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2014 ANNUAL REPORT ON FORM 10-K

Table of contents

  • Page 1
    2014 ANNUAL REPORT ON FORM 10-K

  • Page 2
    .... In 2014, we introduced our most advanced A-Series APU ever, offering industryleading graphics and superior total compute performance. We also delivered the world's fastest server GPU and desktop graphics card, and took several key steps to foster the development of robust 64-bit ARM® server and...

  • Page 3
    ... SoC shipments, which more than doubled from 2013 to 2014. Going forward, we see significant demand for AMD solutions in the enterprise, embedded, and highperformance computing spaces which address the growth of data and content in a world of 50 billion connected devices. We are focused on a number...

  • Page 4
    Advanced Micro Devices, Inc. 2014 ANNUAL REPORT ON FORM 10-K CAUTIONARY STATEMENT The forward-looking statements contained herein, including but not limited to, AMD's ability to transition its revenue to high-growth areas, the timing, features and functionality of future AMD products, AMD's ability...

  • Page 5
    ...reported closing sale price of $4.11 per share as reported on the New York Stock Exchange on June 27, 2014, 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's classes of common stock...

  • Page 6
    ... Data ...Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...Controls and Procedures ...Other Information ... PART III ...ITEM 10. ITEM 11. ITEM 12. ITEM 13. ITEM 14. Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security...

  • Page 7
    ...of our semicustom System-on-Chip (SoC) products; consumer PC market conditions; the success of our transformation strategy; our ability to transform our business to attain revenue from high-growth markets; expected Enterprise, Embedded and Semi-Custom segment research and development costs; expected...

  • Page 8
    ... property; we depend on third-party companies for the design, manufacture and supply of motherboards, BIOS software and other computer platform components to support our business; if we lose Microsoft Corporation's support for our products or other software vendors do not design and develop software...

  • Page 9
    ... offices are located at One AMD Place, Sunnyvale, California 94088, and our telephone number is (408) 749-4000. References in this Annual Report on Form 10-K to "AMD," "we," "us," "management," "our" or the "Company" mean Advanced Micro Devices, Inc. and our consolidated subsidiaries. AMD, the AMD...

  • Page 10
    ... performance include the number and type of cores in a microprocessor, the bit rating of the microprocessor, memory size and data access speed. Developments in IC design and manufacturing process technologies have resulted in significant advances in microprocessor performance. As businesses...

  • Page 11
    ...to reduce processor power consumption during active and idle times. The use of intelligent, dynamic power management is designed to create lower energy use by allowing compute applications to be completed quickly and efficiently, enabling a return to the ultra-low power idle state. Desktop. Our APUs...

  • Page 12
    ...our 2014 mainstream and low-power APUs and mobile APUs, formerly codenamed "Beema" and "Mullins," respectively, which feature up to four newly-designed x86 CPU cores with AMD Radeon graphics and a hardware-level data security solution based on the ARM® Cortex®-A5, all on a single SoC. In June 2014...

  • Page 13
    ... scale multi-GPU support and the AMD FirePro S9100 in October 2014, designed for high visualization, high throughput and multi-tasking. Enterprise, Embedded and Semi-Custom The Enterprise, Embedded and Semi-Custom Markets Server. A server is a computer system that performs services for connected...

  • Page 14
    ... 2014, we began sampling the AMD Opteron A1100 Series processor, our first 64-bit ARM-based server processor based on 28nm technology. AMD Opteron A-Series processors combine AMD's expertise in delivering server-class silicon with ARM's trademark low-power architecture. These products are designed...

  • Page 15
    ... mid-to high-end visual and parallel compute-intensive embedded applications. • The AMD Embedded G-Series SoC platform is a high-performance, low-power design offering ultra-low power consumption and advanced graphics performance. In June 2014, we announced our AMD Embedded G-Series SoC, formerly...

  • Page 16
    ...Freedom Fabric Storage series for storage systems. We also sell low-power versions of our AMD Opteron, AMD Athlon and AMD Sempron, as well as AMD Geode, AMD R-Series and G-Series processors as embedded processor solutions. Our product brand for the consumer graphics market is AMD Radeon. Our product...

  • Page 17
    ... customers and channel partners; control over industry standards, PC manufacturers and other PC industry participants, including motherboard, memory, chipset and basic input/output system, or BIOS, suppliers and software companies as well as the graphics interface for Intel platforms; and marketing...

