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2012 ANNUAL REPORT ON FORM 10-K

Table of contents

  • Page 1
    2012 ANNUAL REPORT ON FORM 10-K

  • Page 2
    ... combination of AMD's design capabilities, system and fabric IP acquired in the SeaMicro acquisition, and our forthcoming 64bit ARM processors position us well to attack the fastest growing segment of the server market. In the ultra-low power client space, we continue to drive performance-per-watt...

  • Page 3
    ...with an AMD A61450 Quad Core 1.0GHz APU, AMD Radeonâ„¢ HD 8280 series graphics, 2GB DDR3-1066 system memory and Microsoft Windows 7. TEM-2 1/2 the power or twice the compute per-watt based on a comparison of same throughput achieved by 28 traditional 2P Hex Core 1U Westmere rack servers @ 7300 total...

  • Page 4

  • Page 5
    ... ACT OF 1934. For the fiscal year ended December 29, 2012 OR ' TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to Commission File Number 001-07882 ADVANCED MICRO DEVICES, INC. (Exact name of registrant as specified in its...

  • Page 6

  • Page 7
    Advanced Micro Devices, Inc. FORM 10-K For The Fiscal Year Ended December 29, 2012 INDEX PART I ...ITEM 1. ITEM 1A. ITEM 1B. ITEM 2. ITEM 3. ITEM 4. BUSINESS ...RISK FACTORS ...UNRESOLVED STAFF COMMENTS ...PROPERTIES ...LEGAL PROCEEDINGS ...MINE SAFETY DISCLOSURES ...1 1 18 35 35 35 36 37 PART II ...

  • Page 8

  • Page 9
    ...2012, including, cash expenditures, and operational savings; the level of international sales as compared to total sales; our ability to sell our auction rate securities within the next twelve months; that our first ARM technology-based AMD Opteronâ„¢ processor for servers is targeted for production...

  • Page 10
    ... Stock Exchange under the symbol "AMD." Our mailing address and executive offices are located at One AMD Place, Sunnyvale, California 94088, and our telephone number is (408) 749-4000. References in this report to "AMD," "we," "us," "management," "our," or the "Company" mean Advanced Micro Devices...

  • Page 11
    ..., as businesses and consumers require greater performance from their computer systems due to the growth of digital data and increasingly sophisticated software applications, semiconductor companies are designing and developing multi-core microprocessors, where multiple processor cores are placed...

  • 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
    ... connect directly to large data storage systems. In November 2012, we launched the AMD Opteron 6300 Series processor based on "Piledriver," our nextgeneration high performance x86 multi-core architecture. We designed the AMD Opteron 6300 Series processor to balance performance, scalability and cost...

  • Page 14
    ... include low cost, mobility, low power and small form factor. High performance graphics are increasingly important in many embedded systems. Customers of our embedded products include vendors in industrial controls, digital signage, point of sale/self-service kiosks, medical imaging, set-top box and...

  • Page 15
    ... solutions to increase the speed of rendering images and to improve image resolution and color definition. We develop our products for use in desktop and mobile PCs, professional workstations, servers and gaming consoles. With each of our graphics products, we provide drivers and supporting software...

  • Page 16
    ... also launched AMD FirePro A300 APU for entry-level and mainstream desktop workstations for users who require a highperformance computing platform to power their professional applications. In November 2012, we introduced AMD FirePro S10000 server graphics card designed for high-performance computing...

  • Page 17
    ...utilize the parallel stream processing power of the GPU for heavy floating-point computations and to meet the requirements of various industries, such as the high-performance computing and the scientific and financial sectors. Game Consoles. Semiconductor graphics suppliers have leveraged their core...

  • Page 18
    ... performance for digital consumption and creation. These activities include watching HD movies, photo editing, DirectX 11 gaming, multi-tasking, and video editing. VISION FX desktops are based on the AMD FX processor and an AMD Radeon HD 6000, HD 7000 or HD 8000 series graphics card. We designed...

