • Page 61
    ...: 2013 2012 2011 (In millions) Cost of sales ...Research and development ...Marketing, general and administrative ...Total stock-based compensation expense, net of tax of $0 ... $ 5 48 38 $91 $ 8 52 37 $97 $ 6 46 38 $90 During 2013, 2012 and 2011, we did not realize any excess tax benefits...

  • Page 62
    ...and better position us competitively. As a result of our restructuring, we decreased operating expenses by approximately 31% from the first quarter of 2012 to the fourth quarter of 2013. With the impact of our restructuring plan, the liquidity provided by our Secured Revolving Line of Credit and the...

  • Page 63
    ... in Computing Solutions inventory as well as semicustom SOC products due to our customers' next generation game console ramps, an increase in accounts receivable of $200 million, which was primarily due to higher sales during the fourth quarter of 2013 compared to the fourth quarter of 2012, an...

  • Page 64
    ...from borrowings pursuant to our Secured Revolving Line of Credit of $55 million, net proceeds from U.S. government grants for research and development activities and foreign grants from the Canadian government for research and development activities related to our AMD APU products of $11 million and...

  • Page 65
    ... and development activities related to our AMD APU products and from the Malaysian and Chinese governments for our local microprocessor assembly, test and packaging facilities, and $18 million from the issuance of common stock under our stock-based compensation plan. During 2013, 2012 and 2011, we...

  • Page 66
    ... carrying value was approximately $470 million, net of debt discount of $30 million. See Note 11 of "Notes to Consolidated Financial Statements" below, for additional information regarding our 8.125% Notes. 7.75% Senior Notes Due 2020 On August 4, 2010, we issued $500 million of our 7.75% Senior...

  • Page 67
    ... our Secured Revolving Line of Credit is utilized. The Borrowers will pay (i) a monthly fee on all letters of credit outstanding under our Secured Revolving Line of Credit equal to the applicable LIBOR margin and (ii) a fronting fee to the Agent equal to 0.125% of all such letters of credit, payable...

  • Page 68
    ... Trigger Period, the Borrowers are required to maintain a fixed charge coverage ratio each four-fiscal quarter period ending on and after March 29, 2014. At December 28, 2013, the outstanding loan balance under our Secured Revolving Line of Credit was $55 million, with an interest rate of 2.75%, and...

  • Page 69
    ... of future lease payments and estimated operating costs related to real estate in Austin, Texas, Sunnyvale, California and Singapore that we sold and leased back. Purchase Obligations Our purchase obligations primarily include our obligations to purchase wafers and substrates from third parties...

  • Page 70
    ...commercial paper and corporate bonds. These investments were highly liquid. Due to the relatively short, weighted-average maturity of our investment portfolio and the current low interest rate environment, our exposure to interest rate risk is minimal. As of December 28, 2013, all of our outstanding...

  • Page 71
    ... operations, we incur costs and we carry assets and liabilities that are denominated in foreign currencies, primarily the Canadian dollar, while sales of products are primarily denominated in U.S. dollars. We maintain a foreign currency hedging strategy, which uses derivative financial instruments...

  • Page 72
    ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Advanced Micro Devices, Inc. Consolidated Statements of Operations Year Ended December 28, December 29, December 31, 2013 2012 2011 (In millions, except per share amounts) Net revenue ...Cost of sales ...Gross margin ...Research and development ...

  • Page 73
    Advanced Micro Devices, Inc. Consolidated Statements of Comprehensive Income (Loss) December 28, 2013 Year Ended December 29, 2012 (In millions) December 31, 2011 Net income (loss) ...Other comprehensive income (loss): Unrealized gains (losses) on available-for-sale securities: Unrealized gains (...

  • Page 74
    Advanced Micro Devices, Inc. Consolidated Balance Sheets December 28, December 29, 2013 2012 (In millions, except par value amounts) ASSETS Current assets: Cash and cash equivalents ...Marketable securities ...Accounts receivable, net ...Inventories, net ...Prepaid expenses and other current assets...

  • Page 75
    Advanced Micro Devices, Inc. Consolidated Statements of Stockholders' Equity Three Years Ended December 28, 2013 (In millions) Accumulated Number Additional other Total of Common paid-in Treasury Accumulated comprehensive stockholders' shares Stock capital stock deficit income (loss) equity ...

  • Page 76
    Advanced Micro Devices, Inc. Consolidated Statements of Cash Flows December 28, 2013 Year Ended December 29, 2012 (In millions) December 31, 2011 Cash flows from operating activities: Net income (loss) ...Adjustments to reconcile net income (loss) to net cash provided by (used in) operating ...