  • Page 18
    ... offers supporting software and services. Our ability to compete with companies who use ARM-based solutions depends on our ability to timely design and bring to market energy-efficient, high-performing products at an attractive price point. In the chipset market, our competitors include suppliers of...

  • Page 19
    ... for servers. We are also focusing on delivering a range 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...

  • Page 20
    ... 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 27, 2014...

  • Page 21
    ... free." If we cannot satisfy these customers, they may choose a competitor's products. 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 as well...

  • Page 22
    ... customers and channel partners; control over industry standards, PC manufacturers and other PC industry participants, including motherboard, memory, chipset and basic input/output system, or BIOS, suppliers and software companies as well as the graphics interface for Intel platforms; and marketing...

  • Page 23
    ... GF is unable to achieve anticipated manufacturing 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...

  • Page 24
    ...Computing and Graphics revenue has been related to desktop PCs. As consumers adopt new form factors, have new product feature preferences or have different requirements than those consumers in the PC market, PC sales could be negatively impacted, which could negatively impact our business. Currently...

  • Page 25
    ... the embedded, professional graphics, semi-custom, dense server and ultra low-power client markets. One of the goals of our strategy is to derive approximately 50% of our revenue from high growth adjacent markets by the end of 2015. As part of our business strategy, effective July 1, 2014, we...

  • Page 26
    ...ARM architectural license for the development of custom high-performance cores for high-growth adjacent markets. Also in the second quarter of 2014 we announced our third generation mainstream and low powered mobile APUs, formerly codenamed "Mullins" and "Beema," and we released our new embedded APU...

  • Page 27
    ...our exposure to changes in interest rates and the risk that our exposure to interest rates may increase if interest rates increase. 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...

  • Page 28
    ... to, among other things: • allow certain subsidiaries that manufacture or process inventory for us or AMD International Sales & Service, Ltd. (together, the Borrowers) to borrow secured debt or unsecured debt beyond a certain amount; create any liens upon any of the Borrowers' property (other than...

  • Page 29
    ...development services and revenue received in connection with sales of our semi-custom SoC products to these third parties. As a result, our ability to generate revenue from our semi-custom products depends on our ability to secure customers for our semi-custom design pipeline and our semi-custom SoC...

  • Page 30
    ... to support our business. We depend on third-party companies for the design, manufacture and supply of motherboards, BIOS software and other components that our customers utilize to support our microprocessor, GPU and APU offerings. We also rely on AIBs to support our GPU and APU products. In...

  • Page 31
    ... reporting unit. Subsequent to our annual goodwill impairment analysis, we monitor for any events or changes in circumstances, such as significant adverse changes in business climate or operating results, changes in management's business strategy, an inability to successfully introduce new products...

  • Page 32
    ... 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 33
    ... our business needs. These changes may be costly and disruptive to our operations and could impose substantial demands on management time. These changes may also require changes in our information systems, modification of internal control procedures and significant training of employees and third...

  • Page 34
    ...affect quarterly and seasonal trends are beyond our control. If essential equipment or materials are not available to manufacture our products, we could be materially adversely affected. We purchase equipment and materials for our internal back-end manufacturing operations from a number of suppliers...

  • Page 35
    ..., 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 applications, server and storage administration, data center...

  • Page 36
    ... affect the price of, our common stock. Our success will depend, in part, on our ability to expand our product offerings and grow our business in response to changing technologies, customer demands and competitive pressures. In some circumstances, we may pursue growth through the acquisition of...

  • Page 37
    ...events could cause consumer spending to decrease or result in increased volatility in the United States economy and worldwide financial markets. Unfavorable currency exchange rate fluctuations could adversely affect us. We have costs, assets and liabilities that are denominated in foreign currencies...

  • Page 38
    ..., our intellectual property on a worldwide basis in a cost-effective manner. In jurisdictions where foreign laws provide less intellectual property protection than afforded in the United States and abroad, our technology or other intellectual property may be compromised, and our business would be...

  • Page 39
    ... products may not meet customer roadmaps, or produce sudden changes in demand, which may result in excess inventory. 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...

  • Page 40
    ..., 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 United States, Latin...

  • Page 41
    ...to inflate artificially the price paid for our common stock during the period. The shareholder derivative lawsuit is currently stayed pending a decision on the motion to dismiss the class action lawsuit Hatamian v. AMD, et al. Based upon information presently known to management, we believe that the...