  • Page 19
    ... build and sell board-level products using our technology to system integrators, or SIs, and at retail. Our agreements with AIBs protect their inventory of our products against price reductions. We also sell directly to our SI customers. SIs typically sell from positions of regional or product-based...

  • Page 20
    ...offers supporting software and services. Our ability to compete with companies who use ARMbased solutions depends on our ability to design energy-efficient, high-performing products at an attractive price point. In addition, Nvidia builds custom CPU cores based on ARM architecture to support tablets...

  • Page 21
    ... and gaming and media computing, as well as developing a Heterogeneous System Architecture, which is designed for software developers to easily program APUs by combining scalar processing on the CPU with parallel processing on the GPU, all while providing high bandwidth access to memory at low power...

  • Page 22
    ... more advanced process technology because using more advanced process technology can contribute to lower product manufacturing costs and improve a product's performance and power efficiency. Other Third-Party Manufacturers. party manufacturers. We outsource board-level graphics product manufacturing...

  • Page 23
    ... cross-licensing and technology exchange agreements with other companies under which we both transfer and receive technology and intellectual property rights. One such agreement is the cross-license agreement that we entered into with Intel on November 11, 2009, in connection with the settlement of...

  • Page 24
    ... to treatment, transport, storage and disposal of solid and hazardous wastes. If we fail to comply with any of the applicable environmental regulations we may be subject to fines, suspension of production, alteration of our manufacturing processes, import/export restrictions, sales limitations, and...

  • Page 25
    ... devices but will add additional costs associated with complying with the disclosure requirements, such as costs related to determining the source of any conflict minerals used in our products, auditing the process and reporting to our customers and the US government. Also, since our supply chain...

  • Page 26
    ... and potential 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...

  • Page 27
    ..., ARM-based processors are being used in mobile and embedded electronics products as relatively low cost and small microprocessors and also in form factors such as laptops, tablets and smartphones. Historically, a significant portion of our Computing Solutions revenue has been related to desktop PCs...

  • Page 28
    ... to successfully implement our cost cutting efforts, our business could be materially adversely affected. In the fourth quarter of 2012, we implemented a restructuring plan designed to improve our cost structure and to strengthen our competitiveness in core growth areas. The plan primarily involves...

  • Page 29
    ... quality and at acceptable manufacturing yields and to deliver those products to us on a timely basis and at acceptable prices. The manufacturers we use also fabricate wafers and assemble, test and package products for other companies, including certain of our competitors. They could choose to...

  • Page 30
    ... growing low power or dense server, embedded, and ultraportable and ultra-lowpower markets. Currently, approximately 85% of our business is focused on the legacy PC portions of the market, projected to have slowing growth over the next several years. The goal of our long-term strategy is to drive 40...

  • Page 31
    ... of 2012, we implemented a restructuring plan designed to improve our cost structure and to strengthen our competitiveness in core growth areas. The plan primarily involves a workforce reduction of approximately 14% as well as asset impairments and facility consolidations. If we do not manage these...

  • Page 32
    ... quality of Intel's integrated graphics and the graphics performance of our APUs. Using a more advanced process technology can contribute to lower product manufacturing costs and improve a product's performance and power efficiency. If competitors introduce competitive new products into the market...

  • Page 33
    ... graphics businesses. 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 and GPU offerings. We also rely on our add-in-board partners (AIBs) to support our GPU business...

  • Page 34
    ... in the second half of 2012 was adversely affected, in part, by the overall weakness in the global economy and weak consumer demand for end-user PC products, which impacted sales. We do not expect PC market conditions to improve during the first half of 2013. The growth of our business is also...

  • Page 35
    ... such as memory, printed circuit boards (PCBs), substrates and capacitors used in the manufacture of our graphics products are currently available from only a limited number of sources. Because some of the equipment and materials that we and our third party manufacturing suppliers purchase are...

  • Page 36
    ..., our manufacturing suppliers and to our customers. In addition, we rely on third parties to provide certain information technology services to us, including helpdesk support, desktop application services, business and software support applications, server and storage administration, data center...

  • Page 37
    ... litigation and our reputation and brand could be harmed if our information technology systems are compromised and sensitive or confidential information about our customers, suppliers, partners and other third parties is lost or misappropriated. In addition, our business could be adversely affected...

