þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 94-1692300 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
One AMD Place Sunnyvale, California | 94085 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | þ | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
Emerging growth company | ¨ |
Page No. | ||
ITEM 1. | FINANCIAL STATEMENTS |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
(In millions, except per share amounts) | |||||||||||||||
Net revenue | $ | 1,643 | $ | 1,307 | $ | 3,849 | $ | 3,166 | |||||||
Cost of sales | 1,070 | 1,248 | 2,541 | 2,519 | |||||||||||
Gross margin | 573 | 59 | 1,308 | 647 | |||||||||||
Research and development | 315 | 259 | 860 | 744 | |||||||||||
Marketing, general and administrative | 132 | 117 | 378 | 339 | |||||||||||
Restructuring and other special charges, net | — | — | — | (10 | ) | ||||||||||
Licensing gain | — | (24 | ) | (52 | ) | (57 | ) | ||||||||
Operating income (loss) | 126 | (293 | ) | 122 | (369 | ) | |||||||||
Interest expense | (31 | ) | (41 | ) | (95 | ) | (122 | ) | |||||||
Other income (expense), net | (3 | ) | (63 | ) | (11 | ) | 87 | ||||||||
Income (loss) before equity loss and income taxes | 92 | (397 | ) | 16 | (404 | ) | |||||||||
Provision for income taxes | 19 | 4 | 27 | 34 | |||||||||||
Equity loss in investee | (2 | ) | (5 | ) | (7 | ) | (8 | ) | |||||||
Net income (loss) | $ | 71 | $ | (406 | ) | $ | (18 | ) | $ | (446 | ) | ||||
Net income (loss) per share | |||||||||||||||
Basic | $ | 0.07 | $ | (0.50 | ) | $ | (0.02 | ) | $ | (0.56 | ) | ||||
Diluted | $ | 0.07 | $ | (0.50 | ) | $ | (0.02 | ) | $ | (0.56 | ) | ||||
Shares used in per share calculation | |||||||||||||||
Basic | 957 | 815 | 947 | 801 | |||||||||||
Diluted | 1,042 | 815 | 947 | 801 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
(In millions) | |||||||||||||||
Net income (loss) | $ | 71 | $ | (406 | ) | $ | (18 | ) | $ | (446 | ) | ||||
Other comprehensive income, net of tax: | |||||||||||||||
Unrealized gains (losses) on available-for-sale securities: | |||||||||||||||
Unrealized gains (losses) arising during the period | — | 1 | — | — | |||||||||||
Unrealized gains (losses) on cash flow hedges: | |||||||||||||||
Unrealized gains arising during the period | 5 | — | 11 | 4 | |||||||||||
Reclassification adjustment for (gains) losses realized and included in net income (loss) | (3 | ) | (1 | ) | (4 | ) | 1 | ||||||||
Total change in unrealized gains on cash flow hedges | 2 | (1 | ) | 7 | 5 | ||||||||||
Total other comprehensive income | 2 | — | 7 | 5 | |||||||||||
Total comprehensive income (loss) | $ | 73 | $ | (406 | ) | $ | (11 | ) | $ | (441 | ) |
September 30, 2017 | December 31, 2016 | ||||||
(In millions, except par value amounts) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 879 | $ | 1,264 | |||
Accounts receivable, net | 771 | 311 | |||||
Inventories, net | 794 | 751 | |||||
Prepayment and other receivables - related parties | 26 | 32 | |||||
Prepaid expenses | 72 | 63 | |||||
Other current assets | 157 | 109 | |||||
Total current assets | 2,699 | 2,530 | |||||
Property, plant and equipment, net | 236 | 164 | |||||
Goodwill | 289 | 289 | |||||
Investment: equity method | 57 | 59 | |||||
Other assets | 305 | 279 | |||||
Total assets | $ | 3,586 | $ | 3,321 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 70 | $ | — | |||
Accounts payable | 472 | 440 | |||||
Payables to related parties | 444 | 383 | |||||
Accrued liabilities | 460 | 391 | |||||
Other current liabilities | 73 | 69 | |||||
Deferred income on shipments to distributors | 72 | 63 | |||||
Total current liabilities | 1,591 | 1,346 | |||||
Long-term debt, net | 1,356 | 1,435 | |||||
Other long-term liabilities | 119 | 124 | |||||
Commitments and contingencies (See Note 12) | |||||||
Stockholders’ equity: | |||||||
Capital stock: | |||||||
Common stock, par value $0.01; 1,500 shares authorized on September 30, 2017 and December 31, 2016; shares issued: 977 on September 30, 2017 and 949 shares on December 31, 2016; shares outstanding: 965 on September 30, 2017 and 935 shares on December 31, 2016 | 10 | 9 | |||||
Additional paid-in capital | 8,437 | 8,334 | |||||
Treasury stock, at cost (12 shares on September 30, 2017 and 14 shares on December 31, 2016) | (108 | ) | (119 | ) | |||
Accumulated deficit | (7,821 | ) | (7,803 | ) | |||
Accumulated other comprehensive income (loss) | 2 | (5 | ) | ||||
Total stockholders’ equity | 520 | 416 | |||||
Total liabilities and stockholders’ equity | $ | 3,586 | $ | 3,321 |
Nine Months Ended | |||||||
September 30, 2017 | September 24, 2016 | ||||||
(In millions) | |||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (18 | ) | $ | (446 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Net gain on sale of equity interests in ATMP JV | — | (146 | ) | ||||
Depreciation and amortization | 105 | 99 | |||||
Provision for deferred income taxes | — | 11 | |||||
Stock-based compensation expense | 76 | 57 | |||||
Non-cash interest expense | 27 | 11 | |||||
Loss on debt redemption | 9 | 61 | |||||
Fair value of warrant issued related to sixth amendment to the WSA | — | 240 | |||||
Other | 4 | (4 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (460 | ) | (107 | ) | |||
Inventories | (43 | ) | (94 | ) | |||
Prepayment and other receivables - related parties | 6 | 20 | |||||
Prepaid expenses and other assets | (82 | ) | (134 | ) | |||
Payables to related parties | 61 | 183 | |||||
Accounts payable, accrued liabilities and other | — | 151 | |||||
Net cash used in operating activities | (315 | ) | (98 | ) | |||
Cash flows from investing activities: | |||||||
Net proceeds from sale of equity interests in ATMP JV | — | 346 | |||||
Purchases of property, plant and equipment | (69 | ) | (56 | ) | |||
Purchases of available-for-sale securities | (221 | ) | — | ||||
Proceeds from maturity of available-for-sale securities | 221 | — | |||||
Other | (2 | ) | 3 | ||||
Net cash provided by (used in) investing activities | (71 | ) | 293 | ||||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock, net of issuance costs | — | 668 | |||||
Proceeds from issuance of convertible senior notes, net of issuance costs | — | 681 | |||||
Proceeds from issuance of common stock under stock-based compensation equity plans | 15 | 12 | |||||
Proceeds from (repayments of) borrowings, net | 70 | (230 | ) | ||||
Repayments of long-term debt | (70 | ) | (848 | ) | |||
Other | (14 | ) | (5 | ) | |||
Net cash provided by financing activities | 1 | 278 | |||||
Net increase (decrease) in cash and cash equivalents | (385 | ) | 473 | ||||
Cash and cash equivalents at beginning of period | 1,264 | 785 | |||||
Cash and cash equivalents at end of period | $ | 879 | $ | 1,258 | |||
Supplemental cash flow information: | |||||||
Non-cash investing and financing activities: | |||||||
Purchases of property, plant and equipment, accrued but not paid | $ | 53 | $ | — | |||
Issuance of common stock to partially settle long-term debt | $ | 38 | $ | — | |||
Non-cash additions of property, plant and equipment | $ | 8 | $ | — |
September 30, 2017 | December 31, 2016 | ||||||
(In millions) | |||||||
Raw materials | $ | 52 | $ | 11 | |||
Work in process | 521 | 564 | |||||
Finished goods | 221 | 176 | |||||
Total inventories, net | $ | 794 | $ | 751 |
September 30, 2017 | December 31, 2016 | ||||||
(In millions) | |||||||
Leasehold improvements | $ | 151 | $ | 148 | |||
Equipment | 758 | 714 | |||||
Construction in progress | 69 | 19 | |||||
Property, plant and equipment, gross | 978 | 881 | |||||
Accumulated depreciation and amortization | (742 | ) | (717 | ) | |||
Total property, plant and equipment, net | $ | 236 | $ | 164 |
September 30, 2017 | December 31, 2016 | ||||||
(In millions) | |||||||
Software technology and licenses, net | $ | 248 | $ | 232 | |||
Other | 57 | 47 | |||||
Total other assets | $ | 305 | $ | 279 |
September 30, 2017 | December 31, 2016 | ||||||
(In millions) | |||||||
Accrued compensation and benefits | $ | 147 | $ | 116 | |||
Marketing programs and advertising expenses | 124 | 102 | |||||
Software technology and licenses payable | 54 | 24 | |||||
Other | 135 | 149 | |||||
Total accrued liabilities | $ | 460 | $ | 391 |
September 30, 2017 | December 31, 2016 | ||||||
(In millions) | |||||||
Principal amounts: | |||||||
Principal | $ | 805 | $ | 805 | |||