  • Page 77
    ...accelerated processing unit (APU), chipsets, embedded processors and dense servers; and (ii) graphics processing units (GPUs), including professional graphics, semi-custom System-on-Chip (SOC) products, development services and technology for game consoles. NOTE 2: Summary of Significant Accounting...

  • Page 78
    ... programs, including certain cooperative advertising and marketing promotions and volume based incentives and special pricing arrangements, at the time the related revenues are recognized. For transactions where the Company reimburses a customer for a portion of the customer's cost to perform...

  • Page 79
    ... CPU and AMD A-Series APU products that are commonly referred to as "processors in a box" and for PC workstation products. The Company has also offered extended limited warranties to certain customers of "tray" microprocessor products and/or workstation graphics products who have written agreements...

  • Page 80
    ... as a reduction of research and development expenses when all conditions and requirements set forth in the underlying grant agreement are met. Marketing, Communications and Advertising Expenses. Marketing, communications and advertising expenses for 2013, 2012 and 2011 were approximately $210...

  • Page 81
    ... stock and restricted stock units totaling approximately 59 million, 45 million and 33 million for 2013, 2012 and 2011, respectively, were not included in the net income (loss) per share calculations as their inclusion would have been anti-dilutive. Potential shares issuable under the Company...

  • Page 82
    ... derive the Company's best estimate of awards ultimately expected to vest. NOTE 3: GLOBALFOUNDRIES Formation and Accounting On March 2, 2009, the Company consummated the transactions contemplated by the Master Transaction Agreement among the Company, Advanced Technology Investment Company LLC (ATIC...

  • Page 83
    .... The primary effect of the first amendment was to change the pricing methodology applicable to wafers delivered in 2011 for the Company's microprocessors and APU products. The first amendment also modified the existing commitments regarding the production of certain GPU and chipset products at GF...

  • Page 84
    ... for 2013, 2012 and 2011, respectively. NOTE 4: Acquisition On March 23, 2012, the Company acquired SeaMicro, Inc. (SeaMicro), a privately held company that produced energy-efficient, high-bandwidth microservers. At the time of the acquisition of SeaMicro, AMD planned to accelerate its strategy to...

  • Page 85
    ..., which is built around a parallel array of independent ultra-low power processors, and it serves to integrate computation, switching, server management and load balancing. In addition to developed technology, SeaMicro had in-process research and development projects, which were incomplete at...

  • Page 86
    In March 2013, the Company sold and leased back land and office buildings in Austin, Texas. The Company received net cash proceeds of $164 million in connection with the sale and recorded a $52 million charge in the first quarter of 2013. The operating lease expires in March 2025 and provides for ...

  • Page 87
    ...$280 106 $386 $155 92 $247 December 28, December 29, 2013 2012 (In millions) Accrued compensation and benefits ...Marketing programs and advertising expenses ...Software technology and licenses payable ...Other accrued and current liabilities ...Total accrued and other current liabilities ...NOTE...

  • Page 88
    ..., 2013 and December 29, 2012 were as follows: Developed technology In-process research and development Customer relationships (In millions) Trademark and trade name Total Intangible assets, net as of December 31, 2011 ...Addition due to SeaMicro acquisition ...Completion of in-process research and...

  • Page 89
    NOTE 8: Financial Instruments Available-for-sale securities held by the Company as of December 28, 2013 and December 29, 2012 were as follows: December 28, December 29, 2013 2012 (In millions) Fair Value Classified as cash equivalents: Money market funds ...Commercial paper ...Total classified as...

  • Page 90
    ...for-sale marketable debt securities as of December 28, 2013 were within one year, except those for certain long-term marketable securities. The Company's long-term marketable securities currently consist of corporate bonds and money market funds. The corporate bonds have maximum stated maturities of...

  • Page 91
    ... at reporting dates using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) (In millions) December 28, 2013 Assets Classified as cash equivalents: Money market funds ...Commercial paper...

  • Page 92
    ... in money market funds, commercial paper, time deposits, marketable equity securities, corporate bonds, mutual funds and foreign currency derivative contracts are classified within Level 1 or Level 2. This is because such financial instruments are valued primarily using quoted market prices or...

  • Page 93
    ...through credit limits, credit lines, monitoring procedures and credit approvals. Furthermore, the Company performs in-depth credit evaluations of all new customers and, at intervals, for existing customers. From this, the Company may require letters of credit, bank or corporate guarantees or advance...

  • Page 94
    ... are unable to procure materials for manufacturing its products, its business would be materially adversely affected. NOTE 10: Income Taxes The provision (benefit) for income taxes consists of: 2013 2012 2011 (In millions) Current: U.S. Federal ...U.S. State and Local ...Foreign National and Local...