  • Page 38
    ... limited 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...

  • Page 39
    ... on our business, financial condition, results of operations and cash flow. In addition, the majority of our product sales are denominated in U.S. dollars. Fluctuations in the exchange rate between the U.S. dollar and the local currency can cause increases or decreases in the cost of our products in...

  • Page 40
    ... are purchased outside our authorized distribution channels there is a risk that our customers are buying counterfeit or substandard products, including products that may have been altered, mishandled or damaged, or are used products represented as new. If we cannot adequately protect our technology...

  • Page 41
    ..., alteration of manufacturing processes, import/export restrictions, sales limitations, criminal and civil liabilities or other sanctions. We could also be held liable for any and all consequences arising out of exposure to hazardous materials used, stored, released, disposed of by us or located at...

  • Page 42
    ... devices but will add additional costs associated with complying with the disclosure requirements, such as costs related to determining the source of any conflict minerals used in our products, auditing the process and reporting to our customers and the US government. Also, since our supply chain...

  • Page 43
    ...commonly used in the semiconductor industry in the United States in the wafer fabrication process prior to 1979. In 1991, the Company received Final Site Clean-up Requirements Orders from the California Regional Water Quality Control Board relating to the three sites. We have entered into settlement...

  • Page 44
    ... insurance recoveries in determining the estimated costs of the cleanup. The progress of...financial condition, cash flows or results of operations. Other Matters We are a defendant or plaintiff in various actions that arose in the normal course of business. With respect to these matters, based...

  • Page 45
    ... "AMD") is listed on the New York Stock Exchange. On February 15, 2013, there were 7,082 registered holders of our common stock and the closing price of our common stock was $2.71 per share as reported at New York Stock Exchange. The following table sets forth on a per share basis the high and low...

  • Page 46
    ... of our common stock is no indication of future performance. Comparison of Cumulative Five Year Total Return $150 $100 $50 $0 2007 2008 2009 2010 2011 2012 Advanced Micro Devices, Inc. S&P 500 Index S&P 500 Semiconductors Index Company / Index Base Period 12/28/2007 Years Ending 12/27/2008...

  • Page 47
    ...964 (4) (5) 2012, 2010, 2009 and 2008 consisted of 52 weeks, whereas 2011 consisted of 53 weeks. In 2008, we recorded pre-tax goodwill impairment charges of $1,089 million. In 2009, we entered into a comprehensive settlement agreement with Intel. Pursuant to the settlement agreement, Intel paid...

  • Page 48
    ... wafer purchase commitments for the fourth quarter of 2012. In consideration of this waiver, we agreed to pay GF a fee of $320 million, which resulted in a $273 million lower of cost or market charge recorded in the fourth quarter of 2012. In 2012, 2011 and 2008, we implemented restructuring plans...

  • Page 49
    ... 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. In this MD&A, we will describe the results of operations and the financial condition for Advanced Micro Devices, Inc. and...

  • Page 50
    ... AMD Z-60 APU, codenamed "Hondo," our lowest powered APU designed for the performance tablet and small form factor PC market. We launched our AMD Opteronâ„¢ 3200, 4300 and 3300 Series server processor platforms based on our next-generation "Piledriver" core architecture. We announced AMD's SeaMicro...

  • Page 51
    ... March 4, 2012. Wafer Supply Agreement. The WSA governs the terms by which we purchase products manufactured by GF. Pursuant to the WSA, during 2010, we purchased substantially all of our microprocessor unit (MPU) product requirements from GF. During 2010, we paid GF for wafers on a cost-plus basis...

  • Page 52
    ... to purchase, a fixed number of 45nm and 32nm wafers per quarter in 2011. We paid GF a fixed price for 45nm wafers delivered in 2011. Our price for 32nm wafers varied based on the wafer volumes and manufacturing yield of such wafers and was based on good die. In addition, we also agreed to pay an...