Unamortized debt discount(1) | (291 | ) | (308 | ) | |||
Unamortized debt issuance costs | (13 | ) | (14 | ) | |||
Net carrying amount | $ | 501 | $ | 483 | |||
Carrying amount of the equity component, net(2) | $ | 305 | $ | 305 |
(1) | Included in the consolidated balance sheets within Long-term debt, net and amortized over the remaining life of the notes using the effective interest rate method. |
(2) | Included in the consolidated balance sheets within additional paid-in capital, net of $9 million of equity issuance costs. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
(In millions) | |||||||||||||||
Contractual interest expense | $ | 4 | $ | — | $ | 13 | $ | — | |||||||
Interest cost related to amortization of debt issuance costs | — | — | 1 | — | |||||||||||
Interest cost related to amortization of the debt discount | $ | 6 | $ | 1 | $ | 17 | $ | 1 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
(In millions, except per share amounts) | |||||||||||||||
Numerator – Net income (loss): | |||||||||||||||
Numerator for basic and diluted net income (loss) per share | $ | 71 | $ | (406 | ) | $ | (18 | ) | $ | (446 | ) | ||||
Denominator - Weighted average shares | |||||||||||||||
Denominator for basic net income (loss) per share | 957 | 815 | 947 | 801 | |||||||||||
Effect of potentially dilutive shares: | |||||||||||||||
Employee stock options and restricted stock units | 44 | — | — | — | |||||||||||
Warrants | 41 | — | — | — | |||||||||||
Denominator for diluted net income (loss) per share | 1,042 | 815 | 947 | 801 | |||||||||||
Net income (loss) per share: | |||||||||||||||
Basic | $ | 0.07 | $ | (0.50 | ) | $ | (0.02 | ) | $ | (0.56 | ) | ||||
Diluted | $ | 0.07 | $ | (0.50 | ) | $ | (0.02 | ) | $ | (0.56 | ) |
September 30, 2017 | December 31, 2016 | ||||||
(In millions) | |||||||
Cash | $ | 118 | $ | 67 | |||
Level 1(1) (2) | |||||||
Government money market funds | $ | 115 | $ | 50 | |||
Total level 1 | $ | 115 | $ | 50 | |||
Level 2(1) (3) | |||||||
Commercial paper | $ | 646 | $ | 1,147 | |||
Total level 2 | $ | 646 | $ | 1,147 | |||
Total | $ | 879 | $ | 1,264 |
(1) | The Company did not have any transfers between Level 1 and Level 2 of the fair value hierarchy during the quarter and nine months ended September 30, 2017 or the year ended December 31, 2016. |
(2) | The Company's Level 1 assets are valued using quoted prices for identical instruments in active markets. |
(3) | The Company’s Level 2 assets are valued using broker reports that utilize quoted market prices for identical or comparable instruments. Brokers gather observable inputs for all of the Company’s fixed income securities from a variety of industry data providers and other third-party sources. |
September 30, 2017 | December 31, 2016 | ||||||||||||||
Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||
(In millions) | |||||||||||||||
Short-term debt | $ | 70 | $ | 70 | $ | — | $ | — | |||||||
Long-term debt, net(1) | $ | 1,355 | $ | 2,294 | $ | 1,434 | $ | 2,313 |
(1) | Carrying amounts of long-term debt are net of unamortized debt issuance costs of $21 million as of September 30, 2017 and $25 million as of December 31, 2016, based on the adoption of ASU 2015-03 and net of unamortized debt discount associated with the 2.125% Notes of $291 million as of September 30, 2017 and $308 million as of December 31, 2016. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
(In millions) | |||||||||||||||
Foreign Currency Forward Contracts - gains (losses) | |||||||||||||||
Contracts designated as cash flow hedging instruments | |||||||||||||||
Other comprehensive income (loss) | $ | 1 | $ | (1 | ) | $ | 8 | $ | 7 | ||||||
Research and development | 3 | 1 | 4 | — | |||||||||||
Marketing, general and administrative | 1 | — | 1 | — | |||||||||||
Contracts not designated as hedging instruments | |||||||||||||||
Other income (expense), net | $ | (2 | ) | $ | — | $ | (3 | ) | $ | 2 |
September 30, 2017 | December 31, 2016 | ||||||
(In millions) | |||||||
Foreign Currency Forward Contracts - gains (losses) | |||||||
Contracts designated as cash flow hedging instruments | $ | 6 | $ | (2 | ) |
• | the Computing and Graphics segment, which primarily includes desktop and notebook processors and chipsets, discrete graphics processing units (GPUs), professional graphics processors and licensing portions of its intellectual property (IP) portfolio; and |
• | the Enterprise, Embedded and Semi-Custom segment, which primarily includes server and embedded processors, semi-custom System-on-Chip (SoC) products, development services, technology for game consoles and licensing portions of its IP portfolio. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
(In millions) | |||||||||||||||
Net revenue: | |||||||||||||||
Computing and Graphics | $ | 819 | $ | 472 | $ | 2,071 | $ | 1,367 | |||||||
Enterprise, Embedded and Semi-Custom | 824 | 835 | 1,778 | 1,799 | |||||||||||
Total net revenue | $ | 1,643 | $ | 1,307 | $ | 3,849 | $ | 3,166 | |||||||
Operating income (loss): | |||||||||||||||
Computing and Graphics | $ | 70 | $ | (66 | ) | $ | 62 | $ | (217 | ) | |||||
Enterprise, Embedded and Semi-Custom | 84 | 136 | 135 | 236 | |||||||||||
All Other | (28 | ) | (363 | ) | (75 | ) | (388 | ) | |||||||
Total operating income (loss) | $ | 126 | $ | (293 | ) | $ | 122 | $ | (369 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
(In millions) | |||||||||||||||
Operating loss: | |||||||||||||||
Stock-based compensation expense | $ | (29 | ) | $ | (23 | ) | $ | (76 | ) | $ | (57 | ) | |||
Restructuring and other special charges, net | — | — | — | 10 | |||||||||||
Charge related to the sixth amendment to the WSA with GF | — | (340 | ) | — | (340 | ) | |||||||||
Other | 1 | — | 1 | (1 | ) | ||||||||||
Total operating loss | $ | (28 | ) | $ | (363 | ) | $ | (75 | ) | $ | (388 | ) |
Three and Nine Months Ended | |||||
September 30, 2017 | September 24, 2016 | ||||
Expected volatility | 56.32 | % | 59.85 | % | |
Risk-free interest rate | 1.65 | % | 1.00 | % | |
Expected dividends | 0.00 | % | 0.00 | % | |
Expected life | 3.92 years | 3.98 years |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
(In millions) | |||||||||||||||
Beginning balance | $ | 10 | $ | 11 | $ | 12 | $ | 15 | |||||||
New warranties issued | 7 | 5 | 18 | 15 | |||||||||||
Settlements | (7 | ) | (5 | ) | (16 | ) | (13 | ) | |||||||
Changes in liability for pre-existing warranties, including expirations | 1 | — | (3 | ) | (6 | ) | |||||||||
Ending balance | $ | 11 | $ | 11 | $ | 11 | $ | 11 |
Three Months Ended | |||||||||||||||||||||||
September 30, 2017 | September 24, 2016 | ||||||||||||||||||||||
Unrealized gains (losses) on available-for-sale securities | Unrealized gains (losses) on cash flow hedges | Total | Unrealized gains (losses) on available-for-sale securities | Unrealized gains (losses) on cash flow hedges | Total | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Beginning balance | $ | (1 | ) | $ | 1 | $ | — | $ | (2 | ) | $ | (1 | ) | $ | (3 | ) | |||||||
Unrealized gains arising during the period | — | 6 | 6 | 1 | — | 1 | |||||||||||||||||
Reclassification adjustment for (gains) losses realized and included in net income (loss) | — | (4 | ) | (4 | ) | — | (1 | ) | (1 | ) | |||||||||||||
Tax effect | — | — | — | — | — | — | |||||||||||||||||
Total other comprehensive income (loss) | — | 2 | 2 | 1 | (1 | ) | — | ||||||||||||||||
Ending balance | $ | (1 | ) | $ | 3 | $ | 2 | $ | (1 | ) | $ | (2 | ) | $ | (3 | ) |
Nine Months Ended | |||||||||||||||||||||||
September 30, 2017 | September 24, 2016 | ||||||||||||||||||||||
Unrealized gains (losses) on available-for-sale securities | Unrealized gains (losses) on cash flow hedges | Total | Unrealized gains (losses) on available-for-sale securities | Unrealized gains (losses) on cash flow hedges | Total | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Beginning balance | $ | (1 | ) | $ | (4 | ) | $ | (5 | ) | $ | (1 | ) | $ | (7 | ) | $ | (8 | ) | |||||
Unrealized gains (losses) arising during the period | — | 14 | 14 | (1 | ) | 7 | 6 | ||||||||||||||||
Reclassification adjustment for (gains) losses realized and included in net income (loss) | — | (5 | ) | (5 | ) | — | 1 | 1 | |||||||||||||||
Tax effect | — | (2 | ) | (2 | ) | 1 | (3 | ) | (2 | ) | |||||||||||||