  • Page 42
    ... released into the groundwater were commonly used in the semiconductor industry in the United States in the wafer fabrication process prior to 1979. In 1991, we received Final Site Clean-up Requirements Orders from the California Regional Water Quality Control Board relating to the three sites...

  • Page 43
    ...per share as reported on Nasdaq. 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 2014 Quarters Ended: March 29, 2014 ...June 28, 2014 ...September 27, 2014...

  • Page 44
    ... performance. Comparison of Cumulative Five Year Total Return $250 $200 $150 $100 $50 $0 2009 2010 2011 2012 2013 2014 Advanced Micro Devices, Inc. S&P 500 Index S&P 500 Semiconductors Index Company / Index Base Period 12/24/2009 12/25/2010 12/31/2011 Years Ending 12/29/2012 12/28/2013...

  • Page 45
    ITEM 6. SELECTED FINANCIAL DATA Five Years Ended December 27, 2014 (In millions except per share amounts) 2014(1) 2013(1) 2012(1) 2011(1) 2010(1) Net revenue ...$5,506 $5,299 $ 5,422 $6,568 $6,494 Income (loss) from continuing operations(2)(3)(4)(5)(6)(7) ...(403) (83) (1,183) 495 471 - - - (4) - ...

  • Page 46
    .... In 2014, we recorded a goodwill impairment charge of $233 million related to our Computing and Graphics segment. Also in 2014, we recorded a $58 million lower of cost or market inventory adjustment related to our second generation APU products. In 2008, we sold our Digital Television business to...

  • Page 47
    ... quarter of 2014, we announced our ambidextrous computing roadmap to develop custom high-performance ARM and x86 processor cores for 2016. At the same time, we publicly demonstrated the AMD Opteronâ„¢ A1100 Series, our first 64-bit ARM-based server processor based on 28 nanometer (nm) technology...

  • Page 48
    ... debt as of the end December 27, 2014 was $2.2 billion compared to $2.1 billion as of December 28, 2013. Our cash, cash equivalents and marketable securities as of December 27, 2014 were $1.0 billion compared to $1.2 billion as of December 28, 2013. GLOBALFOUNDRIES Formation and Accounting On March...

  • Page 49
    .... The primary effect of the fourth amendment was to establish volume purchase commitments and fixed pricing for the 2014 calendar year as well as to modify certain other terms of the WSA applicable to wafers for some of our microprocessor, graphics processor and semi-custom game console products to...

  • Page 50
    ... on product sales for estimated future price reductions and other customer incentives in the same period that the related revenues are recorded. We base these estimates on actual historical sales returns, historical allowances, historical price reductions, market activity and other known or...

  • Page 51
    ..., which primarily includes desktop and notebook processors and chipsets, discrete GPUs and professional graphics; and the Enterprise, Embedded and Semi-Custom segment, which primarily includes server and embedded processors, dense servers, semi-custom SoC products, engineering services and royalties...

  • Page 52
    ... 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 27, 2014, December 28, 2013 and December 29, 2012 each included 52 weeks. References in this report to 2014, 2013...

  • Page 53
    ... increase in cost of sales was primarily due to an increase in unit shipments of our semi-custom SoC products in 2014 compared to 2013. In addition, operating income in 2014 included an $8 million benefit from technology license revenue. Research and development expenses and marketing, general and...

  • Page 54
    .... The increase in cost of sales was primarily due to the commencement of unit shipments of our semi-custom SoC products in the second quarter of 2013. Marketing, general and administrative expenses increased and research and development expenses decreased for the reasons set forth under "Expenses...

  • Page 55
    ... charge recorded in the first quarter of 2014. Research and development expenses attributable to our Computing and Graphics segment decreased primarily due to a $171 million decrease in product engineering and design costs, a $22 million decrease in other employee compensation and benefit expenses...

  • Page 56
    ... our Computing and Graphics segment and a $6 million decrease in the All Other category due to the absence of SeaMicro acquisition-related costs recorded in 2012, partially offset by a $12 million increase in marketing, general and administrative expenses attributable to our Enterprise, Embedded and...

  • Page 57
    ... costs related to certain employee benefits. The 2011 restructuring plan was completed as of the end of the first quarter of 2012. The following table provides a summary of the restructuring activities during 2014 and 2013 and the remaining related liabilities recorded in "Accrued and other current...

