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Total stockholders’ equity
54,750
7,497
Total liabilities and stockholders’ equity
$
67,580
$
12,419
See accompanying notes to consolidated financial statements.
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Advanced Micro Devices, Inc.
Consolidated Statements of Stockholders’ Equity
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Capital stock
Common stock
Balance, beginning of period
$
12
$
12
$
12
Issuance of common stock as consideration for acquisition
4
—
—
Balance, end of period
$
16
$
12
$
12
Additional paid-in capital
Balance, beginning of period
$
11,069
$
10,544
$
9,963
Common stock issued under employee equity plans
167
104
85
Stock-based compensation
1,080
379
274
Issuance of common stock to settle convertible debt
—
25
217
Issuance of common stock as consideration for acquisition
45,372
—
—
Fair value of replacement share-based awards related to acquisition
275
—
—
Issuance of common stock warrants
42
17
5
Balance, end of period
$
58,005
$
11,069
$
10,544
Treasury stock
Balance, beginning of period
$
(2,130)
$
(131)
$
(53)
Repurchases of common stock
(3,702)
(1,762)
—
Reissuance of treasury stock as consideration for acquisition
3,138
—
—
Common stock repurchases for tax withholding on employee equity plans
(405)
(237)
(78)
Balance, end of period
$
(3,099)
$
(2,130)
$
(131)
Accumulated deficit
Balance, beginning of period
$
(1,451)
$
(4,605)
$
(7,095)
Cumulative effect of adoption of accounting standard
—
(8)
—
Net income
1,320
3,162
2,490
Balance, end of period
$
(131)
$
(1,451)
$
(4,605)
Accumulated other comprehensive income (loss)
Balance, beginning of period
$
(3)
$
17
$
—
Other comprehensive income (loss)
(38)
(20)
17
Balance, end of period
$
(41)
$
(3)
$
17
Total stockholders' equity
$
54,750
$
7,497
$
5,837
See accompanying notes to consolidated financial statements.
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Advanced Micro Devices, Inc.
Consolidated Statements of Cash Flows
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Cash flows from operating activities:
Net income
$
1,320
$
3,162
$
2,490
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
4,174
407
312
Stock-based compensation
1,081
379
274
Amortization of debt discount and issuance costs
—
5
14
Amortization of operating lease right-of-use assets
88
56
42
Amortization of inventory fair value adjustment
189
—
—
Loss on debt redemption, repurchase and conversion
—
7
54
Loss on sale or disposal of property and equipment
16
34
33
Deferred income taxes
(1,505)
308
(1,223)
(Gains) losses on equity investments, net
62
(56)
(2)
Other
(14)
(7)
8
Changes in operating assets and liabilities:
Accounts receivable, net
(1,091)
(640)
(219)
Inventories
(1,401)
(556)
(417)
Receivables from related parties
(13)
8
10
Prepaid expenses and other assets
(1,197)
(920)
(231)
Payables to related parties
379
7
(135)
Accounts payable
931
801
(513)
Accrued liabilities and other
546
526
574
Net cash provided by operating activities
3,565
3,521
1,071
Cash flows from investing activities:
Purchases of property and equipment
(450)
(301)
(294)
Purchases of short-term investments
(2,667)
(2,056)
(850)
Proceeds from maturity of short-term investments
4,310
1,678
192
Cash received from acquisition of Xilinx
2,366
—
—
Acquisition of Pensando, net of cash acquired
(1,544)
—
—
Other
(16)
(7)
—
Net cash provided by (used in) investing activities
1,999
(686)
(952)
Cash flows from financing activities:
Proceeds from debt, net of issuance costs
991
—
200
Repayment of debt
(312)
—
(200)
Proceeds from sales of common stock through employee equity plans
167
104
85
Repurchases of common stock
(3,702)
(1,762)
—
Common stock repurchases for tax withholding on employee equity plans
(406)
(237)
(78)
Other
(2)
—
(1)
Net cash (used in) provided by financing activities
(3,264)
(1,895)
6
Net increase in cash and cash equivalents
2,300
940
125
Cash and cash equivalents at beginning of year
2,535
1,595
1,470
Cash and cash equivalents at end of year
$
4,835
$
2,535
$
1,595
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Advanced Micro Devices, Inc.
Consolidated Statements of Cash Flows
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Supplemental cash flow information:
Cash paid during the year for:
Interest
$
85
$
25
$
31
Income taxes, net of refund
$
685
$
35
$
8
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid
$
157
$
72
$
31
Issuance of common stock to settle convertible debt
$
—
$
25
$
217
Issuance of common stock and treasury stock for the acquisition of Xilinx
$
48,514
$
—
$
—
Fair value of replacement share-based awards related to acquisition of Xilinx
$
275
$
—
$
—
Transfer of assets for the acquisition of property and equipment
$
13
$
37
$
111
Non-cash activities for leases:
Operating lease right-of-use assets acquired by assuming related liabilities
$
115
$
227
$
45
See accompanying notes to consolidated financial statements.
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Advanced Micro Devices, Inc.
Notes to Consolidated Financial Statements
NOTE 1 – The Company
Advanced Micro Devices, Inc. is a global semiconductor company. References herein to AMD or the Company mean Advanced Micro Devices, Inc. and its
consolidated subsidiaries. AMD’s products include x86 microprocessors (CPUs) and graphics processing units (GPUs), as standalone devices or as
incorporated into accelerated processing units (APUs), chipsets, data center and professional GPUs, embedded processors, semi-custom System-on-Chip
(SoC) products, microprocessor and SoC development services and technology, data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), and
Adaptive SoC products. From time to time, the Company may also sell or license portions of its intellectual property (IP) portfolio.
On February 14, 2022 (the Xilinx Acquisition Date), the Company completed the acquisition of Xilinx, Inc. (Xilinx). On May 26, 2022 (the Pensando Acquisition
Date), the Company completed the acquisition of Pensando Systems, Inc. (Pensando). See Note 5 - Business Combinations for additional information on these
acquisitions.
NOTE 2 – Basis of Presentation and Significant Accounting Policies
Fiscal Year. The Company uses a 52- or 53-week fiscal year ending on the last Saturday in December. Fiscal 2022, 2021 and 2020 ended on December 31,
2022, December 25, 2021 and December 26, 2020, respectively. Fiscal 2022 consisted of 53 weeks, and fiscal 2021 and 2020 each consisted of 52 weeks.
Principles of Consolidation. The consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries. Upon
consolidation, all inter-company accounts and transactions have been eliminated.
Reclassification. Certain prior period amounts have been reclassified to conform to current period presentation.
Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at
the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results are likely to differ from
those estimates, and such differences may be material to the financial statements. Areas where management uses subjective judgment include, but are not
limited to, revenue allowances, inventory valuation, valuation of goodwill and long-lived and intangible assets, and income taxes.
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the
Company expects to receive in exchange for those goods or services. Sales, value-added, and other taxes collected concurrently with the provision of goods or
services are excluded from revenue. Shipping and handling costs associated with product sales are included in cost of sales. Substantially all the Company’s
revenue is derived from product sales, representing a single performance obligation.
Customers are generally required to pay for products and services within the Company’s standard contractual terms, which are typically net 30 to 60 days. The
Company has determined that it does not have significant financing components in its contracts with customers.
Non-custom products
The Company transfers control and recognizes revenue when non-custom products are shipped to customers, which includes original equipment
manufacturers (OEM) and distributors, in accordance with the shipping terms of the sale. Non-custom product arrangements generally comprise a single
performance obligation. Certain OEMs may be entitled to rights of return and rebates under OEM agreements. The Company also sells to distributors under
terms allowing the majority of distributors certain rights of return and price protection on unsold merchandise held by them. The Company estimates the amount
of variable consideration under OEM and distributor arrangements and, accordingly, records a provision for product returns, allowances for price protection and
rebates based on actual historical experience and any known events.
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The Company offers incentive programs to certain customers, including cooperative advertising, marketing promotions, volume-based incentives and special
pricing arrangements. Where funds provided for such programs can be estimated, the Company recognizes a reduction to revenue at the time the related
revenue is recognized; otherwise, the Company recognizes such reduction to revenue at the later of when: i) the related revenue transaction occurs; or ii) the
program is offered. 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 activities, such amounts are recognized as a reduction to revenue unless they qualify for expense recognition.
Constraints of variable consideration have not been material.
Custom products
Custom products which are associated with the Company’s Gaming segment (semi-custom products), sold under non-cancellable purchases orders, for which
the Company has an enforceable right to payment, and which have no alternative use to the Company at contract inception, are recognized as revenue, over
the time of production of the products by the Company. The Company utilizes a cost-based input method, calculated as cost incurred plus estimated margin, to
determine the amount of revenue to recognize for in-process, but incomplete, customer orders at a reporting date. The Company believes that a cost-based
input method is the most appropriate manner to measure how the Company satisfies its performance obligations to customers because the effort and costs
incurred best depict the Company’s satisfaction of its performance obligation.
Sales of semi-custom products are not subject to a right of return. Custom products arrangements generally involve a single performance obligation. There are
no variable consideration estimates associated with custom products.
Development and intellectual property licensing agreements
From time to time, the Company may enter into arrangements with customers that combine the provision of development services and a license to the right to
use the Company’s IP. These arrangements are deemed to be single or multiple performance obligations based upon the nature of the arrangements. Revenue
is recognized upon the transfer of control, over time or at a point in time, depending on the nature of the arrangements. The Company evaluates whether the
licensing component is distinct. A licensing component is distinct if it is both (i) capable of being distinct and (ii) distinct in the context of the arrangement. If the
license is not distinct, it is combined with the development services as a single performance obligation and recognized over time. If the license is distinct,
revenue is recognized at a point in time when the customer has the ability to benefit from the license.
From time to time, the Company may enter into arrangements with customers that solely involve the sale or licensing of its patents or IP. Generally, there are no
performance obligations beyond transferring the designated license to the Company’s patents or IP. Accordingly, revenue is recognized at a point in time when
the customer has the ability to benefit from the license.
There are no variable consideration estimates associated with either combined development and IP arrangements or for standalone arrangements involving
either the sale or licensing of IP.
Inventories
The Company values inventory at standard cost, adjusted to approximate the lower of actual cost or estimated net realizable value using assumptions about
future demand and market conditions. In determining excess or obsolescence reserves for its products, the Company considers assumptions such as changes
in business and economic conditions, other-than-temporary decreases in demand for its products, and changes in technology or customer requirements. In
determining the lower of cost or net realizable value reserves, the Company considers assumptions such as recent historical sales activity and selling prices, as
well as estimates of future selling prices. The Company fully reserves for inventories and non-cancellable purchase orders for inventory deemed obsolete. The
Company performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances and non-cancellable purchase
orders to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or
market conditions become less favorable than those projected by the Company, additional inventory carrying value adjustments may be required.
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Business Combinations
The Company is required to use the acquisition method of accounting for business combinations. The acquisition method of accounting requires the Company
to allocate the purchase consideration to the assets acquired and liabilities assumed from the acquiree based on their respective fair values as of the
acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as
goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially
with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future revenue growth rates and
margins, future changes in technology, time to recreate customer relationships, useful lives, and discount rates. Fair value estimates are based on the
assumptions that management believes a market participant would use in pricing the asset or liability. These estimates are inherently uncertain and, therefore,
actual results may differ from the estimates made. As a result, during the measurement period of up to one year from the acquisition date, the Company may
record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or
final determination of the fair value of the purchase price of an acquisition, whichever comes first, any subsequent adjustments are recorded in the
Consolidated Statements of Operations.
Goodwill
The Company performs its goodwill impairment analysis as of the first day of the fourth quarter of each year and, if certain events or circumstances indicate that
an impairment loss may have been incurred, on a more frequent basis. The analysis may include both qualitative and quantitative factors to assess the
likelihood of an impairment.
The Company has the option to first perform qualitative testing to determine if it is more likely than not that the fair value of a reporting unit exceeds its carrying
amount. Qualitative factors include industry and market considerations, overall financial performance, share price trends and market capitalization and
Company-specific events. If the Company concludes it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, the Company
does not proceed to perform a quantitative impairment test.
If the Company concludes it is more likely than not that the fair value of a reporting unit is less than its carrying value or elects to bypass the qualitative test, a
quantitative goodwill impairment test will be performed by comparing the fair value of each reporting unit to its carrying value. The Company’s quantitative
impairment analysis uses a combination of the income approach, which requires estimates of the present value of expected future cash flows of a reporting
unit, and the market approach, which uses financial ratios of comparable companies to arrive at an estimated value for the reporting units. Significant estimates
and assumptions used in the income approach include assessments of macroeconomic conditions, growth rates of reporting units in the near- and long-term,
expectations of the Company’s ability to execute on roadmaps and projections, and the discount rate applied to cash flows. Significant estimates used in the
market approach include the identification of comparable companies for each reporting unit, and the determination of the appropriate multiples to apply to a
reporting unit based on adjustments and consideration of specific attributes of that reporting unit. If a reporting unit’s fair value is determined to be less than its
carrying value, a goodwill impairment charge is recognized for the amount by which the reporting unit’s fair value is less than its carrying value, not to exceed
the total amount of goodwill allocated to that reporting unit.
Long-Lived and Intangible Assets
Long-lived and intangible assets to be held and used are reviewed for impairment if indicators of potential impairment exist and at least annually for indefinite-
lived intangible assets. Impairment indicators are reviewed on a quarterly basis. Assets are grouped and evaluated for impairment at the lowest level of
identifiable cash flows.
When indicators of impairment exist and assets are held for use, the Company estimates future undiscounted cash flows attributable to the related asset
groups. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated
fair values based on the expected discounted future cash flows attributable to the asset group or based on appraisals. Factors affecting impairment of assets
held for use include the ability of the specific assets to generate separately identifiable positive cash flows.
When assets are removed from operations and held for sale, the Company estimates impairment losses as the excess of the carrying value of the assets over
their fair value. Market conditions are among the factors affecting impairment of assets held for sale. Changes in any of these factors could necessitate
impairment recognition in future periods for assets held for use or assets held for sale.
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Cash Equivalents
Cash equivalents consist of financial instruments that are readily convertible into cash and have original maturities of three months or less at the time of
purchase.
Accounts Receivable
Accounts receivable are primarily comprised of trade receivables presented net of rebates, price protection and an allowance for credit loss. Accounts
receivable also include unbilled receivables, which primarily represent work completed on development services recognized as revenue but not yet invoiced to
customers and semi-custom products under non-cancellable purchase orders that have no alternative use to the Company at contract inception, for which
revenue has been recognized but not yet invoiced to customers. All unbilled accounts receivables are expected to be billed and collected within twelve months.