  • Page 53
    ...to GF that matures on December 31, 2013. GF continues to be a related party of AMD. Our expenses related to GF's wafer manufacturing were $1.2 billion, $904 million and $1.2 billion in 2012, 2011 and 2010. Our expenses related to GF's research and development activities were $49 million, $79 million...

  • Page 54
    ... to the presentation of our financial statements and require the most difficult, subjective and complex judgments. Revenue Allowances. We record a provision for estimated sales returns and allowances on product sales for estimated future price reductions and other customer incentives in the same...

  • Page 55
    ... embedded processors; and the Graphics segment, which includes graphics, video and multimedia products developed for use in desktop and notebook computers, including home media PCs, professional workstations and servers as well as revenue received in connection with the development and sale of game...

  • Page 56
    ... APU products for mobile devices increased due to strong demand for our Brazos and Llano-based APU platforms. However, the increase in unit shipments in 2011 was limited by supply constraints with respect to certain microprocessor products manufactured using the 32nm technology node. Chipset...

  • Page 57
    ... of sales decreased primarily due to lower GPU shipments and correspondingly lower manufacturing costs. Marketing, general and administrative expenses and research and development expenses decreased for the reasons set forth under "Expenses" below. Graphics operating income was $51 million in 2011...

  • Page 58
    ... of certain consolidated statement of operations data for 2012, 2011 and 2010. 2012 2011 2010 (In millions, except for percentages) Cost of sales ...Gross margin ...Gross margin percentage ...Research and development ...Marketing, general and administrative ...Legal settlement ...Amortization of...

  • Page 59
    ... in other employee compensation and benefit expense, an $11 million decrease in manufacturing process technology expenses related to GF for our future products and a $9 million decrease in product engineering and design costs. Research and development expenses of $1.5 billion in 2011, increased by...

  • Page 60
    ...to 2011 was due to the reduced amortization base amount of acquired intangible assets. Effects of Restructuring Plans 2012 Restructuring Plan In the fourth quarter of 2012, we implemented a restructuring plan designed to improve our cost structure and to strengthen our competitiveness in core growth...

  • Page 61
    ... employee benefits were lower than previously estimated. The following table provides a summary of each major type of cost associated with the 2012, 2011 and 2008 restructuring plans for the periods presented: 2012 2011 2010 (In millions) Severance and benefits ...Contract or program terminations...

  • Page 62
    ...currency exchange rate fluctuations. Income Taxes We recorded an income tax benefit of $34 million and $4 million in 2012 and 2011 and an income tax provision of $38 million in 2010. The income tax benefit in 2012 was primarily due to a tax benefit of $36 million relating to the SeaMicro acquisition...

  • Page 63
    ... ended December 29, 2012, December 31, 2011 and December 25, 2010 was allocated in our consolidated statements of operations as follows: 2012 2011 2010 (In millions) Cost of sales ...Research and development ...Marketing, general and administrative ...Total stock-based compensation expense, net...

  • Page 64
    ...December 31, 2011. During 2012, we made net cash payments of $281 million to acquire SeaMicro, $250 million related to the limited waiver of exclusively from GF, $105 million related to restructuring activities and $80 million related to GF's waiver of a portion of our wafer purchase commitments for...

  • Page 65
    ... the challenging macroeconomic conditions that we experienced in the second half of 2012 will continue during the first half of 2013. In light of the macroeconomic environment, in the fourth quarter of 2012, we implemented a restructuring plan to reduce our operating expenses and better position us...

  • Page 66
    ... during 2010. Investing Activities Net cash used in investing activities was $19 million in 2012. We had a net cash inflow of $404 million from purchase, sale and maturity of available-for-sale securities, partially offset by a net cash outflow of $281 million related to the acquisition of SeaMicro...

  • Page 67
    ... Canadian government for research 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...

  • Page 68
    ... Consolidated Financial Statements," below, for additional information regarding the 6.00% Notes. 8.125% Senior Notes Due 2017 On November 30, 2009, we issued $500 million of the 8.125% Notes at a discount of 10.204%. The 8.125% Notes are our general unsecured senior obligations. Interest is payable...

