AMD 2011 Annual Report Download - page 64

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International Sales
International sales as a percentage of net revenue were 93% in 2011, 88% in 2010 and 87% in 2009. We
expect that international sales will continue to be a significant portion of total sales in the foreseeable future.
Substantially all of our sales transactions were denominated in U.S. dollars.
FINANCIAL CONDITION
Liquidity
As of December 31, 2011, our cash, cash equivalents and marketable securities balances remained relatively
flat at $1.8 billion when compared to cash, cash equivalents and marketable securities as of December 25, 2010.
During 2011, we invested $149 million in long-term marketable securities, which we intend to hold for
more than one year, and do not intend to use in current operations. Our long-term marketable securities are
invested in corporate bonds and money market funds that have maximum stated maturities of 2 years. As of
December 31, 2011, the fair value of these long-term marketable securities was $149 million.
As of December 31, 2011, our debt and capital lease obligations were $2 billion, which reflects a debt
discount adjustment of $75 million on our 6.00% Notes and 8.125% Notes. The principal amount outstanding of
our 5.75% Notes of $485 million matures in August 2012. We have classified this amount as current portion of
long term debt on our balance sheet. We may elect to refinance the outstanding amount of our 5.75% Notes, or to
purchase or otherwise retire the outstanding amount of our 5.75% Notes in open market or privately negotiated
transactions, either directly or through intermediaries. Otherwise, we will pay off the outstanding amount of our
5.75% Notes at maturity.
For 2011, our adjusted free cash flow was $528 million. Adjusted free cash flow is a non-GAAP measure,
which we calculated by taking GAAP net cash provided by operating activities of $382 million and adding an
amount of $396 million, which represents payments made by certain of our distributor customers during 2011 to
IBM Credit LLC and certain of its subsidiaries (collectively, the IBM Parties) pursuant to our former accounts
receivable financing arrangement among AMD, certain AMD subsidiaries and the IBM Parties, which we
describe in further detail below. We adjusted the resulting amount of $778 million by subtracting capital
expenditures, which were $250 million for 2011. When compared to adjusted free cash flow of $355 million in
2010, the increase was attributable to a higher GAAP net cash provided by operating activities, which increased
by $794 million, partially offset by an increase of $102 million in capital expenditures, and a decrease of $519
million in payments made by our distributor customers to the IBM Parties in 2011 as compared to 2010. Our
capital expenditures increased in 2011 compared to 2010 primarily due to the implementation of a financial
transformation project to improve operational efficiency and also due to the acquisition of a new data center. We
terminated our financing arrangement with the IBM Parties in February 2011. We did not make any adjustments
to GAAP net cash provided by operating activities related to this financing arrangement in the third or fourth
quarters of 2011 because there were no outstanding invoices, and we do not intend to do so in future periods.
We had various supplier agreements with the IBM Parties pursuant to which we sold invoices of selected
distributor customers. Under this financing arrangement, we did not recognize revenue until our distributors sold
our products to their customers. Under GAAP, we classified funds received from the IBM Parties as debt on the
balance sheet. Moreover, for cash flow purposes, we classified these funds as cash flows from financing
activities. When a distributor paid the applicable IBM Party, we reduced the distributor’s accounts receivable and
the corresponding debt, resulting in a non-cash accounting entry. Because we did not receive the cash from the
distributor to reduce the accounts receivable, the distributor’s payment was never reflected in our cash flows
from operating activities.
Generally, under GAAP, the reduction in accounts receivable is assumed to be a source of operating cash
flow. Therefore, we believe that treating the payments from our distributor customers to the IBM Parties as if we
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