The Company manages its exposure to customer credit risk through credit limits, credit lines, ongoing 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 payments if deemed necessary. The Company maintains an allowance for credit loss,
consisting of known specific troubled accounts as well as an amount based on overall estimated potential uncollectible accounts receivable based on historical
experience and review of their current credit quality. The Company does not believe the receivable balance from its customers represents a significant credit
risk.
Investments
Available for Sale Debt Securities. The Company classifies its investments in debt securities at the date of acquisition as available-for-sale. Available-for-sale
debt securities are reported at fair value with the related unrealized gains and losses included, net of tax, in accumulated other comprehensive income (loss), a
component of stockholders’ equity. If an available-for-sale debt security’s fair value is less than its amortized cost basis, then the Company evaluates whether
the decline is the result of a credit loss, in which case an impairment is recorded through an allowance for credit losses. Unrealized gains and losses not
attributable to credit losses are included, net of tax, in accumulated other comprehensive income (loss), a component of stockholders’ equity. Classification of
available-for-sale debt securities as current or non-current is based on the Company’s intent and belief in its ability to sell these securities and use the proceeds
from sale in operations within 12 months.
Non-marketable Securities. The Company’s investments in non-marketable securities of privately-held companies are accounted for under the measurement
alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and are periodically assessed for impairment when events or
circumstances indicate that a decline in value may have occurred. The Company's periodic assessment of impairment is made by considering available
evidence, including the investee’s general market and industry conditions and product development status. The Company also assesses the investee’s ability to
meet business milestones, its financial condition, and near-term prospects, including the rate at which the investee is using its cash, the investee’s need for
possible additional funding at a lower valuation and any bona fide offer to purchase the investee.
Fair Value Measurements
The Company’s financial instruments are measured and recorded at fair value on a recurring basis, except for non-marketable equity investments in privately-
held companies, which are generally accounted for under the measurement alternative.
Fair Value Hierarchy
The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or
liabilities. The guidance for fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following
categories:
Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices
for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data
for substantially the full term of the asset or liability.
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Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the
fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted
cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of one to 15 years
for equipment, 34 to 44 years for buildings, and leasehold improvements are measured by the shorter of the remaining terms of the leases or the estimated
useful economic lives of the improvements.
Leases
Operating and finance leases are recorded as right-of-use (ROU) assets and lease liabilities on the Company’s balance sheet. ROU assets represent the
Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the
lease. Operating and finance lease ROU assets and liabilities are initially recognized based on the present value of lease payments over the lease term. In
determining the present value of lease payments, the Company uses the implicit interest rate if readily determinable. When the implicit interest rate is not
readily determinable, the Company uses its incremental borrowing rate, which is based on its collateralized borrowing capabilities over a similar term of the
lease payments. The Company utilizes the consolidated group incremental borrowing rate for all leases as the Company has centralized treasury operations.
Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. The Company has elected the accounting policy to not
recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Operating leases are included
in operating lease ROU assets, other current liabilities, and long-term operating lease liabilities on the Company’s consolidated balance sheets. The Company’s
finance leases are immaterial.
Foreign Currency Translation/Transactions
The functional currency of the majority of the Company’s foreign subsidiaries is the U.S. dollar. For certain foreign subsidiaries where the local currency is the
functional currency, assets and liabilities are translated from foreign currencies into U.S. dollars. Gains or losses arising from translation of foreign currency
denominated assets and liabilities (i.e., cumulative translation adjustment) are included as a component of accumulated other comprehensive income (loss) in
stockholders' equity.
Assets and liabilities denominated in non-U.S. dollars have been remeasured into U.S. dollars at current exchange rates for monetary assets and liabilities and
historical exchange rates for non-monetary assets and liabilities. Non-U.S. dollar denominated transactions have been remeasured at average exchange rates
in effect during each period, except for those cost of sales and expense transactions related to non-monetary balance sheet amounts which have been
remeasured at historical exchange rates. The gains or losses from foreign currency remeasurement are included in earnings.
Marketing and Advertising Expenses
Advertising costs are expensed as incurred. In addition, the Company’s marketing and advertising expenses include certain cooperative advertising funding
obligations under customer incentive programs, which costs are recorded upon agreement with customers and vendor partners. Cooperative advertising
expenses are recorded as marketing, general and administrative expense to the extent the cash paid does not exceed the estimated fair value of the
advertising benefit received. Any excess of cash paid over the estimated fair value of the advertising benefit received is recorded as a reduction of revenue.
Total marketing and advertising expenses for 2022, 2021 and 2020 were approximately $683 million, $578 million and $314 million, respectively.
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Stock-Based Compensation
The Company estimates stock-based compensation cost for stock options at the grant date based on the option’s fair value as calculated by the Black-Scholes
model. For time-based restricted stock units (RSUs), fair value is based on the closing price of the Company’s common stock on the grant date. The Company
estimates the grant-date fair value of RSUs that involve a market condition using the Monte Carlo simulation model. The Company estimates the grant-date fair
value of stock to be issued under the Company’s Employee Stock Purchase plan (ESPP) using the Black-Scholes model. Compensation expense is recognized
over the vesting period of the applicable award using the straight-line method, except for the compensation expense related to RSUs with performance or
market conditions (PRSUs), which are recognized ratably for each vesting tranche from the service inception date to the end of the requisite service period.
Forfeiture rates are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Contingencies
From time to time the Company is a defendant or plaintiff in various legal actions that arise in the normal course of business. The Company is also subject to
income tax, indirect tax or other tax claims by tax agencies in jurisdictions in which it conducts business. In addition, the Company is a party to environmental
matters including local, regional, state and federal government clean-up activities at or near locations where the Company currently or has in the past
conducted business. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of
reasonably possible losses. A determination of the amount of reserves required for these commitments and contingencies that would be charged to earnings, if
any, includes assessing the probability of adverse outcomes and estimating the amount of potential losses. The required reserves, if any, may change due to
new developments in each matter or changes in circumstances such as a change in settlement strategy.
Income Taxes
The Company computes the provision for income taxes using the liability method and recognizes deferred tax assets and liabilities for temporary differences
between financial statement and income tax bases of assets and liabilities, as well as for operating loss and tax credit carryforwards. The Company measures
deferred tax assets and liabilities using tax rates applicable to taxable income in effect for the years in which those tax assets are expected to be realized or
settled and provides a valuation allowance against deferred tax assets when it cannot conclude that it is more likely than not that some or all deferred tax
assets will be realized. The assessment requires significant judgment and is performed in each of the applicable taxing jurisdictions. In addition, the Company
recognizes tax benefits from uncertain tax positions only if it is more likely than not that they will be sustained, based on the technical merits of the positions, on
examination by the jurisdictional tax authority.
Global Intangible Low-Taxed Income (GILTI). In 2022, the Company elected to change its method of accounting for the United States GILTI tax from recording
the tax impact in the period it is incurred to recognizing deferred taxes for temporary tax basis differences expected to reverse as GILTI tax in future years. The
change is considered preferable based on the Company’s facts and circumstances as it provides better and more timely information of expected future income
tax liabilities arising from temporary tax differences primarily associated with the Xilinx acquisition. As a result of the acquisition, the Company recorded
$27.3 billion of identified intangible assets (refer to Note 5 - Business Combinations), of which $16.9 billion are related to foreign operations which will be
amortized to income from operations over the assets’ estimated useful lives, but for which the Company will not receive a tax deduction under GILTI. This
accounting policy change resulted in the recording of $857 million of deferred tax liabilities in connection with the Xilinx acquisition as disclosed in Note 14 -
Income Taxes. In addition, for the year ended December 31, 2022, it resulted in a decrease in the income tax provision with a corresponding increase to net
income of $296 million and an increase in basic and diluted earnings per share of $0.19, as compared to the computation under the previous accounting policy.
This accounting policy change had no material impact on the Company’s historical consolidated financial statements.
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Accrued Interest on Unrecognized Tax Benefits. Prior to 2022, the Company reported any interest expense related to unrecognized tax benefits as a
component of Interest expense and reported any related penalties as a component of Income tax provision (benefit). In 2022, the Company elected to change
its method of accounting for tax interest expense from Interest expense to the Income tax provision (benefit) line in the Consolidated Statements of Operations.
This change in classification is considered preferable as it i) better aligns classification of tax interest with the substance of the underlying tax positions, which
are managed inclusive of interest, ii) allows for greater visibility to the cost of the Company’s debt and other financing activities, and iii) better aligns with
common industry practice and provides increased comparability. This accounting policy change resulted in a decrease in Interest expense and corresponding
increase to i) Income before income taxes and equity income and ii) Income tax provision (benefit) as reported on the Consolidated Statements of Operations of
$11 million in 2022. This accounting policy change had an immaterial effect on the Consolidated Statements of Operations in 2021 and 2020, and the Company
did not revise its previously issued consolidated financial statements for these fiscal years. This accounting policy change had no impact to net income or basic
and diluted earnings per share, or to financial statements besides the Consolidated Statements of Operations, for any period, as compared to the computation
under the previous accounting policy.
NOTE 3 – Supplemental Financial Statement Information
Accounts Receivable, net
As of December 31, 2022 and December 25, 2021, Accounts receivable, net included unbilled accounts receivable of $1.1 billion and $329 million,
respectively. Unbilled accounts receivables primarily represent work completed for development services and on custom products for which revenue has been
recognized but not yet invoiced. All unbilled accounts receivable are expected to be billed and collected within 12 months.
Inventories
December 31,
2022
December 25,
2021
(In millions)
Raw materials
$
231
$
82
Work in process
2,648
1,676
Finished goods
892
197
Total inventories
$
3,771
$
1,955
Property and Equipment, net
December 31,
2022
December 25,
2021
(In millions)
Land
$
120
$
—
Building and leasehold improvements
594
206
Equipment
2,163
1,534
Construction in progress
143
96
Property and equipment, gross
3,020
1,836
Accumulated depreciation
(1,507)
(1,134)
Total property and equipment, net
$
1,513
$
702
Depreciation expense for 2022, 2021 and 2020 was $439 million, $296 million and $217 million, respectively.
Other Non-current Assets
December 31,
2022
December 25,
2021
(In millions)
Prepaid long-term supply agreements
$
1,252
$
916
Software and technology licenses, net
362
323
Other
538
239
Total other non-current assets
$
2,152
$
1,478
Prepaid long-term supply agreements relate to payments made to vendors to secure long-term supply capacity.
63
Table of Contents
Accrued Liabilities
December 31,
2022
December 25,
2021
(In millions)
Accrued marketing programs
$
876
$
933
Accrued compensation and benefits
701
705
Customer program liabilities
859
314
Other accrued and current liabilities
641
472
Total accrued liabilities
$
3,077
$
2,424
Revenue
Revenue allocated to remaining performance obligations that are unsatisfied (or partially unsatisfied) include amounts received from customers and amounts
that will be invoiced and recognized as revenue in future periods for development services, IP licensing and product revenue. As of December 31, 2022, the
aggregate transaction price allocated to remaining performance obligations under contracts with an original expected duration of more than one
year was $247 million, of which $213 million is expected to be recognized in the next 12 months. The revenue allocated to remaining performance obligations
does not include amounts which have an original expected duration of one year or less.
Revenue recognized over time associated with custom products and development services accounted for approximately 24%, 23% and 18% of the Company’s
revenue in 2022, 2021 and 2020, respectively.
NOTE 4 – Segment Reporting
Management, including the Chief Operating Decision Maker (CODM), who is the Company’s Chief Executive Officer, reviews and assesses operating
performance using segment net revenue and operating income (loss). These performance measures include the allocation of expenses to the reportable
segments based on management’s judgment. In the second quarter of fiscal year 2022, the Company updated its segment reporting structure to align financial
reporting with the manner in which the Company manages its business in strategic end markets. The Company’s disclosed measure of segment operating
results has been updated consistent with the revised manner in which the Company’s CODM assesses the company’s financial performance and allocates
resources. All prior-period segment data have been retrospectively adjusted.
The Company’s four reportable segments are:
•
the Data Center segment, which primarily includes server CPUs and GPUs, DPUs, FPGAs and Adaptive SoC products for data centers;
•
the Client segment, which primarily includes CPUs, accelerated processing units that integrate microprocessors and GPUs (APUs), and chipsets for
desktop and notebook personal computers;
•
the Gaming segment, which primarily includes discrete GPUs, semi-custom SoC products and development services; and
•
the Embedded segment, which primarily includes embedded CPUs and GPUs, FPGAs, and Adaptive SoC products.
From time to time, the Company may also sell or license portions of its IP portfolio.
In addition to these reportable segments, the Company has an All Other category, which is not a reportable segment. This category primarily includes certain
expenses and credits that are not allocated to any of the reportable segments because the CODM does not consider these expenses and credits in evaluating
the performance of the reportable segments. This category primarily includes amortization of acquisition-related intangibles, employee stock-based
compensation expense, acquisition-related costs and licensing gain.
64
Table of Contents
The
following
table
provides
a
summary
of
net
revenue
and
operating
income
(loss)
by
segment
for
2022,
2021
and
2020.
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Net revenue:
Data Center
$
6,043
$
3,694
$
1,685
Client
6,201
6,887
5,189
Gaming
6,805
5,607
2,746
Embedded
4,552
246
143
Total net revenue
$
23,601
$
16,434
$
9,763
Operating income
</info> | todo | [
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"seed_prompt": "\n Please generate a question that requires counting how frequently different events occur in the document.\n This question should be about statistical properties of the document, rather than the statement details.\n For instance, you could ask someone to count the number of times the word \"million\" is mentioned or\n count the length of the shortest section title.\n Do NOT include any other text or explanation other than the question \n ",
"tool_calls": []
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You are in a conversation about the following user information.
<info>
(3)
Total stockholders’ equity
54,750
7,497
Total liabilities and stockholders’ equity
$
67,580
$
12,419
See accompanying notes to consolidated financial statements.
53
Table of Contents
Advanced Micro Devices, Inc.