Total other comprehensive income (loss) | — | 7 | 7 | — | 5 | 5 | |||||||||||||||||
Ending balance | $ | (1 | ) | $ | 3 | $ | 2 | $ | (1 | ) | $ | (2 | ) | $ | (3 | ) |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | x86 microprocessors, as standalone devices or as incorporated as an accelerated processing unit (APU), chipsets, discrete graphics processing units (GPUs) and professional graphics processors; and |
• | server and embedded processors, semi-custom System-on-Chip (SoC) products and technology for game consoles. |
• | the Computing and Graphics segment, which primarily includes desktop and notebook processors and chipsets, discrete graphics processors, professional graphics processors and licensing portions of our IP portfolio; and |
• | the Enterprise, Embedded and Semi-Custom segment, which primarily includes server and embedded processors, semi-custom SoC products, development services, technology for game consoles and licensing portions of our IP portfolio. |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Net revenue: | ||||||||||||||||
Computing and Graphics | $ | 819 | $ | 472 | $ | 2,071 | $ | 1,367 | ||||||||
Enterprise, Embedded and Semi-Custom | 824 | 835 | 1,778 | 1,799 | ||||||||||||
Total net revenue | $ | 1,643 | $ | 1,307 | $ | 3,849 | $ | 3,166 | ||||||||
Operating income (loss): | ||||||||||||||||
Computing and Graphics | $ | 70 | $ | (66 | ) | $ | 62 | $ | (217 | ) | ||||||
Enterprise, Embedded and Semi-Custom | 84 | 136 | 135 | 236 | ||||||||||||
All Other | (28 | ) | (363 | ) | (75 | ) | (388 | ) | ||||||||
Total operating income (loss) | $ | 126 | $ | (293 | ) | $ | 122 | $ | (369 | ) |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | |||||||||||||
(In millions except for percentages) | ||||||||||||||||
Cost of sales | $ | 1,070 | $ | 1,248 | $ | 2,541 | $ | 2,519 | ||||||||
Gross margin | 573 | 59 | 1,308 | 647 | ||||||||||||
Gross margin percentage | 35 | % | 5 | % | 34 | % | 20 | % | ||||||||
Research and development | 315 | 259 | 860 | 744 | ||||||||||||
Marketing, general and administrative | 132 | 117 | 378 | 339 | ||||||||||||
Restructuring and other special charges, net | — | — | — | (10 | ) | |||||||||||
Licensing gain | — | (24 | ) | (52 | ) | (57 | ) | |||||||||
Interest expense | (31 | ) | (41 | ) | (95 | ) | (122 | ) | ||||||||
Other income (expense), net | (3 | ) | (63 | ) | (11 | ) | 87 | |||||||||
Provision for income taxes | 19 | 4 | 27 | 34 | ||||||||||||
Equity loss in investee | $ | (2 | ) | $ | (5 | ) | $ | (7 | ) | $ | (8 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
(In millions) | |||||||||||||||
Cost of sales | $ | 1 | $ | — | $ | 2 | $ | 1 | |||||||
Research and development | 18 | 15 | 45 | 34 | |||||||||||
Marketing, general and administrative | 10 | 8 | 29 | 22 | |||||||||||
Stock-based compensation expense, net of tax of $0 | $ | 29 | $ | 23 | $ | 76 | $ | 57 |
Nine Months Ended | ||||||||
September 30, 2017 | September 24, 2016 | |||||||
(In millions ) | ||||||||
Net cash provided by (used in): | ||||||||
Operating activities | $ | (315 | ) | $ | (98 | ) | ||
Investing activities | (71 | ) | 293 | |||||
Financing activities | 1 | 278 |
Payments due by period as of September 30, 2017 | |||||||||||||||||||||||||||
(In millions) | Total | Remainder of 2017 | 2018 | 2019 | 2020 | 2021 | 2022 and thereafter | ||||||||||||||||||||
6.75% Notes | $ | 191 | $ | — | $ | — | $ | 191 | $ | — | $ | — | $ | — | |||||||||||||
7.50% Notes | 347 | — | — | — | — | — | 347 | ||||||||||||||||||||
7.00% Notes | 324 | — | — | — | — | — | 324 | ||||||||||||||||||||
2.125% Notes | 805 | — | — | — | — | — | 805 | ||||||||||||||||||||
Secured Revolving Line of Credit | 70 | 70 | — | — | — | — | — | ||||||||||||||||||||
Other long-term liabilities (1) | 134 | 18 | 52 | 51 | 8 | 3 | 2 | ||||||||||||||||||||
Aggregate interest obligation (2) | 468 | — | 80 | 74 | 67 | 67 | 180 | ||||||||||||||||||||
Operating leases | 265 | 10 | 40 | 35 | 31 | 29 | 120 | ||||||||||||||||||||
Purchase obligations (3) | 313 | 255 | 42 | 12 | 3 | 1 | — | ||||||||||||||||||||
Obligations to GF (4) | 2,931 | 335 | 1,052 | 764 | 780 | — | — | ||||||||||||||||||||
Total contractual obligations (5) | $ | 5,848 | $ | 688 | $ | 1,266 | $ | 1,127 | $ | 889 | $ | 100 | $ | 1,778 |
(1) | Amounts largely represent future fixed and non-cancelable cash payments associated with software technology and licenses and IP licenses, including the payments due within the next 12 months. |
(2) | Represents estimated aggregate interest obligations for our outstanding debt obligations that are payable in cash, excluding non-cash amortization of debt issuance costs and debt discount. |
(3) | We have purchase obligations for goods and services where payments are based, in part, on the volume or type of services we acquire. In those cases, we only included the minimum volume of purchase obligations in the table above. Purchase orders for goods and services that are cancelable upon notice and without significant penalties are not included in the amounts above. |
(4) | Includes our currently expected purchases from GF for the remainder of 2017 for wafer manufacturing and research and development activities and minimum purchase obligations for wafer purchases for years 2018 through 2020. We cannot meaningfully quantify or estimate our future purchase obligations to GF beyond 2020 but expect that our future purchases from GF will continue to be material. |
(5) | Total amount excludes contractual obligations already recorded on our condensed consolidated balance sheets except for debt obligations and other liabilities related to software and technology licenses and IP licenses. |
Period | Price as Percentage of Principal Amount | |
Beginning on July 1, 2019 through June 30, 2020 | 103.500 | % |
Beginning on July 1, 2020 through June 30, 2021 | 102.333 | % |
Beginning on July 1, 2021 through June 30, 2022 | 101.167 | % |
On July 1, 2022 and thereafter | 100.000 | % |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
• | business practices, including rebating and allocation strategies and pricing actions, designed to limit our market share and margins; |
• | product mix and introduction schedules; |
• | product bundling, marketing and merchandising strategies; |
• | exclusivity payments to its current and potential customers and channel partners; |
• | de facto control over industry standards, and heavy influence on PC manufacturers and other PC industry participants, including motherboard, memory, chipset and basic input/output system, or BIOS, suppliers and software companies as well as the graphics interface for Intel platforms; and |
• | marketing and advertising expenditures in support of positioning the Intel brand over the brand of its original equipment manufacturer OEM customers. |
• | make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments; |
• | limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions and general corporate and other purposes; |
• | limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general corporate purposes; |
• | require us to use a substantial portion of our cash flow from operations to make debt service payments; |
• | place us at a competitive disadvantage compared to our competitors with relatively less debt; and |
• | increase our vulnerability to the impact of adverse economic and industry conditions. |
• | incur additional indebtedness; |
• | pay dividends and make other restricted payments; |
• | make certain investments, including investments in our unrestricted subsidiaries; |
• | create or permit certain liens; |
• | create or permit restrictions on the ability of certain restricted subsidiaries to pay dividends or make other distributions to us; |
• | use the proceeds from sales of assets; |
• | enter into certain types of transactions with affiliates; and |
• | consolidate or merge or sell our assets as an entirety or substantially as an entirety. |
• | create liens upon any of the Loan Parties’ property (other than customary permitted liens and liens in respect of up to $1.5 billion of secured credit facilities debt (which amount includes our Secured Revolving Line of Credit); |
• | declare or make cash distributions; |
• | create any encumbrance on the ability of a subsidiary to make any upstream payments; |