  • Page 69
    ... carrying value was approximately $464 million, net of debt discount of $36 million. See Note 10 of "Notes to Consolidated Financial Statements" below, for additional information regarding the 8.125% Notes. 7.75% Senior Notes Due 2020 On August 4, 2010, we issued $500 million of the 7.75% Notes. The...

  • Page 70
    ... of our wafer purchase commitments for 2013 and $250 million for the first quarter of 2014 and other payables under the WSA as described below. Under the second amendment to the WSA, GF granted us certain rights to contract with another wafer foundry supplier with respect to specified products for...

  • Page 71
    ... is no longer outstanding. Under the third amendment to the WSA, GF agreed to waive a portion of our wafer purchase commitments for the fourth quarter of 2012. In consideration of this waiver, we agreed to pay GF a fee of $320 million. Of the $320 million fee, we paid $80 million as of December 29...

  • Page 72
    ... funds by limiting default risk and market risk. We actively monitor market conditions and developments specific to the securities and security classes in which we invest. We believe that we take a conservative approach to investing our funds in that we invest only in highly-rated debt securities...

  • Page 73
    ... 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 to mitigate the risks associated with changes in foreign currency exchange rates. This strategy takes into consideration...

  • Page 74
    ...months. December 29, 2012 December 31, 2011 Average Estimated Average Estimated Notional Contract Fair Value Notional Contract Fair Value Amount Rate Gain (Loss) Amount Rate Gain (Loss) (In millions except contract rates) Foreign currency forward contracts: Canadian Dollar ...Euro ...Total ... $142...

  • Page 75
    ... DATA Advanced Micro Devices, Inc. Consolidated Statements of Operations Year Ended December 29, December 31, December 25, 2012 2011 2010 (In millions, except per share amounts) Net revenue ...Cost of sales ...Gross margin ...Research and development ...Marketing, general and administrative...

  • Page 76
    Advanced Micro Devices, Inc. Consolidated Statements of Comprehensive Income (Loss) December 29, 2012 Year Ended December 31, 2011 (In millions) December 25, 2010 Net income (loss) ...Other comprehensive income (loss): Unrealized gains (losses) on available-for-sale... financial statements. 68

  • Page 77
    ... ...Treasury stock, at cost (9 shares on December 29, 2012 and December 31, 2011) ...Accumulated deficit ...Accumulated other comprehensive loss ...Total stockholders' equity ...Total liabilities and stockholders' equity ...See accompanying notes to consolidated financial statements. 69 $ 549 453...

  • Page 78
    Advanced Micro Devices, Inc. Consolidated Statements of Stockholders' Equity Three Years Ended December 29, 2012 (In millions) Accumulated Number Additional other Total of Common paid-in Treasury Accumulated comprehensive stockholders' shares Stock capital stock deficit income (loss) equity ...

  • Page 79
    ... accrued liabilities and other ...Payable to GLOBALFOUNDRIES ...Net cash provided by (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 and equipment...

  • Page 80
    ...) 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...

  • Page 81
    ... 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 specific product advertising or marketing and promotional...

  • Page 82
    ... end users for only those CPU and AMD A-Series APU products that are commonly referred to as "processors in a box" and has also offered extended limited warranties to certain customers of "tray" microprocessor products and/or workstation graphics products who have written agreements with the Company...

  • Page 83
    ...costs at the time of sale of warranted products. Foreign Currency Translation/Transactions. The functional currency of all of the Company's foreign subsidiaries is the U.S. dollar. Assets and liabilities denominated in non-U.S. dollars have been remeasured into U.S. dollars at current exchange rates...

  • Page 84
    .... The application of the 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...

  • Page 85
    ... costs, take advantage of operating synergies and market wafer fabrications services on a collective basis. In order to allow for the signing of the MOA on December 28, 2009, prior to obtaining any regulatory approvals, the Company agreed to irrevocably waive rights under the Shareholders Agreement...

  • Page 86
    ...on its consolidated statement of operations. Contribution Agreement, Funding and Accounting in 2011 GLOBALFOUNDRIES Singapore Pte. Ltd. (GFS, formerly Chartered) Contribution in 2011 On December 27, 2010, pursuant to the Contribution Agreement, ATIC International Investment Company LLC, an affiliate...

