AMD 2013 Annual Report Download - page 53

changes in our industry, increased competition, an inability to successfully introduce new products in the
marketplace or to achieve internal forecasts, and a decline in our stock price. If the estimated fair value of our
Computing Solutions reporting unit declines due to any of these factors, we may be required to record future
goodwill impairment charges.
Income Taxes. In determining taxable income for financial statement reporting purposes, we must make
certain estimates and judgments. These estimates and judgments are applied in the calculation of certain tax
liabilities and in the determination of the recoverability of deferred tax assets, which arise from temporary
differences between the recognition of assets and liabilities for tax and financial statement reporting purposes.
We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not
likely, we must increase our charge to income tax expense, in the form of a valuation allowance, for the deferred
tax assets that we estimate will not ultimately be recoverable. We consider past performance, future expected
taxable income and prudent and feasible tax planning strategies in determining the need for a valuation
allowance.
In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of
complex tax rules and the potential for future adjustment of our uncertain tax positions by the Internal Revenue
Service or other taxing authority. If our estimates of these taxes are greater or less than actual results, an
additional tax benefit or charge will result. We recognize potential accrued interest and penalties related to
unrecognized tax benefits as interest expense and income tax expense.
Results of Operations
Management, including the Chief Operating Decision Maker, who is our Chief Executive Officer, reviews
and assesses our operating performance using segment net revenue and operating income (loss) before interest,
other income (expense), net, and income taxes. These performance measures include the allocation of expenses
to the operating segments based on management’s judgment.
We use the following two reportable segments:
• the Computing Solutions segment, comprised of x86 microprocessors, as standalone devices or as
incorporated as an APU, chipsets, embedded processors and dense servers; and
• the Graphics and Visual Solutions segment, comprised of GPUs, including professional graphics, semi-
custom SOC products, revenue from development services and royalties for game consoles.
In addition to these reportable segments, we have an All Other category, which is not a reportable segment.
This category includes certain expenses and credits that were not allocated to any of the operating segments
because management does not consider these expenses and credits in evaluating the performance of the operating
segments. Also included in this category are amortization of acquired intangible assets, employee stock-based
compensation expense, restructuring and other special charges, net, a charge related to the limited waiver of
exclusivity from GF and a net gain from licenses and settlement agreements regarding patent-related matters.
We also reported the results of former businesses in the All Other category because the operating results
were not material.
We intend the discussion of our financial condition and results of operations that follows to provide
information that will assist you in understanding our financial statements, the changes in certain key items in
those financial statements from year to year, the primary factors that resulted in those changes and how certain
accounting principles, policies and estimates affect our financial statements.
We use a 52 or 53 week fiscal year ending on the last Saturday in December. The years ended December 28,
2013, December 29, 2012 and December 31, 2011 included 52 weeks, 52 weeks and 53 weeks, respectively. The
extra week in 2011 did not have a material impact on our results of operations. References in this report to 2013,
2012 and 2011 refer to the fiscal year unless explicitly stated otherwise.
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