  • Page 58
    ... end of the initial lease term and for an additional 3.5 years thereafter. In September 2013, we also sold an office building in Austin, Texas. We received net cash proceeds of $10 million in connection with the sale and recorded a $5 million gain in the third quarter of 2013. In March 2013, we sold...

  • Page 59
    ... for the years ended December 27, 2014, December 28, 2013 and December 29, 2012 was allocated in our consolidated statements of operations as follows: 2014 2013 2012 (In millions) Cost of sales ...Research and development ...Marketing, general and administrative ...Total stock-based compensation...

  • Page 60
    ...were 81% in 2014, 85% in 2013 and 92% in 2012. The decrease in international sales as a percentage of net revenue in 2014 compared 2013 and 2012 was primarily driven by an increase in net revenue from domestic sales of our semi-custom SoC products. We expect that international sales will continue to...

  • Page 61
    ... in Computing and Graphics inventory as well as semi-custom 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 62
    ...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 63
    ... for software technology and licenses where payments are fixed and non-cancelable which are also included in the table above. Represents our payment obligations to GF as of the end of our fiscal year for wafer receipts and research and development activities. We negotiate our purchase commitments...

  • Page 64
    ...on the consolidated balance sheet as of December 27, 2014 due May 2015. See Note 10 of "Notes to Consolidated Financial Statements" below, for additional information regarding our 6.00% Notes. 8.125% Senior Notes Due 2017 On November 30, 2009, we issued $500 million of our 8.125% Notes at a discount...

  • Page 65
    ...On August 15, 2012, we issued $500 million of our 7.50% Notes. Our 7.50% Notes are our general unsecured senior obligations. Interest is payable on February 15 and August 15 of each year beginning February 15, 2013 until the maturity date of August 15, 2022. The 7.50% Notes are governed by the terms...

  • Page 66
    ... we believe the market conditions are favorable to do so. Secured Revolving Line of Credit We and our subsidiary, AMD International Sales & Service, Ltd. (together, the Borrowers), entered into a loan and security agreement on November 12, 2013, as amended on December 11, 2014 (the Loan Agreement...

  • Page 67
    ... years. Total future non-cancelable lease obligations as of December 27, 2014 were $340 million, including approximately $284 million 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. 61

  • Page 68
    ... payments to GF based on wafer receipts and research and development activities. As of December 27, 2014, payments owed to GF were $80 million. We are currently in the process of negotiating a fifth amendment to the WSA, and we expect that our future purchases from GF will continue to be material...

  • Page 69
    ... control. There were no sales of available-for-sale securities during 2014. The following table presents the cost basis, fair value and related weighted-average interest rates by year of maturity for our investment portfolio and debt obligations as of December 27, 2014: 2015 2016 2020 and 2017 2018...

  • Page 70
    ... in foreign currencies, while sales of products are primarily denominated in U.S. dollars. We maintain a foreign currency hedging strategy, which uses derivative financial instruments to mitigate the risks associated with changes in foreign currency exchange rates. This strategy takes into...

  • Page 71
    ... DATA Advanced Micro Devices, Inc. Consolidated Statements of Operations Year Ended December 27, December 28, December 29, 2014 2013 2012 (In millions, except per share amounts) Net revenue ...Cost of sales ...Gross margin ...Research and development ...Marketing, general and administrative...

  • Page 72
    Advanced Micro Devices, Inc. Consolidated Statements of Comprehensive Income (Loss) December 27, 2014 Year Ended December 28, 2013 (In millions) December 29, 2012 Net loss ...Other comprehensive income (loss): Unrealized gains (losses) on available-for-sale securities... ...Total change in unrealized ...

  • Page 73
    Advanced Micro Devices, Inc. Consolidated Balance Sheets December 27, December 28, 2014 2013 (In millions, except par value amounts) ASSETS Current assets: Cash and cash equivalents ...Marketable securities ...Accounts receivable, net ...Inventories, net ...Prepayments to GLOBALFOUNDRIES ...Prepaid...

  • Page 74
    Advanced Micro Devices, Inc. Consolidated Statements of Stockholders' Equity Three Years Ended December 27, 2014 (In millions) Accumulated Number Additional other Total of Common paid-in Treasury Accumulated comprehensive stockholders' shares Stock capital stock deficit income (loss) equity ...