  • Page 87
    ...number of 45nm and 32nm wafers per quarter in 2011. The Company paid GF a fixed price for 45nm wafers delivered in 2011. The Company's price for 32nm wafers varied based on the wafer volumes and manufacturing yield of such wafers and was based on good die. In addition, the Company also agreed to pay...

  • Page 88
    ...2012, 2011 and 2010. NOTE 4: Acquisition On March 23, 2012, AMD acquired SeaMicro, Inc. (SeaMicro), a privately held company that produces energy-efficient, high-bandwidth microservers. Through the acquisition of SeaMicro, AMD plans to accelerate its strategy to deliver disruptive server technology...

  • Page 89
    ... 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 inprocess research and development projects, which were incomplete at the time of the acquisition...

  • Page 90
    ... below summarizes the combined results of operations of AMD and SeaMicro during 2012 and 2011 as though the acquisition had occurred as of the beginning of the comparable prior annual reporting period. The pro forma financial information also includes certain adjustments such as amortization expense...

  • Page 91
    ... and $256 million, respectively. Accrued liabilities December 29, December 31, 2012 2011 (In millions) Accrued compensation and benefits ...Marketing programs and advertising expenses ...Software technology and licenses payable ...Other ...Total accrued liabilities ...NOTE 6: Goodwill and Acquired...

  • Page 92
    ... research and development Game console royalty agreements Trademark and trade name Developed technology Customer relationships Total Intangible assets, net as of December 25, 2010 ...Amortization expense ...Intangible assets, net as of December 31, 2011 ...Addition due to SeaMicro acquisition...

  • Page 93
    ... The amortized cost of available-for-sale securities approximates the fair value for the periods presented. At December 29, 2012 and December 31, 2011, the Company had approximately $10 million of availablefor-sale investments in money market funds used as collateral for leased buildings and letter...

  • Page 94
    During 2012 and 2011, the Company invested $32 million and $149 million, respectively, in long-term marketable securities, which the Company intends to hold greater than one year, and does not intend to use in current operations. All contractual maturities of the Company's available-for-sale ...

  • Page 95
    ... measurement 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 29, 2012 Assets Classified as cash equivalents: Money market funds ...Commercial...

  • Page 96
    ... income securities from a variety of industry data providers and other third-party sources. The Company's Level 2 long-term investments are valued using broker reports that utilize a third party professional pricing service who gathers information from multiple market sources and integrates relevant...

  • Page 97
    ...in repurchase agreements must have securities of the type and quality listed above as collateral. The Company believes that concentrations of credit risk with respect to trade receivables are limited because a large number of geographically diverse customers make up the Company's customer base, thus...

  • Page 98
    ... or components such as memory, PCBs, substrates and capacitors used in the manufacture of the Company's graphics products are currently available from only a limited number of sources. Interruption of supply or increased demand in the industry could cause shortages and price increases in various...

  • Page 99
    ... assets and liabilities for financial reporting purposes and the balances for income tax purposes. Significant components of the Company's deferred tax assets and liabilities as of December 29, 2012 and December 31, 2011 are as follows: December 29, December 31, 2012 2011 (In millions) Deferred tax...

  • Page 100
    ... $135 N/A N/A 2013 to 2032 2018 to 2031 2025 to 2028 2012 to 2032 no expiration 2013 to 2017 various Utilization of $123 million of the Company's U.S. federal net operating loss carryforwards are subject to annual limitations as a result of the SeaMicro acquisition and prior purchase transactions...

  • Page 101
    ... other than U.S. rates ...US valuation allowance generated ...Credit monetization ...2011 Statutory federal income tax expense ...State taxes, net of federal benefit ...Foreign income at other than U.S. rates ...US valuation allowance utilized ...Credit monetization ...2010 Statutory federal income...