  • Page 95
    ... distributor income ...Inventory valuation ...Accrued expenses not currently deductible ...Acquired intangibles ...Tax deductible goodwill ...Federal and state tax credit carryovers ...Foreign capitalized research and development costs ...Foreign research and development ITC credits ...Discount...

  • Page 96
    ... income taxes. 2013 2012 2011 (In millions) Statutory federal income tax provision (benefit) at 35% rate ...State taxes, net of federal benefit ...Foreign income at other than U.S. rates ...U.S. valuation allowance generated (utilized) ...Credit monetization ...Provision (benefit) for income taxes...

  • Page 97
    ... 2005 through 2010. During the second quarter of 2010 the U.S. Internal Revenue Service completed its audit of the U.S. Federal income tax returns for the years ending 2004 through 2006 inclusive. As of December 31, 2011 the German tax authorities completed their audit of the Company's former German...

  • Page 98
    ... Total Debt The Company's total debt as of December 28, 2013 and December 29, 2012 consisted of: December 28, December 29, 2013 2012 (In millions) 6.00% Notes, net of discount ...8.125% Notes, net of discount ...7.75% Notes ...7.50% Notes ...Secured Revolving Line of Credit ...Capital lease...

  • Page 99
    ...000 principal amount of the 6.00% Notes, which is equivalent to an initial conversion price of $28.08 per share. This initial conversion price represents a premium of 100% relative to the last reported sale price of the Company's common stock on April 23, 2007 (the trading date preceding the date of...

  • Page 100
    ... Indenture) dated August 4, 2010 between the Company and Wells Fargo Bank, N.A., as trustee. As of December 28, 2013, the outstanding aggregate principal amount of the 7.75% Notes was $500 million. Prior to August 1, 2015, the Company may redeem some or all of the 7.75% Notes at a price equal to 100...

  • Page 101
    .... The 7.50% Notes are governed by the terms of an indenture (the 7.50% Indenture) dated August 15, 2012 between the Company and Wells Fargo Bank, N.A., as trustee. As of December 28, 2013, the outstanding aggregate principal amount of the 7.50% Notes was $500 million. At any time (which may be more...

  • Page 102
    ... the Secured Revolving Line of Credit is utilized. The Borrowers will pay (i) a monthly fee on all letters of credit outstanding under the Secured Revolving Line of Credit equal to the applicable LIBOR margin and (ii) a fronting fee to the Agent equal to 0.125% of all such letters of credit, payable...

  • Page 103
    ...-arm's-length transaction with an affiliate. During a Domestic Cash Trigger Period, the Borrowers are required to maintain a fixed charge coverage ratio each four-fiscal quarter periods ending on and after March 29, 2014. At December 28, 2013, the Secured Revolving Line of Credit had an outstanding...

  • Page 104
    ... APU, chipsets, embedded processors and dense servers; and the Graphics and Visual Solutions segment, comprised of GPUs, including professional graphics, semicustom SOC products, revenue from development services and royalties for game consoles. In addition to these reportable segments, the Company...

  • Page 105
    ... The Company's stock-based incentive programs are intended to attract, retain and motivate highly qualified employees. On April 29, 2004, the Company's stockholders approved the 2004 Equity Incentive Plan (the 2004 Plan). As of December 28, 2013, the Company also has stock options outstanding under...

  • Page 106
    ..., 2013, the Company granted 2,450,000 performance-based restricted stock units (the pRSUs) to specified officers of the Company. Each pRSU award reflects a target number of shares (Target Shares) that may be issued to the award recipient before adjusting based on the Company's financial performance...

  • Page 107
    .... Valuation and Expense Information. Stock-based compensation expense related to employee stock options, restricted stock and restricted stock units was allocated in the consolidated statements of operations as follows: 2013 2012 2011 (In millions) Cost of sales ...Research and development...

  • Page 108
    ..., including market-based stock options, and related information: 2013 2012 2011 WeightedWeightedWeightedAverage Average Average Number Exercise Number Exercise Number Exercise of Shares Price of Shares Price of Shares Price (In millions, except share price) Stock options: Outstanding at beginning...

  • Page 109
    ...03 years. NOTE 15: Other Employee Benefit Plans The Company has a retirement savings plan, commonly known as a 401(k) plan, that allows participating employees in the United States to contribute up to 100% of their pre-tax salary subject to Internal Revenue Service limits. The Company matched 75% of...

  • Page 110
    ... manufacturing and office equipment for terms ranging from 1 to 5 years. Rent expense was approximately $64 million, $49 million and $48 million in 2013, 2012 and 2011. In December 1998, the Company arranged for the sale of its marketing, general and administrative facility in Sunnyvale, California...