  • Page 75
    ...assets ...Accounts payables, accrued liabilities and other ...Payable to GLOBALFOUNDRIES ...Net cash used in operating activities ...Cash flows from investing activities: Acquisition of SeaMicro, Inc., net of cash acquired ...Purchases of available-for-sale securities ...Purchases of property, plant...

  • Page 76
    ...server and embedded processors, dense servers, semi-custom System-on-Chip (SoC) products 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 2014, 2013 and 2012...

  • Page 77
    ... the end of each period based on the change in inventory units at distributors, latest published prices and latest product costs. The Company records estimated reductions to revenue under distributor and customer incentive programs, including certain cooperative advertising and marketing promotions...

  • Page 78
    ... to certain customers of "tray" microprocessor products and/or workstation graphics products who have written agreements with the Company and target their computer systems at the commercial and/or embedded markets. The Company accrues warranty costs at the time of sale of warranted products. 72

  • Page 79
    ... as a reduction of revenue. Net Loss Per Share. Basic net loss per share is computed based on the weighted-average number of shares outstanding and shares issuable upon exercise of the warrants issued by the Company to West Coast Hitech L.P. (WCH), in connection with the GLOBALFOUNDRIES, Inc. (GF...

  • Page 80
    ... lattice-binomial option-pricing model requires the use of extensive actual employee exercise behavior data and the use of a number of complex assumptions including expected volatility of the Company's common stock, risk-free interest rate and expected dividends. Significant changes in any of these...

  • Page 81
    ... in the fourth quarter of 2016, with early adoption permitted. The Company is currently evaluating the impact of its pending adoption of ASU 2014-15 on its consolidated financial statements. Share-Based Payments with Performance Targets. In June 2014, the FASB issued Accounting Standards Update No...

  • Page 82
    ... 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. On March 4, 2012, the Company entered into...

  • Page 83
    ...the end of the initial operating lease term, and for an additional 3.5 years thereafter. In September 2013, the Company also sold an office building in Austin, Texas. The Company received net cash proceeds of $10 million in connection with the sale and recorded a $5 million gain in the third quarter...

  • Page 84
    ... 27, 2014 and December 28, 2013 were as follows: Computing and Graphics Enterprise, Embedded and Semi-Custom All Other (In millions) Total Initial goodwill due to ATI acquisition ...Initial goodwill due to SeaMicro acquisition ...Accumulated impairment losses ...Balance as of December 29, 2012...

  • Page 85
    ... fourth quarter of 2014, the Company conducted its annual impairment test of goodwill. In step one of the impairment test, the Company compared the fair value of each of the reporting units to its carrying value. The Company determined that the carrying value of the Computing and Graphics reporting...

  • Page 86
    ... 27, 2014 and December 28, 2013 are summarized below: Total Fair Value Cash and Short-Term Cash Marketable Equivalents Securities (In millions) Long-Term Marketable Securities December 27, 2014 Cash ...Level 1(1)(2) Money market funds ...Total level 1 ...Level 2(2)(3) Commercial paper ...Corporate...

  • Page 87
    ...of the Company's fixed income securities from a variety of industry data providers and other third-party sources. The Company's Level 2 long-term investments were valued using broker reports that utilize a third-party professional pricing service that gathers information from multiple market sources...

  • Page 88
    ... The Company's foreign currency derivative contracts are classified within Level 2 because the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets, such as currency spot and forward rates. The following table shows the fair value amounts...

  • Page 89
    ... net impact to the Company's consolidated statements of operations. The Company's fair value hedge derivative contracts are classified within Level 2 because the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets. The following table shows...

  • Page 90
    ... supply the majority of certain types of integrated circuit packages for its internal back-end manufacturing operations. Similarly, certain non-proprietary materials or components such as memory, PCBs, substrates and capacitors used in the manufacture of the Company's graphics products are currently...

  • Page 91
    ...2014 2013 (In millions) Deferred tax assets: Net operating loss carryovers ...Deferred distributor income ...Inventory valuation ...Accrued expenses not currently deductible ...Acquired intangibles ...Tax deductible goodwill ...Federal and state tax credit carryovers ...Foreign capitalized research...

  • Page 92
    ... provision (benefit) for income taxes. 2014 2013 (In millions) 2012 Statutory federal income tax benefit at 35% rate ...State taxes, net of federal benefit ...Foreign (income) expense at other than U.S. rates ...U.S. valuation allowance generated ...Credit monetization ...Provision (benefit) for...