  • Page 102
    ...$ 69 $ 166 - (8) 7 (119) (4) $ 42 The amount of unrecognized tax benefits that would impact the effective tax rate was $2 million, $4 million, and $8 million as of December 29, 2012, December 31, 2011 and December 25, 2010, respectively. The Company had accrued interest related to unrecognized tax...

  • Page 103
    ...share. This initial conversion price represents a premium of 50% relative to the last reported sale price of the Company's common stock on August 8, 2007 (the trading date preceding the date of pricing of the 5.75% Notes) of $13.42 per share. This initial conversion rate will be adjusted for certain...

  • Page 104
    ...based on an initial conversion rate of 35.6125 shares of common stock per $1,000 principal amount of 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...

  • Page 105
    ... and will be amortized to interest expense over the life of the 8.125% Notes using the effective interest method. The 8.125% Notes are governed by the terms of an indenture (the 8.125% Indenture) dated November 30, 2009 between the Company and Wells Fargo Bank, National Association, as Trustee. As...

  • Page 106
    ... 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; and consolidating, merging or selling the...

  • Page 107
    ... 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 consolidate, merge or sell its assets as entirety...

  • Page 108
    ..., 2011, respectively. Future Payments on Long Term Debt and Capital Lease Obligations As of December 29, 2012, the Company's future long term debt and capital lease payment obligations were as follows: Long Term Debt (Principal Capital only) Leases (In millions) 2013 ...2014 ...2015 ...2016 ...2017...

  • Page 109
    ..., video and multimedia products developed for use in desktop and notebook computers, including home media PCs, professional workstations and servers as well as revenue received in connection with the development and sale of game console systems that incorporate the Company's graphics technology...

  • Page 110
    ..., nor does management evaluate operating segments using discrete asset information. The Company's operations outside the United States include research and development activities, back end manufacturing and sales, marketing and administrative activities. The Company conducts product and system...

  • Page 111
    ..., December 31, 2012 2011 (In millions) United States ...Malaysia ...Greater China ...Singapore ...Other countries ...Total long-lived assets ... $417 66 59 37 79 $658 $455 70 60 56 85 $726 NOTE 13: Stock-Based Incentive Compensation Plans The Company's stock-based incentive programs are intended...

  • Page 112
    ... statements of operations as follows: 2012 2011 2010 (In millions) Cost of sales ...Research and development ...Marketing, general, and administrative ...Total stock-based compensation expense, net of tax of $0 ... $ 8 52 37 $97 $ 6 46 38 $90 $ 4 46 37 $87 During 2012, 2011 and 2010, the Company...

  • Page 113
    ...: 2012 2011 2010 Expected volatility ...Risk-free interest rate ...Expected dividends ...Expected life (in years) ... 56.24% 54.82% 55.97% 0.52% 1.60% 1.34% - - - 3.79 3.75 3.71 The Company used a combination of the historical volatility of its common stock and the implied volatility for publicly...

  • Page 114
    ...025 for 2012, 2011 and 2010, 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 were approximately $22 million in 2012, $20 million in 2011 and $9 million in 2010. In 2009, as part of its cost cutting efforts...

  • Page 115
    ... end users for only those CPU and AMD A-Series APU products that are commonly referred to as "processors in a box" and has also offered extended limited warranties to certain customers of "tray" microprocessor products and/or workstation graphics products who have written agreements with the Company...

  • Page 116
    ... used in the semiconductor industry in the United States in the wafer fabrication process prior to 1979. In 1991, the Company received Final Site Clean-up Requirements Orders from the California Regional Water Quality Control Board relating to the three sites. The Company has entered into settlement...

  • Page 117
    NOTE 17: Restructuring 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 growth areas. The plan primarily involves a workforce reduction of approximately ...

  • Page 118
    ...the consolidated statement of operations as follows: 2012 2011 (In millions) Foreign Currency Forward Contracts Contracts designated as cash flow hedging instruments Other comprehensive income (loss) ...Research and development ...Marketing, general and administrative ...Contracts not designated as...

  • Page 119
    ... 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 29, 2012, based on criteria established in Internal Control...