• | make asset dispositions other than certain ordinary course dispositions and certain supply chain finance arrangements; |
• | make certain loans, make payments with respect to subordinated debt or certain borrowed money prior to its due date; and |
• | enter into any non-arm’s-length transaction with an affiliate (except for certain customary exceptions). |
• | a sudden or significant decrease in demand for our products; |
• | a production or design defect in our products; |
• | a higher incidence of inventory obsolescence because of rapidly changing technology and customer requirements; |
• | a failure to accurately estimate customer demand for our products, including for our older products as our new products are introduced; or |
• | our competitors introducing new products or taking aggressive pricing actions. |
• | substantial declines in average selling prices; |
• | the cyclical nature of supply and demand imbalances in the semiconductor industry; |
• | a decline in demand for end-user products (such as PCs) that incorporate our products; and |
• | excess inventory levels. |
• | implementing new data security procedures, including costs related to upgrading computer and network security; |
• | training workers to maintain and monitor our security measures; |
• | remediating any data security breach and addressing the related litigation; and |
• | mitigating reputational harm. |
• | expropriation; |
• | changes in a specific country’s or region’s political or economic conditions; |
• | changes in tax laws, trade protection measures and import or export licensing requirements; |
• | difficulties in protecting our intellectual property; |
• | difficulties in managing staffing and exposure to different employment practices and labor laws; |
• | changes in foreign currency exchange rates; |
• | restrictions on transfers of funds and other assets of our subsidiaries between jurisdictions; |
• | changes in freight and interest rates; |
• | disruption in air transportation between the United States and our overseas facilities; |
• | loss or modification of exemptions for taxes and tariffs; and |
• | compliance with U.S. laws and regulations related to international operations, including export control and economic sanctions laws and regulations and the Foreign Corrupt Practices Act. |
ITEM 6. | EXHIBITS |
10.1 | ||
10.2 | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
ADVANCED MICRO DEVICES, INC. | |||
November 2, 2017 | By: | /s/Devinder Kumar | |
Name: | Devinder Kumar | ||
Title: | Senior Vice President, Chief Financial Officer and Treasurer Signing on behalf of the Registrant as the Principal Financial Officer |
OBLIGORS: | ADVANCED MICRO DEVICES, INC., a Delaware corporation |
AGENT AND LENDERS: | BANK OF AMERICA, N.A., as Agent and a Lender |
Date: November 2, 2017 | ||
/s/Lisa T. Su | ||
Lisa T. Su President and Chief Executive Officer (Principal Executive Officer) | ||
Date: November 2, 2017 | ||
/s/Devinder Kumar | ||
Devinder Kumar Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | ||
(i.) | the Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2017 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
(ii.) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 2, 2017 | ||
/s/Lisa T. Su | ||
Lisa T. Su President and Chief Executive Officer (Principal Executive Officer) | ||
(i.) | the Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2017 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
(ii.) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 2, 2017 | ||
/s/Devinder Kumar | ||
Devinder Kumar Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | ||
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Oct. 27, 2017 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | AMD | |
Entity Registrant Name | ADVANCED MICRO DEVICES INC | |
Entity Central Index Key | 0000002488 | |
Current Fiscal Year End Date | --12-30 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 964,798,603 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 24, 2016 |
Sep. 30, 2017 |
Sep. 24, 2016 |
|
Income Statement [Abstract] | ||||
Net revenue | $ 1,643 | $ 1,307 | $ 3,849 | $ 3,166 |
Cost of sales | 1,070 | 1,248 | 2,541 | 2,519 |
Gross margin | 573 | 59 | 1,308 | 647 |
Research and development | 315 | 259 | 860 | 744 |
Marketing, general and administrative | 132 | 117 | 378 | 339 |
Restructuring and other special charges, net | 0 | 0 | 0 | (10) |
Licensing gain | 0 | (24) | (52) | (57) |
Operating income (loss) | 126 | (293) | 122 | (369) |
Interest expense | (31) | (41) | (95) | (122) |
Other income (expense), net | (3) | (63) | (11) | 87 |
Income (loss) before equity loss and income taxes | 92 | (397) | 16 | (404) |
Provision for income taxes | 19 | 4 | 27 | 34 |
Equity loss in investee | (2) | (5) | (7) | (8) |
Net income (loss) | $ 71 | $ (406) | $ (18) | $ (446) |
Net income (loss) per share | ||||
Basic (in usd per share) | $ 0.07 | $ (0.50) | $ (0.02) | $ (0.56) |
Diluted (in usd per share) | $ 0.07 | $ (0.50) | $ (0.02) | $ (0.56) |
Shares used in per share calculation | ||||
Basic (in shares) | 957 | 815 | 947 | 801 |
Diluted (in shares) | 1,042 | 815 | 947 | 801 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 24, 2016 |
Sep. 30, 2017 |
Sep. 24, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 71 | $ (406) | $ (18) | $ (446) |
Unrealized gains (losses) on available-for-sale securities: | ||||
Unrealized gains (losses) arising during the period | 0 | 1 | 0 | 0 |
Unrealized gains (losses) on cash flow hedges: | ||||
Unrealized gains arising during the period | 5 | 0 | 11 | 4 |
Reclassification adjustment for (gains) losses realized and included in net income (loss) | (3) | (1) | (4) | 1 |
Total change in unrealized gains on cash flow hedges | 2 | (1) | 7 | 5 |
Total other comprehensive income | 2 | 0 | 7 | 5 |
Total comprehensive income (loss) | $ 73 | $ (406) | $ (11) | $ (441) |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,500,000,000 | 1,500,000,000 |
Common stock, shares issued | 977,000,000 | 949,000,000 |
Common stock, shares outstanding | 965,000,000 | 935,000,000 |
Treasury stock, shares | 12,000,000 | 14,000,000 |
Basis of Presentation and Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies Basis of Presentation. The accompanying unaudited condensed consolidated financial statements of Advanced Micro Devices, Inc. and its subsidiaries (the Company or AMD) have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The results of operations for the quarter and nine months ended September 30, 2017 shown in this report are not necessarily indicative of results to be expected for the full year ending December 30, 2017. In the opinion of the Company’s management, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s results of operations, financial position and cash flows. All such adjustments are of a normal, recurring nature. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The Company uses a 52 or 53 week fiscal year ending on the last Saturday in December. The quarters and nine months ended September 30, 2017 and September 24, 2016 each consisted of 13 weeks and 39 weeks, respectively. Principles of Consolidation. The condensed consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries. Upon consolidation, all significant inter-company accounts and transactions are eliminated. Recently Adopted Accounting Standards Goodwill Impairment. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other: Topic 350: Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under the amendments in ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual and any interim impairment tests performed for periods beginning after December 15, 2019 on a prospective basis, and earlier adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company elected to early adopt this accounting standard update in the third quarter of 2017 on a prospective basis. The Company does not expect the standard to have an impact on its consolidated financial statements. The Company expects the adoption of this update to simplify its annual goodwill impairment testing process, by eliminating the need to estimate the implied fair value of a reporting unit’s goodwill, if its respective carrying value exceeds fair value. Stock Compensation. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), which is intended to simplify several aspects of the accounting for share-based payment award transactions. The Company adopted this guidance in the first quarter of 2017 and elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. In the first quarter of 2017, the Company recorded a $96 million cumulative-effect adjustment in accumulated deficit and an offsetting increase in deferred tax assets for previously unrecognized excess tax benefits that existed as of December 31, 2016. Since substantially all of the Company’s U.S. and foreign deferred tax assets, net of deferred tax liabilities, are subject to a valuation allowance and the realization of these assets is not more likely than not to be achieved, the Company recorded a $96 million valuation allowance against these deferred tax assets with an offsetting adjustment in accumulated deficit. The Company elected to report cash flows related to excess tax benefits as an operating activity on a prospective basis. The presentation requirement for cash flows related to employee taxes paid for withheld shares did not impact the statements of cash flows because such cash flows have historically been presented as a financing activity. Investments. In March 2016, the FASB issued ASU No. 2016-07, Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting (ASU 2016-07), which requires the equity method investor to add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment qualifies for equity method accounting. The Company adopted this guidance in the first quarter of 2017, and it did not have an impact on its consolidated financial statements. Inventory. In July 2015, the Financial Accounting Standards Board (FASB) issued ASU No. 2015-11, Simplifying the Measurement of Inventory (ASU 2015-11), which requires entities to measure inventory at the lower of cost or net realizable value. This ASU simplifies the subsequent measurement of inventory by replacing the lower of cost or market test with a lower of cost or net realizable value test. The Company adopted this guidance in the first quarter of 2017, and it did not have an impact on its consolidated financial statements. Recently Issued Accounting Standards Derivatives and Hedging. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12), which amends and simplifies existing guidance in order to allow companies to more accurately present the economic effects of risk management activities in the financial statements. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, including interim periods therein with early adoption permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements, as well as its planned adoption date. Although there are several other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its consolidated financial position or operating results. Stock Compensation. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation: Topic 718: Scope of Modification Accounting (ASU 2017-09) to provide clarity and reduce both the (1) diversity in practice and (2) cost and complexity when changing the terms or conditions of share-based payment awards. Under ASU 2017-09, modification accounting is required to be applied unless all of the following are the same immediately before and after the change: 1. The award’s fair value (or calculated value or intrinsic value, if those measurement methods are used). 2. The award’s vesting conditions. 3. The award’s classification as an equity or liability instrument. ASU 2017-09 is effective for annual and interim periods beginning after December 15, 2017 on a prospective basis, and early adoption is permitted. The Company has evaluated the impact of its pending adoption of ASU 2017-09 and does not expect that this guidance will have a significant impact on its financial statements. Income Taxes. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory (ASU 2016-16), which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This amends current GAAP which prohibits recognition of current and deferred income taxes for all types of intra-entity asset transfers until the asset has been sold to an outside party. ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, including interim periods therein with early adoption permitted. Upon adoption, the Company must apply a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact of this new standard on its consolidated financial statements, as well as its planned adoption date. Statement of Cash Flows. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15), which is intended to reduce the existing diversity in practice in how certain cash receipts and cash payments are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years with early adoption permitted, provided that all of the amendments are adopted in the same period. The Company is currently evaluating the impact of its pending adoption of ASU 2016-15 on its consolidated financial statements. Financial Instruments. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (ASU 2016-13). The standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently evaluating the timing of adoption and impact of ASU 2016-13 on its consolidated financial statements. Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02), which increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. Upon adoption, lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently evaluating the impact of its pending adoption of ASU 2016-02 on its consolidated financial statements. Financial Instruments. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01), which requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The ASU also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. Entities will have to assess the realizability of such deferred tax assets in combination with the entities' other deferred tax assets. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017 and for interim periods within that reporting period. The Company is currently evaluating the impact of its pending adoption of ASU 2016-01 on its consolidated financial statements. Revenue Recognition. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09), which creates a single source of revenue guidance under U.S. GAAP for all companies in all industries and replaces most existing revenue recognition guidance in U.S. GAAP. Under the new standard, 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 entity expects to receive in exchange for those goods or services. In addition, the new standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has issued several amendments to the new standard, including clarification on accounting for licenses of intellectual property and identifying performance obligations. The new standard is effective for annual reporting periods beginning after December 15, 2017. The new standard permits companies to early adopt the new standard, but not before annual reporting periods beginning after December 15, 2016. The Company will not early adopt the new standard and therefore the new standard will be effective for the Company in the first quarter of its fiscal 2018. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or prospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application and providing additional disclosures comparing results to the previous rules in the year of adoption of the new standard (the modified retrospective method or the cumulative catchup method). The Company currently anticipates adopting the standard using the full retrospective method to restate each prior reporting period presented. The Company’s ability to adopt utilizing the full retrospective method is dependent upon system readiness and the completion of its analysis of information necessary to restate prior period financial statements and the Company is progressing toward the adoption of the standard in the first quarter of fiscal 2018. As part of this plan, the Company is implementing changes to its policies, procedures and controls. The Company currently believes that the most significant impact relates to accelerated revenue recognition for sales to its distributors, whereby revenue is expected to be recognized upon the initial sale to the Company's distributors, instead of the current recognition upon resale by the distributors to the end customers. Additionally, the Company expects the timing and financial statement classification related to the accounting for some combined development and intellectual property licensing arrangements to change. Currently some of these arrangements result in both the reduction to research and development expenses and revenue recognition based on a fair value allocation of the consideration received. Some of these arrangements may result in the classification of the entire amount as revenue under the new revenue guidance. The Company currently expects other revenue streams to remain substantially unchanged. |