Consolidated Statements of Stockholders’ Equity
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Capital stock
Common stock
Balance, beginning of period
$
12
$
12
$
12
Issuance of common stock as consideration for acquisition
4
—
—
Balance, end of period
$
16
$
12
$
12
Additional paid-in capital
Balance, beginning of period
$
11,069
$
10,544
$
9,963
Common stock issued under employee equity plans
167
104
85
Stock-based compensation
1,080
379
274
Issuance of common stock to settle convertible debt
—
25
217
Issuance of common stock as consideration for acquisition
45,372
—
—
Fair value of replacement share-based awards related to acquisition
275
—
—
Issuance of common stock warrants
42
17
5
Balance, end of period
$
58,005
$
11,069
$
10,544
Treasury stock
Balance, beginning of period
$
(2,130)
$
(131)
$
(53)
Repurchases of common stock
(3,702)
(1,762)
—
Reissuance of treasury stock as consideration for acquisition
3,138
—
—
Common stock repurchases for tax withholding on employee equity plans
(405)
(237)
(78)
Balance, end of period
$
(3,099)
$
(2,130)
$
(131)
Accumulated deficit
Balance, beginning of period
$
(1,451)
$
(4,605)
$
(7,095)
Cumulative effect of adoption of accounting standard
—
(8)
—
Net income
1,320
3,162
2,490
Balance, end of period
$
(131)
$
(1,451)
$
(4,605)
Accumulated other comprehensive income (loss)
Balance, beginning of period
$
(3)
$
17
$
—
Other comprehensive income (loss)
(38)
(20)
17
Balance, end of period
$
(41)
$
(3)
$
17
Total stockholders' equity
$
54,750
$
7,497
$
5,837
See accompanying notes to consolidated financial statements.
54
Table of Contents
Advanced Micro Devices, Inc.
Consolidated Statements of Cash Flows
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Cash flows from operating activities:
Net income
$
1,320
$
3,162
$
2,490
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
4,174
407
312
Stock-based compensation
1,081
379
274
Amortization of debt discount and issuance costs
—
5
14
Amortization of operating lease right-of-use assets
88
56
42
Amortization of inventory fair value adjustment
189
—
—
Loss on debt redemption, repurchase and conversion
—
7
54
Loss on sale or disposal of property and equipment
16
34
33
Deferred income taxes
(1,505)
308
(1,223)
(Gains) losses on equity investments, net
62
(56)
(2)
Other
(14)
(7)
8
Changes in operating assets and liabilities:
Accounts receivable, net
(1,091)
(640)
(219)
Inventories
(1,401)
(556)
(417)
Receivables from related parties
(13)
8
10
Prepaid expenses and other assets
(1,197)
(920)
(231)
Payables to related parties
379
7
(135)
Accounts payable
931
801
(513)
Accrued liabilities and other
546
526
574
Net cash provided by operating activities
3,565
3,521
1,071
Cash flows from investing activities:
Purchases of property and equipment
(450)
(301)
(294)
Purchases of short-term investments
(2,667)
(2,056)
(850)
Proceeds from maturity of short-term investments
4,310
1,678
192
Cash received from acquisition of Xilinx
2,366
—
—
Acquisition of Pensando, net of cash acquired
(1,544)
—
—
Other
(16)
(7)
—
Net cash provided by (used in) investing activities
1,999
(686)
(952)
Cash flows from financing activities:
Proceeds from debt, net of issuance costs
991
—
200
Repayment of debt
(312)
—
(200)
Proceeds from sales of common stock through employee equity plans
167
104
85
Repurchases of common stock
(3,702)
(1,762)
—
Common stock repurchases for tax withholding on employee equity plans
(406)
(237)
(78)
Other
(2)
—
(1)
Net cash (used in) provided by financing activities
(3,264)
(1,895)
6
Net increase in cash and cash equivalents
2,300
940
125
Cash and cash equivalents at beginning of year
2,535
1,595
1,470
Cash and cash equivalents at end of year
$
4,835
$
2,535
$
1,595
55
Table of Contents
Advanced Micro Devices, Inc.
Consolidated Statements of Cash Flows
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Supplemental cash flow information:
Cash paid during the year for:
Interest
$
85
$
25
$
31
Income taxes, net of refund
$
685
$
35
$
8
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid
$
157
$
72
$
31
Issuance of common stock to settle convertible debt
$
—
$
25
$
217
Issuance of common stock and treasury stock for the acquisition of Xilinx
$
48,514
$
—
$
—
Fair value of replacement share-based awards related to acquisition of Xilinx
$
275
$
—
$
—
Transfer of assets for the acquisition of property and equipment
$
13
$
37
$
111
Non-cash activities for leases:
Operating lease right-of-use assets acquired by assuming related liabilities
$
115
$
227
$
45
See accompanying notes to consolidated financial statements.
56
Table of Contents
Advanced Micro Devices, Inc.
Notes to Consolidated Financial Statements
NOTE 1 – The Company
Advanced Micro Devices, Inc. is a global semiconductor company. References herein to AMD or the Company mean Advanced Micro Devices, Inc. and its
consolidated subsidiaries. AMD’s products include x86 microprocessors (CPUs) and graphics processing units (GPUs), as standalone devices or as
incorporated into accelerated processing units (APUs), chipsets, data center and professional GPUs, embedded processors, semi-custom System-on-Chip
(SoC) products, microprocessor and SoC development services and technology, data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), and
Adaptive SoC products. From time to time, the Company may also sell or license portions of its intellectual property (IP) portfolio.
On February 14, 2022 (the Xilinx Acquisition Date), the Company completed the acquisition of Xilinx, Inc. (Xilinx). On May 26, 2022 (the Pensando Acquisition
Date), the Company completed the acquisition of Pensando Systems, Inc. (Pensando). See Note 5 - Business Combinations for additional information on these
acquisitions.
NOTE 2 – Basis of Presentation and Significant Accounting Policies
Fiscal Year. The Company uses a 52- or 53-week fiscal year ending on the last Saturday in December. Fiscal 2022, 2021 and 2020 ended on December 31,
2022, December 25, 2021 and December 26, 2020, respectively. Fiscal 2022 consisted of 53 weeks, and fiscal 2021 and 2020 each consisted of 52 weeks.
Principles of Consolidation. The consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries. Upon
consolidation, all inter-company accounts and transactions have been eliminated.
Reclassification. Certain prior period amounts have been reclassified to conform to current period presentation.
Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at
the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results are likely to differ from
those estimates, and such differences may be material to the financial statements. Areas where management uses subjective judgment include, but are not
limited to, revenue allowances, inventory valuation, valuation of goodwill and long-lived and intangible assets, and income taxes.
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the
Company expects to receive in exchange for those goods or services. Sales, value-added, and other taxes collected concurrently with the provision of goods or
services are excluded from revenue. Shipping and handling costs associated with product sales are included in cost of sales. Substantially all the Company’s
revenue is derived from product sales, representing a single performance obligation.
Customers are generally required to pay for products and services within the Company’s standard contractual terms, which are typically net 30 to 60 days. The
Company has determined that it does not have significant financing components in its contracts with customers.
Non-custom products
The Company transfers control and recognizes revenue when non-custom products are shipped to customers, which includes original equipment
manufacturers (OEM) and distributors, in accordance with the shipping terms of the sale. Non-custom product arrangements generally comprise a single
performance obligation. Certain OEMs may be entitled to rights of return and rebates under OEM agreements. The Company also sells to distributors under
terms allowing the majority of distributors certain rights of return and price protection on unsold merchandise held by them. The Company estimates the amount
of variable consideration under OEM and distributor arrangements and, accordingly, records a provision for product returns, allowances for price protection and
rebates based on actual historical experience and any known events.
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Table of Contents
The Company offers incentive programs to certain customers, including cooperative advertising, marketing promotions, volume-based incentives and special
pricing arrangements. Where funds provided for such programs can be estimated, the Company recognizes a reduction to revenue at the time the related
revenue is recognized; otherwise, the Company recognizes such reduction to revenue at the later of when: i) the related revenue transaction occurs; or ii) the
program is offered. 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 activities, such amounts are recognized as a reduction to revenue unless they qualify for expense recognition.
Constraints of variable consideration have not been material.
Custom products
Custom products which are associated with the Company’s Gaming segment (semi-custom products), sold under non-cancellable purchases orders, for which
the Company has an enforceable right to payment, and which have no alternative use to the Company at contract inception, are recognized as revenue, over
the time of production of the products by the Company. The Company utilizes a cost-based input method, calculated as cost incurred plus estimated margin, to
determine the amount of revenue to recognize for in-process, but incomplete, customer orders at a reporting date. The Company believes that a cost-based
input method is the most appropriate manner to measure how the Company satisfies its performance obligations to customers because the effort and costs
incurred best depict the Company’s satisfaction of its performance obligation.
Sales of semi-custom products are not subject to a right of return. Custom products arrangements generally involve a single performance obligation. There are
no variable consideration estimates associated with custom products.
Development and intellectual property licensing agreements
From time to time, the Company may enter into arrangements with customers that combine the provision of development services and a license to the right to
use the Company’s IP. These arrangements are deemed to be single or multiple performance obligations based upon the nature of the arrangements. Revenue
is recognized upon the transfer of control, over time or at a point in time, depending on the nature of the arrangements. The Company evaluates whether the
licensing component is distinct. A licensing component is distinct if it is both (i) capable of being distinct and (ii) distinct in the context of the arrangement. If the
license is not distinct, it is combined with the development services as a single performance obligation and recognized over time. If the license is distinct,
revenue is recognized at a point in time when the customer has the ability to benefit from the license.
From time to time, the Company may enter into arrangements with customers that solely involve the sale or licensing of its patents or IP. Generally, there are no
performance obligations beyond transferring the designated license to the Company’s patents or IP. Accordingly, revenue is recognized at a point in time when
the customer has the ability to benefit from the license.
There are no variable consideration estimates associated with either combined development and IP arrangements or for standalone arrangements involving
either the sale or licensing of IP.
Inventories
The Company values inventory at standard cost, adjusted to approximate the lower of actual cost or estimated net realizable value using assumptions about
future demand and market conditions. In determining excess or obsolescence reserves for its products, the Company considers assumptions such as changes
in business and economic conditions, other-than-temporary decreases in demand for its products, and changes in technology or customer requirements. In
determining the lower of cost or net realizable value reserves, the Company considers assumptions such as recent historical sales activity and selling prices, as
well as estimates of future selling prices. The Company fully reserves for inventories and non-cancellable purchase orders for inventory deemed obsolete. The
Company performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances and non-cancellable purchase
orders to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or
market conditions become less favorable than those projected by the Company, additional inventory carrying value adjustments may be required.
58
Table of Contents
Business Combinations
The Company is required to use the acquisition method of accounting for business combinations. The acquisition method of accounting requires the Company
to allocate the purchase consideration to the assets acquired and liabilities assumed from the acquiree based on their respective fair values as of the
acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as
goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially
with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future revenue growth rates and
margins, future changes in technology, time to recreate customer relationships, useful lives, and discount rates. Fair value estimates are based on the
assumptions that management believes a market participant would use in pricing the asset or liability. These estimates are inherently uncertain and, therefore,
actual results may differ from the estimates made. As a result, during the measurement period of up to one year from the acquisition date, the Company may
record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or
final determination of the fair value of the purchase price of an acquisition, whichever comes first, any subsequent adjustments are recorded in the
Consolidated Statements of Operations.
Goodwill
The Company performs its goodwill impairment analysis as of the first day of the fourth quarter of each year and, if certain events or circumstances indicate that
an impairment loss may have been incurred, on a more frequent basis. The analysis may include both qualitative and quantitative factors to assess the
likelihood of an impairment.
The Company has the option to first perform qualitative testing to determine if it is more likely than not that the fair value of a reporting unit exceeds its carrying
amount. Qualitative factors include industry and market considerations, overall financial performance, share price trends and market capitalization and
Company-specific events. If the Company concludes it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, the Company
does not proceed to perform a quantitative impairment test.
If the Company concludes it is more likely than not that the fair value of a reporting unit is less than its carrying value or elects to bypass the qualitative test, a
quantitative goodwill impairment test will be performed by comparing the fair value of each reporting unit to its carrying value. The Company’s quantitative
impairment analysis uses a combination of the income approach, which requires estimates of the present value of expected future cash flows of a reporting
unit, and the market approach, which uses financial ratios of comparable companies to arrive at an estimated value for the reporting units. Significant estimates
and assumptions used in the income approach include assessments of macroeconomic conditions, growth rates of reporting units in the near- and long-term,
expectations of the Company’s ability to execute on roadmaps and projections, and the discount rate applied to cash flows. Significant estimates used in the
market approach include the identification of comparable companies for each reporting unit, and the determination of the appropriate multiples to apply to a
reporting unit based on adjustments and consideration of specific attributes of that reporting unit. If a reporting unit’s fair value is determined to be less than its
carrying value, a goodwill impairment charge is recognized for the amount by which the reporting unit’s fair value is less than its carrying value, not to exceed
the total amount of goodwill allocated to that reporting unit.
Long-Lived and Intangible Assets
Long-lived and intangible assets to be held and used are reviewed for impairment if indicators of potential impairment exist and at least annually for indefinite-
lived intangible assets. Impairment indicators are reviewed on a quarterly basis. Assets are grouped and evaluated for impairment at the lowest level of
identifiable cash flows.
When indicators of impairment exist and assets are held for use, the Company estimates future undiscounted cash flows attributable to the related asset
groups. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated
fair values based on the expected discounted future cash flows attributable to the asset group or based on appraisals. Factors affecting impairment of assets
held for use include the ability of the specific assets to generate separately identifiable positive cash flows.
When assets are removed from operations and held for sale, the Company estimates impairment losses as the excess of the carrying value of the assets over
their fair value. Market conditions are among the factors affecting impairment of assets held for sale. Changes in any of these factors could necessitate
impairment recognition in future periods for assets held for use or assets held for sale.
59
Table of Contents
Cash Equivalents
Cash equivalents consist of financial instruments that are readily convertible into cash and have original maturities of three months or less at the time of
purchase.
Accounts Receivable
Accounts receivable are primarily comprised of trade receivables presented net of rebates, price protection and an allowance for credit loss. Accounts
receivable also include unbilled receivables, which primarily represent work completed on development services recognized as revenue but not yet invoiced to
customers and semi-custom products under non-cancellable purchase orders that have no alternative use to the Company at contract inception, for which
revenue has been recognized but not yet invoiced to customers. All unbilled accounts receivables are expected to be billed and collected within twelve months.