  • Page 93
    ... December 27, 2014, the Canada Revenue Agency, or CRA, had completed its audit of ATI for the years 2005 through 2007 and issued its final Notice of Assessment, which the Company has reviewed and agreed to. The CRA is currently auditing international transactions for the years 2008 through 2010. As...

  • Page 94
    ... 28, 2014 2013 (In millions) 6.00% Notes, net of discount ...8.125% Notes, net of discount ...6.75% Notes ...6.75% Notes, interest rate swap ...7.75% Notes ...7.50% Notes ...7.00% Notes ...Secured Revolving Line of Credit ...Capital lease obligations ...Total debt ...Less: current portion ...Total...

  • Page 95
    ... relative to the last reported sale price of the Company's common stock on April 23, 2007 (the trading date preceding the date of pricing of the 6.00% Notes) of $14.04 per share. The conversion rate will be adjusted for certain anti-dilution events. In addition, the conversion rate will be increased...

  • Page 96
    ... financial conditions are not satisfied; create or permit certain liens; create or permit restrictions on the ability of its subsidiaries to pay dividends or make other distributions to the Company; use the proceeds from sales of assets; enter into certain types of transactions with affiliates; and...

  • Page 97
    ...conditions are not satisfied; creating or permitting certain liens; creating or permitting restrictions on the ability of its subsidiaries to pay dividends or make other distributions to the Company; using the proceeds from sales of assets; entering into certain types of transactions with affiliates...

  • Page 98
    ... financial conditions are not satisfied; create or permit certain liens; create or permit restrictions on the ability of its subsidiaries to pay dividends or make other distributions to the Company; use the proceeds from sales of assets; enter into certain types of transactions with affiliates; and...

  • Page 99
    ...negotiated transactions, either directly or through intermediaries, or by tender offer when the Company believes the market conditions are favorable to do so. Secured Revolving Line of Credit On November 12, 2013, the Company and its subsidiary, AMD International Sales & Service, Ltd. (together, the...

  • Page 100
    ... of 1:1 for each trailing four-fiscal quarter period ending on and after March 29, 2014. At December 27, 2014, the Secured Revolving Line of Credit had an outstanding loan balance of $130 million, with an interest rate of 4.25%, as amended during 2014, $6 million related to outstanding Letters of...

  • Page 101
    ...and notebook processors and chipsets, discrete graphics processing units (GPUs) and professional graphics; and the Enterprise, Embedded and Semi-Custom segment, which primarily includes server and embedded processors, dense servers, semi-custom System-on-Chip (SoC) products, engineering services and...

  • Page 102
    ... activities; and sales, marketing and administrative activities. The Company conducts product and system research and development activities for its products in the United States, with additional design and development engineering teams located in China, Canada, India, Singapore, Taiwan, and...

  • Page 103
    ...of the revenue from these customers was related to products from the Enterprise, Embedded and Semi-Custom segment in 2014 and 2013. In 2012, the majority of the revenue from the customer was related to products from the Computing and Graphics segment. The following table summarizes long-lived assets...

  • Page 104
    ..., 2015, six months after the performance period, and the remaining 50% on June 30, 2016. Target Shares subject to these pRSU awards do not have dividend equivalent rights and do not have the voting rights of common stock until earned and issued, following the end of the applicable requisite service...

  • Page 105
    ... part of the cost of an asset because the cost was immaterial. The Company uses the lattice-binomial model in determining the fair value of the employee stock options. The weighted-average estimated fair value of employee stock options granted for the years ended December 27, 2014, December 28, 2013...

  • Page 106
    ... below: 2014 2013 2012 WeightedWeightedWeightedAverage Average Average Number Fair Number Fair Number Fair of Shares Value of Shares Value of Shares Value (In millions except share price) Unvested balance at beginning of period . . Granted ...Forfeited ...Vested ...Unvested balance at end of period...

  • Page 107
    ... employees' contributions up to 6% of their compensation, to a maximum match of $11,700, $11,475 and $11,250 for 2014, 2013 and 2012, respectively, which is 4.5% (75% of the 6%) of the Internal Revenue Service compensation limit. The Company's contributions to the 401(k) plan for 2014, 2013 and 2012...