GLOBALFOUNDRIES |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
GLOBALFOUNDRIES | GLOBALFOUNDRIES Wafer Supply Agreement. The Wafer Supply Agreement (WSA) governs the terms by which the Company purchases products manufactured by GLOBALFOUNDRIES Inc. (GF). Sixth Amendment to Wafer Supply Agreement. On August 30, 2016, the Company entered into a sixth amendment to the WSA (the WSA Sixth Amendment). The WSA Sixth Amendment modified certain terms of the WSA applicable to wafers for the Company’s microprocessor, graphics processor and semi-custom products for a five-year period from January 1, 2016 to December 31, 2020. The Company and GF also agreed to establish a comprehensive framework for technology collaboration for the 7nm technology node. The WSA Sixth Amendment also provides the Company a limited waiver with rights to contract with another wafer foundry with respect to certain products in the 14nm and 7nm technology nodes and gives the Company greater flexibility in sourcing foundry services across its product portfolio. In consideration for these rights, the Company agreed to pay GF $100 million in installments starting in the fourth fiscal quarter of 2016 through the third fiscal quarter of 2017. During the third fiscal quarter of 2017, the Company paid GF $25 million and, as of September 30, 2017, the Company had paid GF $100 million in aggregate. Starting in 2017 and continuing through 2020, the Company also agreed to make quarterly payments to GF based on the volume of certain wafers purchased from another wafer foundry. Further, for each calendar year during the term of the WSA Sixth Amendment, the Company and GF agreed to annual wafer purchase targets that increase from 2016 through 2020. If the Company does not meet the annual wafer purchase target for any calendar year, the Company will be required to pay to GF a portion of the difference between the Company’s actual wafer purchases and the wafer purchase target for that year. The annual targets were established based on the Company’s business and market expectations and took into account the limited waiver it received for certain products. As of September 30, 2017, the Company expects to meet its 2017 wafer purchase target. The Company and GF also agreed on fixed pricing for wafers purchased during 2016 and established a framework to agree on annual wafer pricing for the years 2017 to 2020. The Company and GF have agreed on pricing for wafer purchases for 2017. The Company’s total purchases from GF related to wafer manufacturing, research and development activities and other for the quarters ended September 30, 2017 and September 24, 2016 were $331 million and $186 million, respectively. The Company’s total purchases from GF related to wafer manufacturing, research and development activities and other for the nine months ended September 30, 2017 and September 24, 2016 were $773 million and $479 million, respectively. Included in the total purchases for the quarter and nine months ended September 30, 2017 are amounts related to the volume of certain wafers purchased from another wafer foundry, as agreed to by the Company and GF under the WSA Sixth Amendment. As of September 30, 2017 and December 31, 2016, the amount of prepayment and other receivables related to GF was $20 million and $32 million, respectively, included in Prepayment and other receivables - related parties on the Company's condensed consolidated balance sheets. As of September 30, 2017 and December 31, 2016, the amount of payable to GF was $270 million and $255 million, respectively, included in Payables to related parties on the Company's condensed consolidated balance sheets. Warrant Agreement. Also on August 30, 2016, in consideration for the limited waiver and rights under the WSA Sixth Amendment, the Company entered into a warrant agreement (the Warrant Agreement) with West Coast Hitech L.P. (WCH), a wholly-owned subsidiary of Mubadala Development Company PJSC (Mubadala). Under the Warrant Agreement, WCH and its permitted assigns are entitled to purchase 75 million shares of the Company’s common stock (the Warrant Shares) at a purchase price of $5.98 per share. The warrant is exercisable in whole or in part until February 29, 2020. Notwithstanding the foregoing, the Warrant Agreement will only be exercisable to the extent that Mubadala does not beneficially own, either directly through any other entities directly and indirectly owned by Mubadala or its subsidiaries, an aggregate of more than 19.99% of the Company’s outstanding capital stock after any such exercise. GF continues to be a related party of the Company because Mubadala and Mubadala Technology Investments LLC (Mubadala Tech, a party to the WSA) are affiliated with WCH, a significant stockholder of the Company. GF, WCH and Mubadala Tech are wholly-owned subsidiaries of Mubadala. |
Supplemental Balance Sheet Information |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Balance Sheet Information | Supplemental Balance Sheet Information Accounts Receivable, net As of September 30, 2017 and December 31, 2016, Accounts receivable, net included unbilled accounts receivable of $16 million and $37 million, respectively. Unbilled accounts receivable represent revenue recognized but not billed as payments are deferred by customers until certain contractual milestones are met. All unbilled accounts receivable are expected to be billed and collected within twelve months. Inventories
Property, Plant and Equipment
The Company incurs costs for the fabrication of masks used by its foundry partners to manufacture its products. Beginning the first fiscal quarter of 2017, the Company capitalizes mask costs that are expected to be utilized in production manufacturing as the Company’s product development process has become more predictable and thus supports capitalization of the mask. The capitalized mask costs begin depreciating to Cost of Sales once the products go into production, on a straight-line basis over the estimated useful life of two years. Previously mask sets were expensed to research and development. Other Assets
Accrued Liabilities
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Equity Interest Purchase Agreement - ATMP Joint Venture |
9 Months Ended |
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Sep. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Interest Purchase Agreement - ATMP Joint Venture and Equity Joint Venture | Equity Interest Purchase Agreement - ATMP Joint Venture On April 29, 2016, the Company and certain of its subsidiaries completed the sale of a majority of the equity interests in Suzhou TF-AMD Semiconductor Co., Ltd. (formerly, AMD Technologies (China) Co., Ltd.), and TF-AMD Microelectronics (Penang) Sdn. Bhd. (formerly, Advanced Micro Devices Export Sdn. Bhd.), to affiliates of Tongfu Microelectronics Co., Ltd. (formerly, Nantong Fujitsu Microelectronics Co., Ltd.) (TFME), a Chinese joint stock company, to form two joint ventures (collectively, the ATMP JV). As a result of the sale, TFME’s affiliates own 85% of the equity interests in the ATMP JV while certain of the Company’s subsidiaries own the remaining 15%. The Company has no obligation to fund the ATMP JV. The Company accounts for its equity interests in the ATMP JV under the equity method of accounting due to its significant influence over the ATMP JV. As of September 30, 2017 and December 31, 2016, the carrying value of the Company's investment in the ATMP JV was approximately $57 million and $59 million, respectively. The ATMP JV is a related party of the Company. The ATMP JV provides assembly, test, mark and packaging (ATMP) services to the Company. The Company currently pays the ATMP JV for ATMP services on a cost-plus basis. The Company's total purchases from the ATMP JV during