  • Page 111
    ... CPU and AMD A-Series APU products that are commonly referred to as "processors in a box" and for PC workstation products. The Company has also offered extended limited warranties to certain customers of "tray" microprocessor products and/or workstation graphics products who have written agreements...

  • Page 112
    ... consolidation and site closures, which were partially offset by the release of estimated employee related severance costs of $5 million. The 2012 restructuring plan was completed as of the end of the third quarter of 2013. 2011 Restructuring Plan In the fourth quarter of 2011, the Company initiated...

  • Page 113
    ... table provides a summary of each major type of cost associated with the 2012, 2011 and 2008 restructuring plans through December 28, 2013: 2013 2012 2011 (In millions) Severance and benefits charges (reversals), net ...Contract or program termination charges ...Asset impairments ...Facility...

  • Page 114
    .... As of December 28, 2013, the Company's outstanding contracts were in a net loss position of $4 million. The Company is required to post collateral should the derivative contracts be in a net loss position exceeding certain thresholds. As of December 28, 2013, the Company was not required to post...

  • Page 115
    ... in all material respects, the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Advanced Micro Devices, Inc.'s internal control over financial reporting as of December 28, 2013, based on criteria...

  • Page 116
    ... with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Advanced Micro Devices, Inc. as of December 28, 2013 and December 29, 2012 and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity...

  • Page 117
    ... a light industrial building in Singapore, and $5 million gain on sale of an office building in Austin, Texas. In the second quarter of 2013, the Company incurred costs of $11 million related to facility consolidation and site closures, partially offset by the release of employee severance costs of...

  • Page 118
    ...Exchange Act, such as this Annual Report on Form 10-K is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial...

  • Page 119
    ... was effective as of December 28, 2013 at the reasonable assurance level. Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on the Company's internal control over financial reporting as of December 28, 2013, which is included in Part II, Item...

  • Page 120
    ... Compensation," "Outstanding Equity Awards at 2013 Fiscal Year-End," "Grants of Plan-Based Awards in 2013" and "Option Exercises and Stock Vested in 2013") and "Severance and Change in Control Arrangements" in our 2014 Proxy Statement is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP...

  • Page 121
    ... Advanced Micro Devices, Inc. and Wells Fargo Bank, N.A., dated as of August 15, 2012, filed as Exhibit 4.1 to AMD's Current Report on Form 8-K dated August 15, 2012, is hereby incorporated by reference. 1996 Stock Incentive Plan, as amended, filed as Exhibit 10.58 to AMD's Quarterly Report on...

  • Page 122
    ... ended April 2, 2011, is hereby incorporated by reference. 1995 Stock Plan of NexGen, Inc., as amended, filed as Exhibit 10.37 to AMD's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1996, is hereby incorporated by reference. ATI Technologies Inc. Share Option Plan, as amended...

  • Page 123
    ... Agreement, between Advanced Micro Devices, Inc. and Devinder Kumar, filed as Exhibit 10.3 to AMD's Quarterly Report on Form 10-Q for the period ended September 29, 2012, is hereby incorporated by reference. Executive Resignation Agreement and General Release, between Advanced Micro Devices...

  • Page 124
    ... Retention Bonus Award to John Byrne, dated October 25, 2011, filed as Exhibit 10.2 to AMD's Quarterly Report on Form 10-Q for the period ended September 29, 2012, is hereby incorporated by reference. Stock Purchase Agreement, between West Coast Hitech L.P. and Advanced Micro Devices, Inc., dated...

  • Page 125
    ... 10.1 to AMD's Quarterly Report on Form 10-Q/A for the period ended April 2, 2011, is hereby incorporated by reference. Wafer Supply Agreement Amendment No. 2, among Advanced Micro Devices, Inc., GLOBALFOUNDRIES Inc., GLOBALFOUNDRIES U.S. Inc., Advanced Technology Investment Company LLC and ATIC...

  • Page 126
    Exhibit Number Description of Exhibits 24 31.1 31.2 32.1 32.2 101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE * ** Power of Attorney. Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of the Chief Financial Officer pursuant to ...

  • Page 127
    ..., thereunto duly authorized. February 18, 2014 ADVANCED MICRO DEVICES, INC. By: /S/ DEVINDER KUMAR Devinder Kumar Senior Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons, on...

  • Page 128
    SCHEDULE II ADVANCED MICRO DEVICES, INC. VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 2011, December 29, 2012 and December 28, 2013 (In millions) Additions Charged (Reductions Credited) To Operations Balance Beginning of Period Deductions(1) Balance End of Period Allowance for ...

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    AMD-54418-A