The Company manages its exposure to customer credit risk through credit limits, credit lines, ongoing 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 payments if deemed necessary. The Company maintains an allowance for credit loss,
consisting of known specific troubled accounts as well as an amount based on overall estimated potential uncollectible accounts receivable based on historical
experience and review of their current credit quality. The Company does not believe the receivable balance from its customers represents a significant credit
risk.
Investments
Available for Sale Debt Securities. The Company classifies its investments in debt securities at the date of acquisition as available-for-sale. Available-for-sale
debt securities are reported at fair value with the related unrealized gains and losses included, net of tax, in accumulated other comprehensive income (loss), a
component of stockholders’ equity. If an available-for-sale debt security’s fair value is less than its amortized cost basis, then the Company evaluates whether
the decline is the result of a credit loss, in which case an impairment is recorded through an allowance for credit losses. Unrealized gains and losses not
attributable to credit losses are included, net of tax, in accumulated other comprehensive income (loss), a component of stockholders’ equity. Classification of
available-for-sale debt securities as current or non-current is based on the Company’s intent and belief in its ability to sell these securities and use the proceeds
from sale in operations within 12 months.
Non-marketable Securities. The Company’s investments in non-marketable securities of privately-held companies are accounted for under the measurement
alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and are periodically assessed for impairment when events or
circumstances indicate that a decline in value may have occurred. The Company's periodic assessment of impairment is made by considering available
evidence, including the investee’s general market and industry conditions and product development status. The Company also assesses the investee’s ability to
meet business milestones, its financial condition, and near-term prospects, including the rate at which the investee is using its cash, the investee’s need for
possible additional funding at a lower valuation and any bona fide offer to purchase the investee.
Fair Value Measurements
The Company’s financial instruments are measured and recorded at fair value on a recurring basis, except for non-marketable equity investments in privately-
held companies, which are generally accounted for under the measurement alternative.
Fair Value Hierarchy
The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or
liabilities. The guidance for fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following
categories:
Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices
for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data
for substantially the full term of the asset or liability.
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Table of Contents
Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the
fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted
cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of one to 15 years
for equipment, 34 to 44 years for buildings, and leasehold improvements are measured by the shorter of the remaining terms of the leases or the estimated
useful economic lives of the improvements.
Leases
Operating and finance leases are recorded as right-of-use (ROU) assets and lease liabilities on the Company’s balance sheet. ROU assets represent the
Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the
lease. Operating and finance lease ROU assets and liabilities are initially recognized based on the present value of lease payments over the lease term. In
determining the present value of lease payments, the Company uses the implicit interest rate if readily determinable. When the implicit interest rate is not
readily determinable, the Company uses its incremental borrowing rate, which is based on its collateralized borrowing capabilities over a similar term of the
lease payments. The Company utilizes the consolidated group incremental borrowing rate for all leases as the Company has centralized treasury operations.
Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. The Company has elected the accounting policy to not
recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Operating leases are included
in operating lease ROU assets, other current liabilities, and long-term operating lease liabilities on the Company’s consolidated balance sheets. The Company’s
finance leases are immaterial.
Foreign Currency Translation/Transactions
The functional currency of the majority of the Company’s foreign subsidiaries is the U.S. dollar. For certain foreign subsidiaries where the local currency is the
functional currency, assets and liabilities are translated from foreign currencies into U.S. dollars. Gains or losses arising from translation of foreign currency
denominated assets and liabilities (i.e., cumulative translation adjustment) are included as a component of accumulated other comprehensive income (loss) in
stockholders' equity.
Assets and liabilities denominated in non-U.S. dollars have been remeasured into U.S. dollars at current exchange rates for monetary assets and liabilities and
historical exchange rates for non-monetary assets and liabilities. Non-U.S. dollar denominated transactions have been remeasured at average exchange rates
in effect during each period, except for those cost of sales and expense transactions related to non-monetary balance sheet amounts which have been
remeasured at historical exchange rates. The gains or losses from foreign currency remeasurement are included in earnings.
Marketing and Advertising Expenses
Advertising costs are expensed as incurred. In addition, the Company’s marketing and advertising expenses include certain cooperative advertising funding
obligations under customer incentive programs, which costs are recorded upon agreement with customers and vendor partners. Cooperative advertising
expenses are recorded as marketing, general and administrative expense to the extent the cash paid does not exceed the estimated fair value of the
advertising benefit received. Any excess of cash paid over the estimated fair value of the advertising benefit received is recorded as a reduction of revenue.
Total marketing and advertising expenses for 2022, 2021 and 2020 were approximately $683 million, $578 million and $314 million, respectively.
61
Table of Contents
Stock-Based Compensation
The Company estimates stock-based compensation cost for stock options at the grant date based on the option’s fair value as calculated by the Black-Scholes
model. For time-based restricted stock units (RSUs), fair value is based on the closing price of the Company’s common stock on the grant date. The Company
estimates the grant-date fair value of RSUs that involve a market condition using the Monte Carlo simulation model. The Company estimates the grant-date fair
value of stock to be issued under the Company’s Employee Stock Purchase plan (ESPP) using the Black-Scholes model. Compensation expense is recognized
over the vesting period of the applicable award using the straight-line method, except for the compensation expense related to RSUs with performance or
market conditions (PRSUs), which are recognized ratably for each vesting tranche from the service inception date to the end of the requisite service period.
Forfeiture rates are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Contingencies
From time to time the Company is a defendant or plaintiff in various legal actions that arise in the normal course of business. The Company is also subject to
income tax, indirect tax or other tax claims by tax agencies in jurisdictions in which it conducts business. In addition, the Company is a party to environmental
matters including local, regional, state and federal government clean-up activities at or near locations where the Company currently or has in the past
conducted business. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of
reasonably possible losses. A determination of the amount of reserves required for these commitments and contingencies that would be charged to earnings, if
any, includes assessing the probability of adverse outcomes and estimating the amount of potential losses. The required reserves, if any, may change due to
new developments in each matter or changes in circumstances such as a change in settlement strategy.
Income Taxes
The Company computes the provision for income taxes using the liability method and recognizes deferred tax assets and liabilities for temporary differences
between financial statement and income tax bases of assets and liabilities, as well as for operating loss and tax credit carryforwards. The Company measures
deferred tax assets and liabilities using tax rates applicable to taxable income in effect for the years in which those tax assets are expected to be realized or
settled and provides a valuation allowance against deferred tax assets when it cannot conclude that it is more likely than not that some or all deferred tax
assets will be realized. The assessment requires significant judgment and is performed in each of the applicable taxing jurisdictions. In addition, the Company
recognizes tax benefits from uncertain tax positions only if it is more likely than not that they will be sustained, based on the technical merits of the positions, on
examination by the jurisdictional tax authority.
Global Intangible Low-Taxed Income (GILTI). In 2022, the Company elected to change its method of accounting for the United States GILTI tax from recording
the tax impact in the period it is incurred to recognizing deferred taxes for temporary tax basis differences expected to reverse as GILTI tax in future years. The
change is considered preferable based on the Company’s facts and circumstances as it provides better and more timely information of expected future income
tax liabilities arising from temporary tax differences primarily associated with the Xilinx acquisition. As a result of the acquisition, the Company recorded
$27.3 billion of identified intangible assets (refer to Note 5 - Business Combinations), of which $16.9 billion are related to foreign operations which will be
amortized to income from operations over the assets’ estimated useful lives, but for which the Company will not receive a tax deduction under GILTI. This
accounting policy change resulted in the recording of $857 million of deferred tax liabilities in connection with the Xilinx acquisition as disclosed in Note 14 -
Income Taxes. In addition, for the year ended December 31, 2022, it resulted in a decrease in the income tax provision with a corresponding increase to net
income of $296 million and an increase in basic and diluted earnings per share of $0.19, as compared to the computation under the previous accounting policy.
This accounting policy change had no material impact on the Company’s historical consolidated financial statements.
62
Table of Contents
Accrued Interest on Unrecognized Tax Benefits. Prior to 2022, the Company reported any interest expense related to unrecognized tax benefits as a
component of Interest expense and reported any related penalties as a component of Income tax provision (benefit). In 2022, the Company elected to change
its method of accounting for tax interest expense from Interest expense to the Income tax provision (benefit) line in the Consolidated Statements of Operations.
This change in classification is considered preferable as it i) better aligns classification of tax interest with the substance of the underlying tax positions, which
are managed inclusive of interest, ii) allows for greater visibility to the cost of the Company’s debt and other financing activities, and iii) better aligns with
common industry practice and provides increased comparability. This accounting policy change resulted in a decrease in Interest expense and corresponding
increase to i) Income before income taxes and equity income and ii) Income tax provision (benefit) as reported on the Consolidated Statements of Operations of
$11 million in 2022. This accounting policy change had an immaterial effect on the Consolidated Statements of Operations in 2021 and 2020, and the Company
did not revise its previously issued consolidated financial statements for these fiscal years. This accounting policy change had no impact to net income or basic
and diluted earnings per share, or to financial statements besides the Consolidated Statements of Operations, for any period, as compared to the computation
under the previous accounting policy.
NOTE 3 – Supplemental Financial Statement Information
Accounts Receivable, net
As of December 31, 2022 and December 25, 2021, Accounts receivable, net included unbilled accounts receivable of $1.1 billion and $329 million,
respectively. Unbilled accounts receivables primarily represent work completed for development services and on custom products for which revenue has been
recognized but not yet invoiced. All unbilled accounts receivable are expected to be billed and collected within 12 months.
Inventories
December 31,
2022
December 25,
2021
(In millions)
Raw materials
$
231
$
82
Work in process
2,648
1,676
Finished goods
892
197
Total inventories
$
3,771
$
1,955
Property and Equipment, net
December 31,
2022
December 25,
2021
(In millions)
Land
$
120
$
—
Building and leasehold improvements
594
206
Equipment
2,163
1,534
Construction in progress
143
96
Property and equipment, gross
3,020
1,836
Accumulated depreciation
(1,507)
(1,134)
Total property and equipment, net
$
1,513
$
702
Depreciation expense for 2022, 2021 and 2020 was $439 million, $296 million and $217 million, respectively.
Other Non-current Assets
December 31,
2022
December 25,
2021
(In millions)
Prepaid long-term supply agreements
$
1,252
$
916
Software and technology licenses, net
362
323
Other
538
239
Total other non-current assets
$
2,152
$
1,478
Prepaid long-term supply agreements relate to payments made to vendors to secure long-term supply capacity.
63
Table of Contents
Accrued Liabilities
December 31,
2022
December 25,
2021
(In millions)
Accrued marketing programs
$
876
$
933
Accrued compensation and benefits
701
705
Customer program liabilities
859
314
Other accrued and current liabilities
641
472
Total accrued liabilities
$
3,077
$
2,424
Revenue
Revenue allocated to remaining performance obligations that are unsatisfied (or partially unsatisfied) include amounts received from customers and amounts
that will be invoiced and recognized as revenue in future periods for development services, IP licensing and product revenue. As of December 31, 2022, the
aggregate transaction price allocated to remaining performance obligations under contracts with an original expected duration of more than one
year was $247 million, of which $213 million is expected to be recognized in the next 12 months. The revenue allocated to remaining performance obligations
does not include amounts which have an original expected duration of one year or less.
Revenue recognized over time associated with custom products and development services accounted for approximately 24%, 23% and 18% of the Company’s
revenue in 2022, 2021 and 2020, respectively.
NOTE 4 – Segment Reporting
Management, including the Chief Operating Decision Maker (CODM), who is the Company’s Chief Executive Officer, reviews and assesses operating
performance using segment net revenue and operating income (loss). These performance measures include the allocation of expenses to the reportable
segments based on management’s judgment. In the second quarter of fiscal year 2022, the Company updated its segment reporting structure to align financial
reporting with the manner in which the Company manages its business in strategic end markets. The Company’s disclosed measure of segment operating
results has been updated consistent with the revised manner in which the Company’s CODM assesses the company’s financial performance and allocates
resources. All prior-period segment data have been retrospectively adjusted.
The Company’s four reportable segments are:
•
the Data Center segment, which primarily includes server CPUs and GPUs, DPUs, FPGAs and Adaptive SoC products for data centers;
•
the Client segment, which primarily includes CPUs, accelerated processing units that integrate microprocessors and GPUs (APUs), and chipsets for
desktop and notebook personal computers;
•
the Gaming segment, which primarily includes discrete GPUs, semi-custom SoC products and development services; and
•
the Embedded segment, which primarily includes embedded CPUs and GPUs, FPGAs, and Adaptive SoC products.
From time to time, the Company may also sell or license portions of its IP portfolio.
In addition to these reportable segments, the Company has an All Other category, which is not a reportable segment. This category primarily includes certain
expenses and credits that are not allocated to any of the reportable segments because the CODM does not consider these expenses and credits in evaluating
the performance of the reportable segments. This category primarily includes amortization of acquisition-related intangibles, employee stock-based
compensation expense, acquisition-related costs and licensing gain.
64
Table of Contents
The
following
table
provides
a
summary
of
net
revenue
and
operating
income
(loss)
by
segment
for
2022,
2021
and
2020.
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Net revenue:
Data Center
$
6,043
$
3,694
$
1,685
Client
6,201
6,887
5,189
Gaming
6,805
5,607
2,746
Embedded
4,552
246
143
Total net revenue
$
23,601
$
16,434
$
9,763
Operating income
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You are in a conversation about the following user information.
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(3)
Total stockholders’ equity
54,750
7,497
Total liabilities and stockholders’ equity
$
67,580
$
12,419
See accompanying notes to consolidated financial statements.
53
Table of Contents
Advanced Micro Devices, Inc.
Consolidated Statements of Stockholders’ Equity
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Capital stock
Common stock
Balance, beginning of period
$
12
$
12
$
12
Issuance of common stock as consideration for acquisition
4
—
—
Balance, end of period
$
16
$
12
$
12
Additional paid-in capital
Balance, beginning of period
$
11,069
$
10,544
$
9,963
Common stock issued under employee equity plans
167
104
85
Stock-based compensation
1,080
379
274
Issuance of common stock to settle convertible debt
—
25
217
Issuance of common stock as consideration for acquisition
45,372
—
—
Fair value of replacement share-based awards related to acquisition
275
—
—
Issuance of common stock warrants
42
17
5
Balance, end of period
$
58,005
$
11,069
$
10,544
Treasury stock
Balance, beginning of period
$
(2,130)
$
(131)
$
(53)
Repurchases of common stock
(3,702)
(1,762)
—
Reissuance of treasury stock as consideration for acquisition
3,138
—
—
Common stock repurchases for tax withholding on employee equity plans
(405)
(237)
(78)
Balance, end of period
$
(3,099)
$
(2,130)
$
(131)
Accumulated deficit
Balance, beginning of period
$
(1,451)
$
(4,605)
$
(7,095)
Cumulative effect of adoption of accounting standard
—
(8)
—
Net income
1,320
3,162
2,490
Balance, end of period
$
(131)
$
(1,451)
$
(4,605)
Accumulated other comprehensive income (loss)
Balance, beginning of period
$
(3)
$
17
$
—
Other comprehensive income (loss)
(38)
(20)
17
Balance, end of period
$
(41)
$
(3)
$
17
Total stockholders' equity
$
54,750
$
7,497
$
5,837
See accompanying notes to consolidated financial statements.