  • Page 120
    Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders of Advanced Micro Devices, Inc. We have audited Advanced Micro Devices, Inc.'s internal control over financial reporting as of December 29, 2012, based on criteria established in Internal Control-...

  • Page 121
    ...quarter of 2011 consisted of 14 weeks. (In millions, except per share amounts) 2012 2011 Sep. 29 Jun. 30 Mar. 31 Dec. 31 Oct. 1 Jul. 2 Dec. 29 Apr. 2 Net revenue ...$1,155 $1,269 $1,413 $1,585 Cost of sales(1) ...977 877 775 1,558 Gross margin ...178 392 638 27 Research and development ...313 328...

  • Page 122
    ... GF. During the first quarter of 2012, the Company recorded an income tax provision benefit of $32 million relating to the SeaMicro acquisition. As of the beginning of 2011, the Company changed the method of accounting for its investment GF from the equity method to the cost method of accounting. As...

  • Page 123
    ... of management and directors of the Company; and (3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements. Internal control over financial reporting...

  • Page 124
    ... the effectiveness of the Company's internal control over financial reporting. Management has concluded that the Company's internal control over financial reporting was effective as of December 29, 2012 at the reasonable assurance level. Our independent registered public accounting firm, Ernst...

  • Page 125
    ... of Plan-Based Awards in 2012 and Option Exercises and Stock Vested in 2012), and "Change in Control Arrangements" in our 2013 Proxy Statement is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information...

  • Page 126
    ...The following is a list of such Exhibits: Exhibit Number Description of Exhibits **2.1 Asset Purchase Agreement by and among Broadcom Corporation, Broadcom International Limited, and Advanced Micro Devices, Inc., dated August 25, 2008 filed as Exhibit 2.1 to AMD's Quarterly Report on Form 10-Q for...

  • Page 127
    ... Unit Agreement Non-U.S. Restricted Stock Unit Award Advanced Micro Devices, Inc. 2004 Equity Incentive Plan filed as Exhibit 10.3 to AMD's Quarterly Report on Form 10-Q for the period ended June 27, 2009, is hereby incorporated by reference. Form of Terms and Conditions For Participants Located in...

  • Page 128
    ..., 2007, is hereby incorporated by reference. Master Transaction Agreement by and among Advanced Micro Devices, Inc., Advanced Technology Investment Company LLC and West Coast Hitech L.P. dated October 6, 2008 filed as Exhibit 10.1 to AMD's Current Report on Form 8-K dated October 16, 2008, is hereby...

  • Page 129
    ... Micro Devices, Inc., Advanced Technology Investment Company LLC and GLOBALFOUNDRIES Inc. dated December 27, 2010 filed as Exhibit 10.45(a) to AMD's Annual Report on Form 10-K for the fiscal year ended December 25, 2010 is hereby incorporated by reference. Wafer Supply Agreement dated March 2, 2009...

  • Page 130
    ..., 2012, is hereby incorporated by reference. Settlement Agreement dated November 17, 2009 between Advanced Micro Devices, Inc. and Intel Corporation filed as Exhibit 10.1 to AMD's Current Report on Form 8-K dated November 17, 2009, is hereby incorporated by reference. Patent Cross License Agreement...

  • Page 131
    ... 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. List of AMD subsidiaries. Consent of Independent Registered Public Accounting Firm. Power...

  • Page 132
    ... Linkbase Document Management contracts and compensatory plans or arrangements. Portions of this Exhibit have been omitted pursuant to a request for confidential treatment, which has been granted. These portions have been filed separately with the Securities and Exchange Commission. *** Portions...

  • Page 133
    ..., thereunto duly authorized. February 21, 2013 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 134
    Signature Title Date * Robert B. Palmer Director February 21, 2013 Director February 21, 2013 * Ahmed Yahia *By: /s/ DEVINDER KUMAR (Devinder Kumar, Attorney-in-Fact) 126

  • Page 135
    SCHEDULE II ADVANCED MICRO DEVICES, INC. VALUATION AND QUALIFYING ACCOUNTS Years Ended December 25, 2010, December 31, 2011 and December 29, 2012 (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-53110-A