the three and nine months ended September 30, 2017 amounted to approximately $131 million and $332 million, respectively. The Company's total purchases from the ATMP JV during the three and nine months ended September 24, 2016 amounted to approximately $107 million and $173 million, respectively. As of September 30, 2017 and December 31, 2016, the amount payable to the ATMP JV was $174 million and $128 million, respectively, included in Payables to related parties on the Company's condensed consolidated balance sheets. During the three and nine months ended September 30, 2017, the Company recorded $2 million and $7 million, respectively, in Equity loss in investee on its condensed consolidated statements of operations, which included certain expenses incurred by the Company on behalf of the ATMP JV. During the three and nine months ended September 24, 2016, the Company recorded $5 million and $8 million, respectively, in Equity loss in investee on its condensed consolidated statements of operations, which included certain expenses incurred by the Company on behalf of the ATMP JV. Equity Joint Venture In February 2016, the Company and Tianjin Haiguang Advanced Technology Investment Co., Ltd. (THATIC), a third-party Chinese entity (JV Partner), formed a joint venture comprised of two separate legal entities, China JV1 and China JV2 (collectively, the THATIC JV). The Company’s equity share in China JV1 and China JV2 is a majority and minority interest, respectively, funded by the Company’s contribution of certain of its patents. The JV Partner is responsible for the initial and on-going financing of the THATIC JV’s operations. The Company has no obligations to fund the THATIC JV. The Company concluded the China JV1 and China JV2 are not operating joint ventures and are variable interest entities due to their reliance on on-going financing by JV Partner. The Company determined that it is not the primary beneficiary of either China JV1 or China JV2, as the Company does not have unilateral power to direct selling and marketing, manufacturing and product development activities related to the THATIC JV’s products. Accordingly, the Company will not consolidate either of these entities and therefore accounts for its investments in the THATIC JV under the equity method of accounting. The THATIC JV is a related party of the Company. In February 2016, the Company licensed certain of its intellectual property (Licensed IP) to the THATIC JV for a total of approximately $293 million in license fee payable over several years contingent upon achievement of certain milestones. The Company also expects to receive a royalty based on the sales of the THATIC JV’s products to be developed on the basis of such Licensed IP. The Company will also provide certain engineering and technical support to the THATIC JV in connection with the product development. In March 2017, the Company entered into a development and intellectual property agreement with THATIC JV, and also expects to receive a royalty based on the sales of the THATIC JV’s products to be developed on the basis of such agreement. In addition, from time to time, the Company enters into certain agreements with the THATIC JV to provide other services primarily related to research and development. The Company recognizes income related to the Licensed IP over the period commencing upon delivery of the first Licensed IP milestone through the date of the milestone that requires the Company’s continuing involvement in the product development process. Royalty payments will be recognized in income once earned. The Company classifies Licensed IP income and royalty income as other operating income. During the three and nine months ended September 30, 2017, the Company recognized zero and $52 million licensing gain associated with the Licensed IP, respectively, and development and other services fees of $7 million and $17 million, respectively, as a credit to research and development expenses. During the three and nine months ended September 24, 2016, the Company recognized $24 million and $57 million licensing gain, respectively. No credits for development and other services associated with these agreements was recognized by the Company during the three and nine months ended September 24, 2016. No royalty income was recognized by the Company during the three and nine months ended September 30, 2017 and September 24, 2016. The Company’s total exposure to losses through its investment in the THATIC JV is limited to the Company’s investment in the THATIC JV, which was zero as of September 30, 2017. The Company’s share in the net losses of the THATIC JV for the three and nine months ended September 30, 2017 and September 24, 2016 was not material and is not recorded in the Company’s condensed consolidated statements of operations since the Company is not obligated to fund the THATIC JV’s losses in excess of the Company’s investment in the THATIC JV. The Company’s receivable from the THATIC JV for these agreements was $5 million and zero as of September 30, 2017 and December 31, 2016, respectively, included in Prepayment and other receivables - related parties on its condensed consolidated balance sheets. As of September 30, 2017, the total assets and liabilities of the THATIC JV were not material. |
Equity Joint Venture |
9 Months Ended |
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Sep. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Interest Purchase Agreement - ATMP Joint Venture and Equity Joint Venture | Equity Interest Purchase Agreement - ATMP Joint Venture On April 29, 2016, the Company and certain of its subsidiaries completed the sale of a majority of the equity interests in Suzhou TF-AMD Semiconductor Co., Ltd. (formerly, AMD Technologies (China) Co., Ltd.), and TF-AMD Microelectronics (Penang) Sdn. Bhd. (formerly, Advanced Micro Devices Export Sdn. Bhd.), to affiliates of Tongfu Microelectronics Co., Ltd. (formerly, Nantong Fujitsu Microelectronics Co., Ltd.) (TFME), a Chinese joint stock company, to form two joint ventures (collectively, the ATMP JV). As a result of the sale, TFME’s affiliates own 85% of the equity interests in the ATMP JV while certain of the Company’s subsidiaries own the remaining 15%. The Company has no obligation to fund the ATMP JV. The Company accounts for its equity interests in the ATMP JV under the equity method of accounting due to its significant influence over the ATMP JV. As of September 30, 2017 and December 31, 2016, the carrying value of the Company's investment in the ATMP JV was approximately $57 million and $59 million, respectively. The ATMP JV is a related party of the Company. The ATMP JV provides assembly, test, mark and packaging (ATMP) services to the Company. The Company currently pays the ATMP JV for ATMP services on a cost-plus basis. The Company's total purchases from the ATMP JV during the three and nine months ended September 30, 2017 amounted to approximately $131 million and $332 million, respectively. The Company's total purchases from the ATMP JV during the three and nine months ended September 24, 2016 amounted to approximately $107 million and $173 million, respectively. As of September 30, 2017 and December 31, 2016, the amount payable to the ATMP JV was $174 million and $128 million, respectively, included in Payables to related parties on the Company's condensed consolidated balance sheets. During the three and nine months ended September 30, 2017, the Company recorded $2 million and $7 million, respectively, in Equity loss in investee on its condensed consolidated statements of operations, which included certain expenses incurred by the Company on behalf of the ATMP JV. During the three and nine months ended September 24, 2016, the Company recorded $5 million and $8 million, respectively, in Equity loss in investee on its condensed consolidated statements of operations, which included certain expenses incurred by the Company on behalf of the ATMP JV. Equity Joint Venture In February 2016, the Company and Tianjin Haiguang Advanced Technology Investment Co., Ltd. (THATIC), a third-party Chinese entity (JV Partner), formed a joint venture comprised of two separate legal entities, China JV1 and China JV2 (collectively, the THATIC JV). The Company’s equity share in China JV1 and China JV2 