54
Table of Contents
Advanced Micro Devices, Inc.
Consolidated Statements of Cash Flows
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Cash flows from operating activities:
Net income
$
1,320
$
3,162
$
2,490
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
4,174
407
312
Stock-based compensation
1,081
379
274
Amortization of debt discount and issuance costs
—
5
14
Amortization of operating lease right-of-use assets
88
56
42
Amortization of inventory fair value adjustment
189
—
—
Loss on debt redemption, repurchase and conversion
—
7
54
Loss on sale or disposal of property and equipment
16
34
33
Deferred income taxes
(1,505)
308
(1,223)
(Gains) losses on equity investments, net
62
(56)
(2)
Other
(14)
(7)
8
Changes in operating assets and liabilities:
Accounts receivable, net
(1,091)
(640)
(219)
Inventories
(1,401)
(556)
(417)
Receivables from related parties
(13)
8
10
Prepaid expenses and other assets
(1,197)
(920)
(231)
Payables to related parties
379
7
(135)
Accounts payable
931
801
(513)
Accrued liabilities and other
546
526
574
Net cash provided by operating activities
3,565
3,521
1,071
Cash flows from investing activities:
Purchases of property and equipment
(450)
(301)
(294)
Purchases of short-term investments
(2,667)
(2,056)
(850)
Proceeds from maturity of short-term investments
4,310
1,678
192
Cash received from acquisition of Xilinx
2,366
—
—
Acquisition of Pensando, net of cash acquired
(1,544)
—
—
Other
(16)
(7)
—
Net cash provided by (used in) investing activities
1,999
(686)
(952)
Cash flows from financing activities:
Proceeds from debt, net of issuance costs
991
—
200
Repayment of debt
(312)
—
(200)
Proceeds from sales of common stock through employee equity plans
167
104
85
Repurchases of common stock
(3,702)
(1,762)
—
Common stock repurchases for tax withholding on employee equity plans
(406)
(237)
(78)
Other
(2)
—
(1)
Net cash (used in) provided by financing activities
(3,264)
(1,895)
6
Net increase in cash and cash equivalents
2,300
940
125
Cash and cash equivalents at beginning of year
2,535
1,595
1,470
Cash and cash equivalents at end of year
$
4,835
$
2,535
$
1,595
55
Table of Contents
Advanced Micro Devices, Inc.
Consolidated Statements of Cash Flows
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Supplemental cash flow information:
Cash paid during the year for:
Interest
$
85
$
25
$
31
Income taxes, net of refund
$
685
$
35
$
8
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid
$
157
$
72
$
31
Issuance of common stock to settle convertible debt
$
—
$
25
$
217
Issuance of common stock and treasury stock for the acquisition of Xilinx
$
48,514
$
—
$
—
Fair value of replacement share-based awards related to acquisition of Xilinx
$
275
$
—
$
—
Transfer of assets for the acquisition of property and equipment
$
13
$
37
$
111
Non-cash activities for leases:
Operating lease right-of-use assets acquired by assuming related liabilities
$
115
$
227
$
45
See accompanying notes to consolidated financial statements.
56
Table of Contents
Advanced Micro Devices, Inc.
Notes to Consolidated Financial Statements
NOTE 1 – The Company
Advanced Micro Devices, Inc. is a global semiconductor company. References herein to AMD or the Company mean Advanced Micro Devices, Inc. and its
consolidated subsidiaries. AMD’s products include x86 microprocessors (CPUs) and graphics processing units (GPUs), as standalone devices or as
incorporated into accelerated processing units (APUs), chipsets, data center and professional GPUs, embedded processors, semi-custom System-on-Chip
(SoC) products, microprocessor and SoC development services and technology, data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), and
Adaptive SoC products. From time to time, the Company may also sell or license portions of its intellectual property (IP) portfolio.
On February 14, 2022 (the Xilinx Acquisition Date), the Company completed the acquisition of Xilinx, Inc. (Xilinx). On May 26, 2022 (the Pensando Acquisition
Date), the Company completed the acquisition of Pensando Systems, Inc. (Pensando). See Note 5 - Business Combinations for additional information on these
acquisitions.
NOTE 2 – Basis of Presentation and Significant Accounting Policies
Fiscal Year. The Company uses a 52- or 53-week fiscal year ending on the last Saturday in December. Fiscal 2022, 2021 and 2020 ended on December 31,
2022, December 25, 2021 and December 26, 2020, respectively. Fiscal 2022 consisted of 53 weeks, and fiscal 2021 and 2020 each consisted of 52 weeks.
Principles of Consolidation. The consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries. Upon
consolidation, all inter-company accounts and transactions have been eliminated.
Reclassification. Certain prior period amounts have been reclassified to conform to current period presentation.
Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at
the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results are likely to differ from
those estimates, and such differences may be material to the financial statements. Areas where management uses subjective judgment include, but are not
limited to, revenue allowances, inventory valuation, valuation of goodwill and long-lived and intangible assets, and income taxes.
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the
Company expects to receive in exchange for those goods or services. Sales, value-added, and other taxes collected concurrently with the provision of goods or
services are excluded from revenue. Shipping and handling costs associated with product sales are included in cost of sales. Substantially all the Company’s
revenue is derived from product sales, representing a single performance obligation.
Customers are generally required to pay for products and services within the Company’s standard contractual terms, which are typically net 30 to 60 days. The
Company has determined that it does not have significant financing components in its contracts with customers.
Non-custom products
The Company transfers control and recognizes revenue when non-custom products are shipped to customers, which includes original equipment
manufacturers (OEM) and distributors, in accordance with the shipping terms of the sale. Non-custom product arrangements generally comprise a single
performance obligation. Certain OEMs may be entitled to rights of return and rebates under OEM agreements. The Company also sells to distributors under
terms allowing the majority of distributors certain rights of return and price protection on unsold merchandise held by them. The Company estimates the amount
of variable consideration under OEM and distributor arrangements and, accordingly, records a provision for product returns, allowances for price protection and
rebates based on actual historical experience and any known events.
57
Table of Contents
The Company offers incentive programs to certain customers, including cooperative advertising, marketing promotions, volume-based incentives and special
pricing arrangements. Where funds provided for such programs can be estimated, the Company recognizes a reduction to revenue at the time the related
revenue is recognized; otherwise, the Company recognizes such reduction to revenue at the later of when: i) the related revenue transaction occurs; or ii) the
program is offered. 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 activities, such amounts are recognized as a reduction to revenue unless they qualify for expense recognition.
Constraints of variable consideration have not been material.
Custom products
Custom products which are associated with the Company’s Gaming segment (semi-custom products), sold under non-cancellable purchases orders, for which
the Company has an enforceable right to payment, and which have no alternative use to the Company at contract inception, are recognized as revenue, over
the time of production of the products by the Company. The Company utilizes a cost-based input method, calculated as cost incurred plus estimated margin, to
determine the amount of revenue to recognize for in-process, but incomplete, customer orders at a reporting date. The Company believes that a cost-based
input method is the most appropriate manner to measure how the Company satisfies its performance obligations to customers because the effort and costs
incurred best depict the Company’s satisfaction of its performance obligation.
Sales of semi-custom products are not subject to a right of return. Custom products arrangements generally involve a single performance obligation. There are
no variable consideration estimates associated with custom products.
Development and intellectual property licensing agreements
From time to time, the Company may enter into arrangements with customers that combine the provision of development services and a license to the right to
use the Company’s IP. These arrangements are deemed to be single or multiple performance obligations based upon the nature of the arrangements. Revenue
is recognized upon the transfer of control, over time or at a point in time, depending on the nature of the arrangements. The Company evaluates whether the
licensing component is distinct. A licensing component is distinct if it is both (i) capable of being distinct and (ii) distinct in the context of the arrangement. If the
license is not distinct, it is combined with the development services as a single performance obligation and recognized over time. If the license is distinct,
revenue is recognized at a point in time when the customer has the ability to benefit from the license.
From time to time, the Company may enter into arrangements with customers that solely involve the sale or licensing of its patents or IP. Generally, there are no
performance obligations beyond transferring the designated license to the Company’s patents or IP. Accordingly, revenue is recognized at a point in time when
the customer has the ability to benefit from the license.
There are no variable consideration estimates associated with either combined development and IP arrangements or for standalone arrangements involving
either the sale or licensing of IP.
Inventories
The Company values inventory at standard cost, adjusted to approximate the lower of actual cost or estimated net realizable value using assumptions about
future demand and market conditions. In determining excess or obsolescence reserves for its products, the Company considers assumptions such as changes
in business and economic conditions, other-than-temporary decreases in demand for its products, and changes in technology or customer requirements. In
determining the lower of cost or net realizable value reserves, the Company considers assumptions such as recent historical sales activity and selling prices, as
well as estimates of future selling prices. The Company fully reserves for inventories and non-cancellable purchase orders for inventory deemed obsolete. The
Company performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances and non-cancellable purchase
orders to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or
market conditions become less favorable than those projected by the Company, additional inventory carrying value adjustments may be required.
58
Table of Contents
Business Combinations
The Company is required to use the acquisition method of accounting for business combinations. The acquisition method of accounting requires the Company
to allocate the purchase consideration to the assets acquired and liabilities assumed from the acquiree based on their respective fair values as of the
acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as
goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially
with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future revenue growth rates and
margins, future changes in technology, time to recreate customer relationships, useful lives, and discount rates. Fair value estimates are based on the
assumptions that management believes a market participant would use in pricing the asset or liability. These estimates are inherently uncertain and, therefore,
actual results may differ from the estimates made. As a result, during the measurement period of up to one year from the acquisition date, the Company may
record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or
final determination of the fair value of the purchase price of an acquisition, whichever comes first, any subsequent adjustments are recorded in the
Consolidated Statements of Operations.
Goodwill
The Company performs its goodwill impairment analysis as of the first day of the fourth quarter of each year and, if certain events or circumstances indicate that
an impairment loss may have been incurred, on a more frequent basis. The analysis may include both qualitative and quantitative factors to assess the
likelihood of an impairment.
The Company has the option to first perform qualitative testing to determine if it is more likely than not that the fair value of a reporting unit exceeds its carrying
amount. Qualitative factors include industry and market considerations, overall financial performance, share price trends and market capitalization and
Company-specific events. If the Company concludes it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, the Company
does not proceed to perform a quantitative impairment test.
If the Company concludes it is more likely than not that the fair value of a reporting unit is less than its carrying value or elects to bypass the qualitative test, a
quantitative goodwill impairment test will be performed by comparing the fair value of each reporting unit to its carrying value. The Company’s quantitative
impairment analysis uses a combination of the income approach, which requires estimates of the present value of expected future cash flows of a reporting
unit, and the market approach, which uses financial ratios of comparable companies to arrive at an estimated value for the reporting units. Significant estimates
and assumptions used in the income approach include assessments of macroeconomic conditions, growth rates of reporting units in the near- and long-term,
expectations of the Company’s ability to execute on roadmaps and projections, and the discount rate applied to cash flows. Significant estimates used in the
market approach include the identification of comparable companies for each reporting unit, and the determination of the appropriate multiples to apply to a
reporting unit based on adjustments and consideration of specific attributes of that reporting unit. If a reporting unit’s fair value is determined to be less than its
carrying value, a goodwill impairment charge is recognized for the amount by which the reporting unit’s fair value is less than its carrying value, not to exceed
the total amount of goodwill allocated to that reporting unit.
Long-Lived and Intangible Assets
Long-lived and intangible assets to be held and used are reviewed for impairment if indicators of potential impairment exist and at least annually for indefinite-
lived intangible assets. Impairment indicators are reviewed on a quarterly basis. Assets are grouped and evaluated for impairment at the lowest level of
identifiable cash flows.
When indicators of impairment exist and assets are held for use, the Company estimates future undiscounted cash flows attributable to the related asset
groups. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated
fair values based on the expected discounted future cash flows attributable to the asset group or based on appraisals. Factors affecting impairment of assets
held for use include the ability of the specific assets to generate separately identifiable positive cash flows.
When assets are removed from operations and held for sale, the Company estimates impairment losses as the excess of the carrying value of the assets over
their fair value. Market conditions are among the factors affecting impairment of assets held for sale. Changes in any of these factors could necessitate
impairment recognition in future periods for assets held for use or assets held for sale.
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Table of Contents
Cash Equivalents
Cash equivalents consist of financial instruments that are readily convertible into cash and have original maturities of three months or less at the time of
purchase.
Accounts Receivable
Accounts receivable are primarily comprised of trade receivables presented net of rebates, price protection and an allowance for credit loss. Accounts
receivable also include unbilled receivables, which primarily represent work completed on development services recognized as revenue but not yet invoiced to
customers and semi-custom products under non-cancellable purchase orders that have no alternative use to the Company at contract inception, for which
revenue has been recognized but not yet invoiced to customers. All unbilled accounts receivables are expected to be billed and collected within twelve months.
The Company manages its exposure to customer credit risk through credit limits, credit lines, ongoing 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 payments if deemed necessary. The Company maintains an allowance for credit loss,
consisting of known specific troubled accounts as well as an amount based on overall estimated potential uncollectible accounts receivable based on historical
experience and review of their current credit quality. The Company does not believe the receivable balance from its customers represents a significant credit
risk.
Investments
Available for Sale Debt Securities. The Company classifies its investments in debt securities at the date of acquisition as available-for-sale. Available-for-sale
debt securities are reported at fair value with the related unrealized gains and losses included, net of tax, in accumulated other comprehensive income (loss), a
component of stockholders’ equity. If an available-for-sale debt security’s fair value is less than its amortized cost basis, then the Company evaluates whether
the decline is the result of a credit loss, in which case an impairment is recorded through an allowance for credit losses. Unrealized gains and losses not
attributable to credit losses are included, net of tax, in accumulated other comprehensive income (loss), a component of stockholders’ equity. Classification of
available-for-sale debt securities as current or non-current is based on the Company’s intent and belief in its ability to sell these securities and use the proceeds
from sale in operations within 12 months.