  • Page 108
    ... use and service for one year. Subject to certain exceptions, the Company also offers a three-year limited warranty to end users for only those CPU and AMD A-Series APU products purchased as individually packaged products that are commonly referred to as "processors in a box" and for PC workstation...

  • Page 109
    ... 15, 2014, a class action lawsuit captioned Hatamian v. AMD, et al., C.A. No. 3:14-cv-00226 was filed against the Company in the United States District Court for the Northern District of California. The complaint purports to assert claims against the Company and certain individual officers for...

  • Page 110
    ... a restructuring charge of approximately $13 million in 2015, primarily related to real estate actions. 2012 Restructuring Plan In the fourth quarter of 2012, the Company implemented a restructuring plan designed to improve the Company's cost structure and to strengthen its competitiveness in core...

  • Page 111
    ... Restructuring Plan In 2012, the Company recorded an approximately $8 million for severance and costs related to certain employee benefits. The plan was completed as of the end of the first quarter of 2012. The following table provides a summary of the restructuring activities during 2014 and 2013...

  • Page 112
    ... 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 27, 2014, based on criteria established in Internal Control...

  • Page 113
    ....'s internal control over financial reporting as of December 27, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Advanced Micro Devices, Inc.'s management...

  • Page 114
    ...on sale of 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...

  • Page 115
    ... assurance level as of the end of the period covered by this report. Management's Report on Internal Control over Financial Reporting Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and...

  • Page 116
    ... 2014 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 27, 2014, which is included in Part II, Item 8, above. Changes in Internal Control...

  • Page 117
    ... board of directors. See also, "Part 1, Item 1-Web Site Access to Company Reports and Corporate Governance Documents," above. ITEM 11. EXECUTIVE COMPENSATION The information under the captions "Directors' Compensation and Benefits" (including "2014 NonEmployee Director Compensation"), "Compensation...

  • Page 118
    PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 1. Financial Statements The financial statements of AMD are set forth in Item 8 of this Annual Report on Form 10-K. Other than Schedule II, all other schedules have been omitted because the required information is not present or is not present...

  • Page 119
    ..., thereunto duly authorized. February 19, 2015 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 120
    ... governing 6.75% Senior Notes due 2019, between Advanced Micro Devices, Inc. and Wells Fargo Bank, N.A., dated June 16, 2014, filed as Exhibit 4.1 to AMD's Quarterly Report on Form 10-Q for the fiscal quarter ended September 27, 2014, is hereby incorporated by reference. 1996 Stock Incentive Plan...

  • Page 121
    ...the period 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...

  • Page 122
    ... Income Account Plan, as amended and restated, effective July 1, 2012, filed as Exhibit 10.16(a) to AMD's Annual Report on Form 10-K for the period ended December 29, 2012, is hereby incorporated by reference. Form of Indemnity Agreement, between Advanced Micro Devices, Inc. and its officers and...

  • Page 123
    ... 10.5 to AMD's Quarterly Report on Form 10-Q for the period ended October 1, 2011, is hereby incorporated by reference. Sign-On Performance Stock Option Grant Notice, between Advanced Micro Devices, Inc. and Rory P. Read, dated August 25, 2011 filed, as Exhibit 10.6 to AMD's Quarterly Report on Form...

  • Page 124
    ... 2, among Advanced Micro Devices, Inc., GLOBALFOUNDRIES Inc., GLOBALFOUNDRIES U.S. Inc., Advanced Technology Investment Company LLC and ATIC International Investment Company LLC, dated March 4, 2012, filed as Exhibit 10.1 to AMD's Quarterly Report on Form 10-Q for the period ended March 31, 2012, is...

  • Page 125
    ... the Company, AMD International Sales & Service, Ltd., the financial institutions party thereto as lenders and Bank of America, N.A., filed as Exhibit 10.1 to AMD's Current Report on Form 8-K dated December 17, 2014, is hereby incorporated by reference. Offer Letter, between Advanced Micro Devices...

  • Page 126
    SCHEDULE II ADVANCED MICRO DEVICES, INC. VALUATION AND QUALIFYING ACCOUNTS Years Ended December 29, 2012, December 28, 2013 and December 27, 2014 (In millions) Additions Charged (Reductions Credited) To Operations Balance Beginning of Period Deductions(1) Balance End of Period Allowance for ...

  • Page 127
    AMD-55377-A