Non-marketable Securities. The Company’s investments in non-marketable securities of privately-held companies are accounted for under the measurement
alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and are periodically assessed for impairment when events or
circumstances indicate that a decline in value may have occurred. The Company's periodic assessment of impairment is made by considering available
evidence, including the investee’s general market and industry conditions and product development status. The Company also assesses the investee’s ability to
meet business milestones, its financial condition, and near-term prospects, including the rate at which the investee is using its cash, the investee’s need for
possible additional funding at a lower valuation and any bona fide offer to purchase the investee.
Fair Value Measurements
The Company’s financial instruments are measured and recorded at fair value on a recurring basis, except for non-marketable equity investments in privately-
held companies, which are generally accounted for under the measurement alternative.
Fair Value Hierarchy
The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or
liabilities. The guidance for fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following
categories:
Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices
for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data
for substantially the full term of the asset or liability.
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Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the
fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted
cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of one to 15 years
for equipment, 34 to 44 years for buildings, and leasehold improvements are measured by the shorter of the remaining terms of the leases or the estimated
useful economic lives of the improvements.
Leases
Operating and finance leases are recorded as right-of-use (ROU) assets and lease liabilities on the Company’s balance sheet. ROU assets represent the
Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the
lease. Operating and finance lease ROU assets and liabilities are initially recognized based on the present value of lease payments over the lease term. In
determining the present value of lease payments, the Company uses the implicit interest rate if readily determinable. When the implicit interest rate is not
readily determinable, the Company uses its incremental borrowing rate, which is based on its collateralized borrowing capabilities over a similar term of the
lease payments. The Company utilizes the consolidated group incremental borrowing rate for all leases as the Company has centralized treasury operations.
Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. The Company has elected the accounting policy to not
recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Operating leases are included
in operating lease ROU assets, other current liabilities, and long-term operating lease liabilities on the Company’s consolidated balance sheets. The Company’s
finance leases are immaterial.
Foreign Currency Translation/Transactions
The functional currency of the majority of the Company’s foreign subsidiaries is the U.S. dollar. For certain foreign subsidiaries where the local currency is the
functional currency, assets and liabilities are translated from foreign currencies into U.S. dollars. Gains or losses arising from translation of foreign currency
denominated assets and liabilities (i.e., cumulative translation adjustment) are included as a component of accumulated other comprehensive income (loss) in
stockholders' equity.
Assets and liabilities denominated in non-U.S. dollars have been remeasured into U.S. dollars at current exchange rates for monetary assets and liabilities and
historical exchange rates for non-monetary assets and liabilities. Non-U.S. dollar denominated transactions have been remeasured at average exchange rates
in effect during each period, except for those cost of sales and expense transactions related to non-monetary balance sheet amounts which have been
remeasured at historical exchange rates. The gains or losses from foreign currency remeasurement are included in earnings.
Marketing and Advertising Expenses
Advertising costs are expensed as incurred. In addition, the Company’s marketing and advertising expenses include certain cooperative advertising funding
obligations under customer incentive programs, which costs are recorded upon agreement with customers and vendor partners. Cooperative advertising
expenses are recorded as marketing, general and administrative expense to the extent the cash paid does not exceed the estimated fair value of the
advertising benefit received. Any excess of cash paid over the estimated fair value of the advertising benefit received is recorded as a reduction of revenue.
Total marketing and advertising expenses for 2022, 2021 and 2020 were approximately $683 million, $578 million and $314 million, respectively.
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Stock-Based Compensation
The Company estimates stock-based compensation cost for stock options at the grant date based on the option’s fair value as calculated by the Black-Scholes
model. For time-based restricted stock units (RSUs), fair value is based on the closing price of the Company’s common stock on the grant date. The Company
estimates the grant-date fair value of RSUs that involve a market condition using the Monte Carlo simulation model. The Company estimates the grant-date fair
value of stock to be issued under the Company’s Employee Stock Purchase plan (ESPP) using the Black-Scholes model. Compensation expense is recognized
over the vesting period of the applicable award using the straight-line method, except for the compensation expense related to RSUs with performance or
market conditions (PRSUs), which are recognized ratably for each vesting tranche from the service inception date to the end of the requisite service period.
Forfeiture rates are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Contingencies
From time to time the Company is a defendant or plaintiff in various legal actions that arise in the normal course of business. The Company is also subject to
income tax, indirect tax or other tax claims by tax agencies in jurisdictions in which it conducts business. In addition, the Company is a party to environmental
matters including local, regional, state and federal government clean-up activities at or near locations where the Company currently or has in the past
conducted business. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of
reasonably possible losses. A determination of the amount of reserves required for these commitments and contingencies that would be charged to earnings, if
any, includes assessing the probability of adverse outcomes and estimating the amount of potential losses. The required reserves, if any, may change due to
new developments in each matter or changes in circumstances such as a change in settlement strategy.
Income Taxes
The Company computes the provision for income taxes using the liability method and recognizes deferred tax assets and liabilities for temporary differences
between financial statement and income tax bases of assets and liabilities, as well as for operating loss and tax credit carryforwards. The Company measures
deferred tax assets and liabilities using tax rates applicable to taxable income in effect for the years in which those tax assets are expected to be realized or
settled and provides a valuation allowance against deferred tax assets when it cannot conclude that it is more likely than not that some or all deferred tax
assets will be realized. The assessment requires significant judgment and is performed in each of the applicable taxing jurisdictions. In addition, the Company
recognizes tax benefits from uncertain tax positions only if it is more likely than not that they will be sustained, based on the technical merits of the positions, on
examination by the jurisdictional tax authority.
Global Intangible Low-Taxed Income (GILTI). In 2022, the Company elected to change its method of accounting for the United States GILTI tax from recording
the tax impact in the period it is incurred to recognizing deferred taxes for temporary tax basis differences expected to reverse as GILTI tax in future years. The
change is considered preferable based on the Company’s facts and circumstances as it provides better and more timely information of expected future income
tax liabilities arising from temporary tax differences primarily associated with the Xilinx acquisition. As a result of the acquisition, the Company recorded
$27.3 billion of identified intangible assets (refer to Note 5 - Business Combinations), of which $16.9 billion are related to foreign operations which will be
amortized to income from operations over the assets’ estimated useful lives, but for which the Company will not receive a tax deduction under GILTI. This
accounting policy change resulted in the recording of $857 million of deferred tax liabilities in connection with the Xilinx acquisition as disclosed in Note 14 -
Income Taxes. In addition, for the year ended December 31, 2022, it resulted in a decrease in the income tax provision with a corresponding increase to net
income of $296 million and an increase in basic and diluted earnings per share of $0.19, as compared to the computation under the previous accounting policy.
This accounting policy change had no material impact on the Company’s historical consolidated financial statements.
62
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Accrued Interest on Unrecognized Tax Benefits. Prior to 2022, the Company reported any interest expense related to unrecognized tax benefits as a
component of Interest expense and reported any related penalties as a component of Income tax provision (benefit). In 2022, the Company elected to change
its method of accounting for tax interest expense from Interest expense to the Income tax provision (benefit) line in the Consolidated Statements of Operations.
This change in classification is considered preferable as it i) better aligns classification of tax interest with the substance of the underlying tax positions, which
are managed inclusive of interest, ii) allows for greater visibility to the cost of the Company’s debt and other financing activities, and iii) better aligns with
common industry practice and provides increased comparability. This accounting policy change resulted in a decrease in Interest expense and corresponding
increase to i) Income before income taxes and equity income and ii) Income tax provision (benefit) as reported on the Consolidated Statements of Operations of
$11 million in 2022. This accounting policy change had an immaterial effect on the Consolidated Statements of Operations in 2021 and 2020, and the Company
did not revise its previously issued consolidated financial statements for these fiscal years. This accounting policy change had no impact to net income or basic
and diluted earnings per share, or to financial statements besides the Consolidated Statements of Operations, for any period, as compared to the computation
under the previous accounting policy.
NOTE 3 – Supplemental Financial Statement Information
Accounts Receivable, net
As of December 31, 2022 and December 25, 2021, Accounts receivable, net included unbilled accounts receivable of $1.1 billion and $329 million,
respectively. Unbilled accounts receivables primarily represent work completed for development services and on custom products for which revenue has been
recognized but not yet invoiced. All unbilled accounts receivable are expected to be billed and collected within 12 months.
Inventories
December 31,
2022
December 25,
2021
(In millions)
Raw materials
$
231
$
82
Work in process
2,648
1,676
Finished goods
892
197
Total inventories
$
3,771
$
1,955
Property and Equipment, net
December 31,
2022
December 25,
2021
(In millions)
Land
$
120
$
—
Building and leasehold improvements
594
206
Equipment
2,163
1,534
Construction in progress
143
96
Property and equipment, gross
3,020
1,836
Accumulated depreciation
(1,507)
(1,134)
Total property and equipment, net
$
1,513
$
702
Depreciation expense for 2022, 2021 and 2020 was $439 million, $296 million and $217 million, respectively.
Other Non-current Assets
December 31,
2022
December 25,
2021
(In millions)
Prepaid long-term supply agreements
$
1,252
$
916
Software and technology licenses, net
362
323
Other
538
239
Total other non-current assets
$
2,152
$
1,478
Prepaid long-term supply agreements relate to payments made to vendors to secure long-term supply capacity.
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Accrued Liabilities
December 31,
2022
December 25,
2021
(In millions)
Accrued marketing programs
$
876
$
933
Accrued compensation and benefits
701
705
Customer program liabilities
859
314
Other accrued and current liabilities
641
472
Total accrued liabilities
$
3,077
$
2,424
Revenue
Revenue allocated to remaining performance obligations that are unsatisfied (or partially unsatisfied) include amounts received from customers and amounts
that will be invoiced and recognized as revenue in future periods for development services, IP licensing and product revenue. As of December 31, 2022, the
aggregate transaction price allocated to remaining performance obligations under contracts with an original expected duration of more than one
year was $247 million, of which $213 million is expected to be recognized in the next 12 months. The revenue allocated to remaining performance obligations
does not include amounts which have an original expected duration of one year or less.
Revenue recognized over time associated with custom products and development services accounted for approximately 24%, 23% and 18% of the Company’s
revenue in 2022, 2021 and 2020, respectively.
NOTE 4 – Segment Reporting
Management, including the Chief Operating Decision Maker (CODM), who is the Company’s Chief Executive Officer, reviews and assesses operating
performance using segment net revenue and operating income (loss). These performance measures include the allocation of expenses to the reportable
segments based on management’s judgment. In the second quarter of fiscal year 2022, the Company updated its segment reporting structure to align financial
reporting with the manner in which the Company manages its business in strategic end markets. The Company’s disclosed measure of segment operating
results has been updated consistent with the revised manner in which the Company’s CODM assesses the company’s financial performance and allocates
resources. All prior-period segment data have been retrospectively adjusted.
The Company’s four reportable segments are:
•
the Data Center segment, which primarily includes server CPUs and GPUs, DPUs, FPGAs and Adaptive SoC products for data centers;
•
the Client segment, which primarily includes CPUs, accelerated processing units that integrate microprocessors and GPUs (APUs), and chipsets for
desktop and notebook personal computers;
•
the Gaming segment, which primarily includes discrete GPUs, semi-custom SoC products and development services; and
•
the Embedded segment, which primarily includes embedded CPUs and GPUs, FPGAs, and Adaptive SoC products.
From time to time, the Company may also sell or license portions of its IP portfolio.
In addition to these reportable segments, the Company has an All Other category, which is not a reportable segment. This category primarily includes certain
expenses and credits that are not allocated to any of the reportable segments because the CODM does not consider these expenses and credits in evaluating
the performance of the reportable segments. This category primarily includes amortization of acquisition-related intangibles, employee stock-based
compensation expense, acquisition-related costs and licensing gain.
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Table of Contents
The
following
table
provides
a
summary
of
net
revenue
and
operating
income
(loss)
by
segment
for
2022,
2021
and
2020.
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Net revenue:
Data Center
$
6,043
$
3,694
$
1,685
Client
6,201
6,887
5,189
Gaming
6,805
5,607
2,746
Embedded
4,552
246
143
Total net revenue
$
23,601
$
16,434
$
9,763
Operating income
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You are in a conversation about the following user information.
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(3)
Total stockholders’ equity
54,750
7,497
Total liabilities and stockholders’ equity
$
67,580
$
12,419
See accompanying notes to consolidated financial statements.
53
Table of Contents
Advanced Micro Devices, Inc.
Consolidated Statements of Stockholders’ Equity
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Capital stock
Common stock
Balance, beginning of period
$
12
$
12
$
12
Issuance of common stock as consideration for acquisition
4
—
—
Balance, end of period
$
16
$
12
$
12
Additional paid-in capital
Balance, beginning of period
$
11,069
$
10,544
$
9,963
Common stock issued under employee equity plans
167
104
85
Stock-based compensation
1,080
379
274
Issuance of common stock to settle convertible debt
—
25
217
Issuance of common stock as consideration for acquisition
45,372
—
—
Fair value of replacement share-based awards related to acquisition
275
—
—
Issuance of common stock warrants
42
17
5
Balance, end of period
$
58,005
$
11,069
$
10,544
Treasury stock
Balance, beginning of period
$
(2,130)
$
(131)
$
(53)
Repurchases of common stock
(3,702)
(1,762)
—
Reissuance of treasury stock as consideration for acquisition
3,138
—
—
Common stock repurchases for tax withholding on employee equity plans
(405)
(237)
(78)
Balance, end of period
$
(3,099)
$
(2,130)
$
(131)
Accumulated deficit
Balance, beginning of period
$
(1,451)
$
(4,605)
$
(7,095)
Cumulative effect of adoption of accounting standard
—
(8)
—
Net income
1,320
3,162
2,490
Balance, end of period
$
(131)
$
(1,451)
$
(4,605)
Accumulated other comprehensive income (loss)
Balance, beginning of period
$
(3)
$
17
$
—
Other comprehensive income (loss)
(38)
(20)
17
Balance, end of period
$
(41)
$
(3)
$
17
Total stockholders' equity
$
54,750
$
7,497
$
5,837
See accompanying notes to consolidated financial statements.
54
Table of Contents
Advanced Micro Devices, Inc.
Consolidated Statements of Cash Flows
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Cash flows from operating activities:
Net income
$
1,320
$
3,162
$
2,490
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
4,174
407
312
Stock-based compensation
1,081
379
274
Amortization of debt discount and issuance costs
—
5
14
Amortization of operating lease right-of-use assets
88
56
42
Amortization of inventory fair value adjustment
189
—
—
Loss on debt redemption, repurchase and conversion
—
7
54
Loss on sale or disposal of property and equipment
16
34
33
Deferred income taxes
(1,505)
308
(1,223)
(Gains) losses on equity investments, net
62
(56)
(2)
Other
(14)
(7)
8
Changes in operating assets and liabilities:
Accounts receivable, net
(1,091)
(640)
(219)
Inventories
(1,401)
(556)
(417)
Receivables from related parties
(13)
8
10
Prepaid expenses and other assets
(1,197)
(920)
(231)
Payables to related parties
379
7
(135)
Accounts payable
931
801
(513)
Accrued liabilities and other
546
526
574
Net cash provided by operating activities
3,565
3,521
1,071
Cash flows from investing activities:
Purchases of property and equipment
(450)
(301)
(294)
Purchases of short-term investments
(2,667)
(2,056)
(850)
Proceeds from maturity of short-term investments
4,310
1,678
192
Cash received from acquisition of Xilinx
2,366
—
—
Acquisition of Pensando, net of cash acquired
(1,544)
—
—
Other
(16)
(7)
—
Net cash provided by (used in) investing activities
1,999
(686)
(952)
Cash flows from financing activities:
Proceeds from debt, net of issuance costs
991
—
200
Repayment of debt
(312)
—
(200)
Proceeds from sales of common stock through employee equity plans
167
104
85
Repurchases of common stock
(3,702)
(1,762)
—
Common stock repurchases for tax withholding on employee equity plans
(406)
(237)
(78)
Other
(2)
—
(1)
Net cash (used in) provided by financing activities
(3,264)
(1,895)
6
Net increase in cash and cash equivalents
2,300
940
125
Cash and cash equivalents at beginning of year
2,535
1,595
1,470
Cash and cash equivalents at end of year
$
4,835
$
2,535
$
1,595
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Table of Contents
Advanced Micro Devices, Inc.
Consolidated Statements of Cash Flows
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Supplemental cash flow information:
Cash paid during the year for:
Interest
$
85
$
25
$
31
Income taxes, net of refund
$
685
$
35
$
8
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid
$
157
$
72
$
31
Issuance of common stock to settle convertible debt
$
—
$
25
$
217
Issuance of common stock and treasury stock for the acquisition of Xilinx
$
48,514
$
—
$
—
Fair value of replacement share-based awards related to acquisition of Xilinx
$
275
$
—
$
—
Transfer of assets for the acquisition of property and equipment
$
13
$
37
$
111
Non-cash activities for leases:
Operating lease right-of-use assets acquired by assuming related liabilities
$
115
$
227
$
45
See accompanying notes to consolidated financial statements.
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Table of Contents
Advanced Micro Devices, Inc.
Notes to Consolidated Financial Statements
NOTE 1 – The Company
Advanced Micro Devices, Inc. is a global semiconductor company. References herein to AMD or the Company mean Advanced Micro Devices, Inc. and its
consolidated subsidiaries. AMD’s products include x86 microprocessors (CPUs) and graphics processing units (GPUs), as standalone devices or as
incorporated into accelerated processing units (APUs), chipsets, data center and professional GPUs, embedded processors, semi-custom System-on-Chip
(SoC) products, microprocessor and SoC development services and technology, data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), and
Adaptive SoC products. From time to time, the Company may also sell or license portions of its intellectual property (IP) portfolio.
On February 14, 2022 (the Xilinx Acquisition Date), the Company completed the acquisition of Xilinx, Inc. (Xilinx). On May 26, 2022 (the Pensando Acquisition
Date), the Company completed the acquisition of Pensando Systems, Inc. (Pensando). See Note 5 - Business Combinations for additional information on these
acquisitions.
NOTE 2 – Basis of Presentation and Significant Accounting Policies
Fiscal Year. The Company uses a 52- or 53-week fiscal year ending on the last Saturday in December. Fiscal 2022, 2021 and 2020 ended on December 31,
2022, December 25, 2021 and December 26, 2020, respectively. Fiscal 2022 consisted of 53 weeks, and fiscal 2021 and 2020 each consisted of 52 weeks.
Principles of Consolidation. The consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries. Upon
consolidation, all inter-company accounts and transactions have been eliminated.
Reclassification. Certain prior period amounts have been reclassified to conform to current period presentation.
Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at
the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results are likely to differ from
those estimates, and such differences may be material to the financial statements. Areas where management uses subjective judgment include, but are not
limited to, revenue allowances, inventory valuation, valuation of goodwill and long-lived and intangible assets, and income taxes.
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the
Company expects to receive in exchange for those goods or services. Sales, value-added, and other taxes collected concurrently with the provision of goods or
services are excluded from revenue. Shipping and handling costs associated with product sales are included in cost of sales. Substantially all the Company’s
revenue is derived from product sales, representing a single performance obligation.
Customers are generally required to pay for products and services within the Company’s standard contractual terms, which are typically net 30 to 60 days. The
Company has determined that it does not have significant financing components in its contracts with customers.
Non-custom products
The Company transfers control and recognizes revenue when non-custom products are shipped to customers, which includes original equipment
manufacturers (OEM) and distributors, in accordance with the shipping terms of the sale. Non-custom product arrangements generally comprise a single
performance obligation. Certain OEMs may be entitled to rights of return and rebates under OEM agreements. The Company also sells to distributors under
terms allowing the majority of distributors certain rights of return and price protection on unsold merchandise held by them. The Company estimates the amount
of variable consideration under OEM and distributor arrangements and, accordingly, records a provision for product returns, allowances for price protection and
rebates based on actual historical experience and any known events.
57
Table of Contents
The Company offers incentive programs to certain customers, including cooperative advertising, marketing promotions, volume-based incentives and special
pricing arrangements. Where funds provided for such programs can be estimated, the Company recognizes a reduction to revenue at the time the related
revenue is recognized; otherwise, the Company recognizes such reduction to revenue at the later of when: i) the related revenue transaction occurs; or ii) the
program is offered. 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 activities, such amounts are recognized as a reduction to revenue unless they qualify for expense recognition.
Constraints of variable consideration have not been material.
Custom products
Custom products which are associated with the Company’s Gaming segment (semi-custom products), sold under non-cancellable purchases orders, for which
the Company has an enforceable right to payment, and which have no alternative use to the Company at contract inception, are recognized as revenue, over
the time of production of the products by the Company. The Company utilizes a cost-based input method, calculated as cost incurred plus estimated margin, to
determine the amount of revenue to recognize for in-process, but incomplete, customer orders at a reporting date. The Company believes that a cost-based
input method is the most appropriate manner to measure how the Company satisfies its performance obligations to customers because the effort and costs
incurred best depict the Company’s satisfaction of its performance obligation.
Sales of semi-custom products are not subject to a right of return. Custom products arrangements generally involve a single performance obligation. There are
no variable consideration estimates associated with custom products.
Development and intellectual property licensing agreements
From time to time, the Company may enter into arrangements with customers that combine the provision of development services and a license to the right to
use the Company’s IP. These arrangements are deemed to be single or multiple performance obligations based upon the nature of the arrangements. Revenue
is recognized upon the transfer of control, over time or at a point in time, depending on the nature of the arrangements. The Company evaluates whether the
licensing component is distinct. A licensing component is distinct if it is both (i) capable of being distinct and (ii) distinct in the context of the arrangement. If the
license is not distinct, it is combined with the development services as a single performance obligation and recognized over time. If the license is distinct,
revenue is recognized at a point in time when the customer has the ability to benefit from the license.
From time to time, the Company may enter into arrangements with customers that solely involve the sale or licensing of its patents or IP. Generally, there are no
performance obligations beyond transferring the designated license to the Company’s patents or IP. Accordingly, revenue is recognized at a point in time when
the customer has the ability to benefit from the license.
There are no variable consideration estimates associated with either combined development and IP arrangements or for standalone arrangements involving
either the sale or licensing of IP.
Inventories
The Company values inventory at standard cost, adjusted to approximate the lower of actual cost or estimated net realizable value using assumptions about
future demand and market conditions. In determining excess or obsolescence reserves for its products, the Company considers assumptions such as changes
in business and economic conditions, other-than-temporary decreases in demand for its products, and changes in technology or customer requirements. In
determining the lower of cost or net realizable value reserves, the Company considers assumptions such as recent historical sales activity and selling prices, as
well as estimates of future selling prices. The Company fully reserves for inventories and non-cancellable purchase orders for inventory deemed obsolete. The
Company performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances and non-cancellable purchase
orders to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or
market conditions become less favorable than those projected by the Company, additional inventory carrying value adjustments may be required.
58
Table of Contents
Business Combinations
The Company is required to use the acquisition method of accounting for business combinations. The acquisition method of accounting requires the Company
to allocate the purchase consideration to the assets acquired and liabilities assumed from the acquiree based on their respective fair values as of the
acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as
goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially
with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future revenue growth rates and
margins, future changes in technology, time to recreate customer relationships, useful lives, and discount rates. Fair value estimates are based on the
assumptions that management believes a market participant would use in pricing the asset or liability. These estimates are inherently uncertain and, therefore,
actual results may differ from the estimates made. As a result, during the measurement period of up to one year from the acquisition date, the Company may
record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or
final determination of the fair value of the purchase price of an acquisition, whichever comes first, any subsequent adjustments are recorded in the
Consolidated Statements of Operations.
Goodwill
The Company performs its goodwill impairment analysis as of the first day of the fourth quarter of each year and, if certain events or circumstances indicate that
an impairment loss may have been incurred, on a more frequent basis. The analysis may include both qualitative and quantitative factors to assess the
likelihood of an impairment.
The Company has the option to first perform qualitative testing to determine if it is more likely than not that the fair value of a reporting unit exceeds its carrying
amount. Qualitative factors include industry and market considerations, overall financial performance, share price trends and market capitalization and
Company-specific events. If the Company concludes it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, the Company
does not proceed to perform a quantitative impairment test.
If the Company concludes it is more likely than not that the fair value of a reporting unit is less than its carrying value or elects to bypass the qualitative test, a
quantitative goodwill impairment test will be performed by comparing the fair value of each reporting unit to its carrying value. The Company’s quantitative
impairment analysis uses a combination of the income approach, which requires estimates of the present value of expected future cash flows of a reporting
unit, and the market approach, which uses financial ratios of comparable companies to arrive at an estimated value for the reporting units. Significant estimates
and assumptions used in the income approach include assessments of macroeconomic conditions, growth rates of reporting units in the near- and long-term,
expectations of the Company’s ability to execute on roadmaps and projections, and the discount rate applied to cash flows. Significant estimates used in the
market approach include the identification of comparable companies for each reporting unit, and the determination of the appropriate multiples to apply to a
reporting unit based on adjustments and consideration of specific attributes of that reporting unit. If a reporting unit’s fair value is determined to be less than its
carrying value, a goodwill impairment charge is recognized for the amount by which the reporting unit’s fair value is less than its carrying value, not to exceed
the total amount of goodwill allocated to that reporting unit.
Long-Lived and Intangible Assets
Long-lived and intangible assets to be held and used are reviewed for impairment if indicators of potential impairment exist and at least annually for indefinite-
lived intangible assets. Impairment indicators are reviewed on a quarterly basis. Assets are grouped and evaluated for impairment at the lowest level of
identifiable cash flows.
When indicators of impairment exist and assets are held for use, the Company estimates future undiscounted cash flows attributable to the related asset
groups. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated
fair values based on the expected discounted future cash flows attributable to the asset group or based on appraisals. Factors affecting impairment of assets
held for use include the ability of the specific assets to generate separately identifiable positive cash flows.
When assets are removed from operations and held for sale, the Company estimates impairment losses as the excess of the carrying value of the assets over
their fair value. Market conditions are among the factors affecting impairment of assets held for sale. Changes in any of these factors could necessitate
impairment recognition in future periods for assets held for use or assets held for sale.
59
Table of Contents
Cash Equivalents
Cash equivalents consist of financial instruments that are readily convertible into cash and have original maturities of three months or less at the time of
purchase.
Accounts Receivable
Accounts receivable are primarily comprised of trade receivables presented net of rebates, price protection and an allowance for credit loss. Accounts
receivable also include unbilled receivables, which primarily represent work completed on development services recognized as revenue but not yet invoiced to
customers and semi-custom products under non-cancellable purchase orders that have no alternative use to the Company at contract inception, for which
revenue has been recognized but not yet invoiced to customers. All unbilled accounts receivables are expected to be billed and collected within twelve months.
The Company manages its exposure to customer credit risk through credit limits, credit lines, ongoing 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 payments if deemed necessary. The Company maintains an allowance for credit loss,
consisting of known specific troubled accounts as well as an amount based on overall estimated potential uncollectible accounts receivable based on historical
experience and review of their current credit quality. The Company does not believe the receivable balance from its customers represents a significant credit
risk.
Investments
Available for Sale Debt Securities. The Company classifies its investments in debt securities at the date of acquisition as available-for-sale. Available-for-sale
debt securities are reported at fair value with the related unrealized gains and losses included, net of tax, in accumulated other comprehensive income (loss), a
component of stockholders’ equity. If an available-for-sale debt security’s fair value is less than its amortized cost basis, then the Company evaluates whether
the decline is the result of a credit loss, in which case an impairment is recorded through an allowance for credit losses. Unrealized gains and losses not
attributable to credit losses are included, net of tax, in accumulated other comprehensive income (loss), a component of stockholders’ equity. Classification of
available-for-sale debt securities as current or non-current is based on the Company’s intent and belief in its ability to sell these securities and use the proceeds
from sale in operations within 12 months.
Non-marketable Securities. The Company’s investments in non-marketable securities of privately-held companies are accounted for under the measurement
alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and are periodically assessed for impairment when events or
circumstances indicate that a decline in value may have occurred. The Company's periodic assessment of impairment is made by considering available
evidence, including the investee’s general market and industry conditions and product development status. The Company also assesses the investee’s ability to
meet business milestones, its financial condition, and near-term prospects, including the rate at which the investee is using its cash, the investee’s need for
possible additional funding at a lower valuation and any bona fide offer to purchase the investee.
Fair Value Measurements
The Company’s financial instruments are measured and recorded at fair value on a recurring basis, except for non-marketable equity investments in privately-
held companies, which are generally accounted for under the measurement alternative.
Fair Value Hierarchy
The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or
liabilities. The guidance for fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following
categories:
Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices
for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data
for substantially the full term of the asset or liability.
60
Table of Contents
Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the
fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted
cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of one to 15 years
for equipment, 34 to 44 years for buildings, and leasehold improvements are measured by the shorter of the remaining terms of the leases or the estimated
useful economic lives of the improvements.
Leases
Operating and finance leases are recorded as right-of-use (ROU) assets and lease liabilities on the Company’s balance sheet. ROU assets represent the
Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the
lease. Operating and finance lease ROU assets and liabilities are initially recognized based on the present value of lease payments over the lease term. In
determining the present value of lease payments, the Company uses the implicit interest rate if readily determinable. When the implicit interest rate is not
readily determinable, the Company uses its incremental borrowing rate, which is based on its collateralized borrowing capabilities over a similar term of the
lease payments. The Company utilizes the consolidated group incremental borrowing rate for all leases as the Company has centralized treasury operations.
Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. The Company has elected the accounting policy to not
recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Operating leases are included
in operating lease ROU assets, other current liabilities, and long-term operating lease liabilities on the Company’s consolidated balance sheets. The Company’s
finance leases are immaterial.
Foreign Currency Translation/Transactions
The functional currency of the majority of the Company’s foreign subsidiaries is the U.S. dollar. For certain foreign subsidiaries where the local currency is the
functional currency, assets and liabilities are translated from foreign currencies into U.S. dollars. Gains or losses arising from translation of foreign currency
denominated assets and liabilities (i.e., cumulative translation adjustment) are included as a component of accumulated other comprehensive income (loss) in
stockholders' equity.
Assets and liabilities denominated in non-U.S. dollars have been remeasured into U.S. dollars at current exchange rates for monetary assets and liabilities and
historical exchange rates for non-monetary assets and liabilities. Non-U.S. dollar denominated transactions have been remeasured at average exchange rates
in effect during each period, except for those cost of sales and expense transactions related to non-monetary balance sheet amounts which have been
remeasured at historical exchange rates. The gains or losses from foreign currency remeasurement are included in earnings.
Marketing and Advertising Expenses
Advertising costs are expensed as incurred. In addition, the Company’s marketing and advertising expenses include certain cooperative advertising funding
obligations under customer incentive programs, which costs are recorded upon agreement with customers and vendor partners. Cooperative advertising
expenses are recorded as marketing, general and administrative expense to the extent the cash paid does not exceed the estimated fair value of the
advertising benefit received. Any excess of cash paid over the estimated fair value of the advertising benefit received is recorded as a reduction of revenue.
Total marketing and advertising expenses for 2022, 2021 and 2020 were approximately $683 million, $578 million and $314 million, respectively.
61
Table of Contents
Stock-Based Compensation
The Company estimates stock-based compensation cost for stock options at the grant date based on the option’s fair value as calculated by the Black-Scholes
model. For time-based restricted stock units (RSUs), fair value is based on the closing price of the Company’s common stock on the grant date. The Company
estimates the grant-date fair value of RSUs that involve a market condition using the Monte Carlo simulation model. The Company estimates the grant-date fair
value of stock to be issued under the Company’s Employee Stock Purchase plan (ESPP) using the Black-Scholes model. Compensation expense is recognized
over the vesting period of the applicable award using the straight-line method, except for the compensation expense related to RSUs with performance or
market conditions (PRSUs), which are recognized ratably for each vesting tranche from the service inception date to the end of the requisite service period.
Forfeiture rates are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Contingencies
From time to time the Company is a defendant or plaintiff in various legal actions that arise in the normal course of business. The Company is also subject to
income tax, indirect tax or other tax claims by tax agencies in jurisdictions in which it conducts business. In addition, the Company is a party to environmental
matters including local, regional, state and federal government clean-up activities at or near locations where the Company currently or has in the past
conducted business. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of
reasonably possible losses. A determination of the amount of reserves required for these commitments and contingencies that would be charged to earnings, if
any, includes assessing the probability of adverse outcomes and estimating the amount of potential losses. The required reserves, if any, may change due to
new developments in each matter or changes in circumstances such as a change in settlement strategy.
Income Taxes
The Company computes the provision for income taxes using the liability method and recognizes deferred tax assets and liabilities for temporary differences
between financial statement and income tax bases of assets and liabilities, as well as for operating loss and tax credit carryforwards. The Company measures
deferred tax assets and liabilities using tax rates applicable to taxable income in effect for the years in which those tax assets are expected to be realized or
settled and provides a valuation allowance against deferred tax assets when it cannot conclude that it is more likely than not that some or all deferred tax
assets will be realized. The assessment requires significant judgment and is performed in each of the applicable taxing jurisdictions. In addition, the Company
recognizes tax benefits from uncertain tax positions only if it is more likely than not that they will be sustained, based on the technical merits of the positions, on
examination by the jurisdictional tax authority.
Global Intangible Low-Taxed Income (GILTI). In 2022, the Company elected to change its method of accounting for the United States GILTI tax from recording
the tax impact in the period it is incurred to recognizing deferred taxes for temporary tax basis differences expected to reverse as GILTI tax in future years. The
change is considered preferable based on the Company’s facts and circumstances as it provides better and more timely information of expected future income
tax liabilities arising from temporary tax differences primarily associated with the Xilinx acquisition. As a result of the acquisition, the Company recorded
$27.3 billion of identified intangible assets (refer to Note 5 - Business Combinations), of which $16.9 billion are related to foreign operations which will be
amortized to income from operations over the assets’ estimated useful lives, but for which the Company will not receive a tax deduction under GILTI. This
accounting policy change resulted in the recording of $857 million of deferred tax liabilities in connection with the Xilinx acquisition as disclosed in Note 14 -
Income Taxes. In addition, for the year ended December 31, 2022, it resulted in a decrease in the income tax provision with a corresponding increase to net
income of $296 million and an increase in basic and diluted earnings per share of $0.19, as compared to the computation under the previous accounting policy.
This accounting policy change had no material impact on the Company’s historical consolidated financial statements.
62
Table of Contents
Accrued Interest on Unrecognized Tax Benefits. Prior to 2022, the Company reported any interest expense related to unrecognized tax benefits as a
component of Interest expense and reported any related penalties as a component of Income tax provision (benefit). In 2022, the Company elected to change
its method of accounting for tax interest expense from Interest expense to the Income tax provision (benefit) line in the Consolidated Statements of Operations.
This change in classification is considered preferable as it i) better aligns classification of tax interest with the substance of the underlying tax positions, which
are managed inclusive of interest, ii) allows for greater visibility to the cost of the Company’s debt and other financing activities, and iii) better aligns with
common industry practice and provides increased comparability. This accounting policy change resulted in a decrease in Interest expense and corresponding
increase to i) Income before income taxes and equity income and ii) Income tax provision (benefit) as reported on the Consolidated Statements of Operations of
$11 million in 2022. This accounting policy change had an immaterial effect on the Consolidated Statements of Operations in 2021 and 2020, and the Company
did not revise its previously issued consolidated financial statements for these fiscal years. This accounting policy change had no impact to net income or basic
and diluted earnings per share, or to financial statements besides the Consolidated Statements of Operations, for any period, as compared to the computation
under the previous accounting policy.
NOTE 3 – Supplemental Financial Statement Information
Accounts Receivable, net
As of December 31, 2022 and December 25, 2021, Accounts receivable, net included unbilled accounts receivable of $1.1 billion and $329 million,
respectively. Unbilled accounts receivables primarily represent work completed for development services and on custom products for which revenue has been
recognized but not yet invoiced. All unbilled accounts receivable are expected to be billed and collected within 12 months.
Inventories
December 31,
2022
December 25,
2021
(In millions)
Raw materials
$
231
$
82
Work in process
2,648
1,676
Finished goods
892
197
Total inventories
$
3,771
$
1,955
Property and Equipment, net
December 31,
2022
December 25,
2021
(In millions)
Land
$
120
$
—
Building and leasehold improvements
594
206
Equipment
2,163
1,534
Construction in progress
143
96
Property and equipment, gross
3,020
1,836
Accumulated depreciation
(1,507)
(1,134)
Total property and equipment, net
$
1,513
$
702
Depreciation expense for 2022, 2021 and 2020 was $439 million, $296 million and $217 million, respectively.
Other Non-current Assets
December 31,
2022
December 25,
2021
(In millions)
Prepaid long-term supply agreements
$
1,252
$
916
Software and technology licenses, net
362
323
Other
538
239
Total other non-current assets
$
2,152
$
1,478
Prepaid long-term supply agreements relate to payments made to vendors to secure long-term supply capacity.
63
Table of Contents
Accrued Liabilities
December 31,
2022
December 25,
2021
(In millions)
Accrued marketing programs
$
876
$
933
Accrued compensation and benefits
701
705
Customer program liabilities
859
314
Other accrued and current liabilities
641
472
Total accrued liabilities
$
3,077
$
2,424
Revenue
Revenue allocated to remaining performance obligations that are unsatisfied (or partially unsatisfied) include amounts received from customers and amounts
that will be invoiced and recognized as revenue in future periods for development services, IP licensing and product revenue. As of December 31, 2022, the
aggregate transaction price allocated to remaining performance obligations under contracts with an original expected duration of more than one
year was $247 million, of which $213 million is expected to be recognized in the next 12 months. The revenue allocated to remaining performance obligations
does not include amounts which have an original expected duration of one year or less.
Revenue recognized over time associated with custom products and development services accounted for approximately 24%, 23% and 18% of the Company’s
revenue in 2022, 2021 and 2020, respectively.
NOTE 4 – Segment Reporting
Management, including the Chief Operating Decision Maker (CODM), who is the Company’s Chief Executive Officer, reviews and assesses operating
performance using segment net revenue and operating income (loss). These performance measures include the allocation of expenses to the reportable
segments based on management’s judgment. In the second quarter of fiscal year 2022, the Company updated its segment reporting structure to align financial
reporting with the manner in which the Company manages its business in strategic end markets. The Company’s disclosed measure of segment operating
results has been updated consistent with the revised manner in which the Company’s CODM assesses the company’s financial performance and allocates
resources. All prior-period segment data have been retrospectively adjusted.
The Company’s four reportable segments are:
•
the Data Center segment, which primarily includes server CPUs and GPUs, DPUs, FPGAs and Adaptive SoC products for data centers;
•
the Client segment, which primarily includes CPUs, accelerated processing units that integrate microprocessors and GPUs (APUs), and chipsets for
desktop and notebook personal computers;
•
the Gaming segment, which primarily includes discrete GPUs, semi-custom SoC products and development services; and
•
the Embedded segment, which primarily includes embedded CPUs and GPUs, FPGAs, and Adaptive SoC products.
From time to time, the Company may also sell or license portions of its IP portfolio.
In addition to these reportable segments, the Company has an All Other category, which is not a reportable segment. This category primarily includes certain
expenses and credits that are not allocated to any of the reportable segments because the CODM does not consider these expenses and credits in evaluating
the performance of the reportable segments. This category primarily includes amortization of acquisition-related intangibles, employee stock-based
compensation expense, acquisition-related costs and licensing gain.
64
Table of Contents
The
following
table
provides
a
summary
of
net
revenue
and
operating
income
(loss)
by
segment
for
2022,
2021
and
2020.
Year Ended
December 31,
2022
December 25,
2021
December 26,
2020
(In millions)
Net revenue:
Data Center
$
6,043
$
3,694
$
1,685
Client
6,201
6,887
5,189
Gaming
6,805
5,607
2,746
Embedded
4,552
246
143
Total net revenue
$
23,601
$
16,434
$
9,763
Operating income
</info> | todo | [
{
"content": "How many times is the word \"million\" mentioned throughout the provided document?",
"role": "user",
"token_ids": [
4438,
1690,
3115,
374,
279,
3492,
330,
59413,
1,
9932,
6957,
279,
3984,
2246,
30,
... | {
"seed_prompt": "\n Please generate a question that requires counting how frequently different events occur in the document.\n This question should be about statistical properties of the document, rather than the statement details.\n For instance, you could ask someone to count the number of times the word \"million\" is mentioned or\n count the length of the shortest section title.\n Do NOT include any other text or explanation other than the question \n ",
"tool_calls": []
} |
"\nYou are in a conversation about the following user information.\n\n<info>\n investments, net\n62(...TRUNCATED) | todo | [{"content":"How many times is the word \"net\" used in the document?","role":"user","token_ids":[44(...TRUNCATED) | {"seed_prompt":"\n Please generate a question that requires counting how frequently different(...TRUNCATED) |
"\nYou are in a conversation about the following user information.\n\n<info>\n investments, net\n62(...TRUNCATED) | todo | [{"content":"What was the recorded purchase consideration for the acquisition of Pensando, net of de(...TRUNCATED) | {"seed_prompt":"\n Please generate a question to test someone’s ability to remember factual(...TRUNCATED) |
"\nYou are in a conversation about the following user information.\n\n<info>\n investments, net\n62(...TRUNCATED) | todo | [{"content":"What is the approximate total amount of property and equipment net, and how does it com(...TRUNCATED) | {"seed_prompt":"\n Please generate a multi-hop question that tests someone’s ability to use(...TRUNCATED) |
"\nYou are in a conversation about the following user information.\n\n<info>\n investments, net\n62(...TRUNCATED) | todo | [{"content":"What was the recorded purchase consideration for the acquisition of Pensando, net of de(...TRUNCATED) | {"seed_prompt":"\n Please generate a question to test someone’s ability to remember factual(...TRUNCATED) |
"\nYou are in a conversation about the following user information.\n\n<info>\nBeginning balance\n$\n(...TRUNCATED) | todo | [{"content":"What is the title of the first section in the document, and which section comes first i(...TRUNCATED) | {"seed_prompt":"\n Please generate a question that requires understanding the structure of th(...TRUNCATED) |
"\nYou are in a conversation about the following user information.\n\n<info>\nBeginning balance\n$\n(...TRUNCATED) | todo | [{"content":"What is the date of the agreement that will provide AMD a license to the Monterey Resea(...TRUNCATED) | {"seed_prompt":"\n Please generate a question to test someone’s ability to remember factual(...TRUNCATED) |
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