is a majority and minority interest, respectively, funded by the Company’s contribution of certain of its patents. The JV Partner is responsible for the initial and on-going financing of the THATIC JV’s operations. The Company has no obligations to fund the THATIC JV. The Company concluded the China JV1 and China JV2 are not operating joint ventures and are variable interest entities due to their reliance on on-going financing by JV Partner. The Company determined that it is not the primary beneficiary of either China JV1 or China JV2, as the Company does not have unilateral power to direct selling and marketing, manufacturing and product development activities related to the THATIC JV’s products. Accordingly, the Company will not consolidate either of these entities and therefore accounts for its investments in the THATIC JV under the equity method of accounting. The THATIC JV is a related party of the Company. In February 2016, the Company licensed certain of its intellectual property (Licensed IP) to the THATIC JV for a total of approximately $293 million in license fee payable over several years contingent upon achievement of certain milestones. The Company also expects to receive a royalty based on the sales of the THATIC JV’s products to be developed on the basis of such Licensed IP. The Company will also provide certain engineering and technical support to the THATIC JV in connection with the product development. In March 2017, the Company entered into a development and intellectual property agreement with THATIC JV, and also expects to receive a royalty based on the sales of the THATIC JV’s products to be developed on the basis of such agreement. In addition, from time to time, the Company enters into certain agreements with the THATIC JV to provide other services primarily related to research and development. The Company recognizes income related to the Licensed IP over the period commencing upon delivery of the first Licensed IP milestone through the date of the milestone that requires the Company’s continuing involvement in the product development process. Royalty payments will be recognized in income once earned. The Company classifies Licensed IP income and royalty income as other operating income. During the three and nine months ended September 30, 2017, the Company recognized zero and $52 million licensing gain associated with the Licensed IP, respectively, and development and other services fees of $7 million and $17 million, respectively, as a credit to research and development expenses. During the three and nine months ended September 24, 2016, the Company recognized $24 million and $57 million licensing gain, respectively. No credits for development and other services associated with these agreements was recognized by the Company during the three and nine months ended September 24, 2016. No royalty income was recognized by the Company during the three and nine months ended September 30, 2017 and September 24, 2016. The Company’s total exposure to losses through its investment in the THATIC JV is limited to the Company’s investment in the THATIC JV, which was zero as of September 30, 2017. The Company’s share in the net losses of the THATIC JV for the three and nine months ended September 30, 2017 and September 24, 2016 was not material and is not recorded in the Company’s condensed consolidated statements of operations since the Company is not obligated to fund the THATIC JV’s losses in excess of the Company’s investment in the THATIC JV. The Company’s receivable from the THATIC JV for these agreements was $5 million and zero as of September 30, 2017 and December 31, 2016, respectively, included in Prepayment and other receivables - related parties on its condensed consolidated balance sheets. As of September 30, 2017, the total assets and liabilities of the THATIC JV were not material. |
Debt and Secured Revolving Line of Credit |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Secured Revolving Line of Credit | Debt and Secured Revolving Line of Credit Debt 2.125% Convertible Senior Notes Due 2026 On September 14, 2016, the Company issued $700 million in aggregate principal amount of 2.125% Convertible Senior Notes due 2026 (2.125% Notes). The Company also granted an option to the underwriters to purchase an additional $105 million aggregate principal amount of the 2.125% Notes. On September 28, 2016, this option was exercised in full and the Company issued an additional $105 million aggregate principal amount of the 2.125% Notes. The 2.125% Notes are general unsecured senior obligations of the Company and will mature on September 1, 2026, unless earlier repurchased or converted. Interest is payable in arrears on March 1 and September 1 of each year beginning on March 1, 2017. The 2.125% Notes are governed by the terms of a base indenture and a supplemental indenture (together the 2.125% Indentures) dated September 14, 2016 between the Company and Wells Fargo Bank, N.A., as trustee. Holders may convert their notes at their option at any time prior to the close of business on the business day immediately preceding June 1, 2026 under the occurrence of one of the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2016 (and only during such calendar quarter), if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the Measurement Period) in which the trading price per $1,000 principal amount of notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after June 1, 2026 until the close of business on the business day immediately preceding the maturity date, holders may convert their notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election. The first event described in (1) above was met during the third quarter of 2017 and as a result, the 2.125% Notes are convertible at the option of the holder from October 1, 2017 and remain convertible until December 31, 2017. The Company's current intent is to deliver shares of its common stock upon conversion of the 2.125% Notes. As such, the Company continued to classify the carrying value of the liability component of the 2.125% Notes as long-term debt and the equity component of the 2.125% Notes as permanent equity on its condensed consolidated balance sheet as of September 30, 2017. The Company may not redeem the notes prior to the maturity date, and no sinking fund is provided for the 2.125% Notes. The conversion rate is currently 125.0031 shares of common stock per $1,000 principal amount of 2.125% Notes (equivalent to an initial conversion price of approximately $8.00 per share of common stock). The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its notes in connection with such a corporate event in certain circumstances. If the Company undergoes a fundamental change prior to the maturity date of the notes, holders may require the Company to repurchase for cash all or any portion of their 2.125% Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2.125% Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In accounting for the issuance of the 2.125% Notes, the Company separated the 2.125% Notes into liability and equity components. The carrying amounts of the liability component was calculated by measuring the fair value of a similar liability that does not have associated conversion features. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2.125% Notes as a whole. The excess of the principal amount of the liability component over its book value (debt discount) is accreted to interest expense over the term of the 2.125% Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the 2.125% Notes, the Company allocated the total amount of issuance costs incurred to the liability and equity components based on their relative fair values. Issuance costs attributable to the liability component are being amortized to interest expense over the term of the 2.125% Notes, and the issuance costs attributable to the equity component were netted against the equity component in additional paid-in capital. During 2016, the Company recorded issuance costs of $15 million and $9 million, for the liability and equity portions, respectively. The determination of whether or not the 2.125% Notes are convertible must continue to be performed on a calendar-quarter basis. The 2.125% Notes consisted of the following:
As of September 30, 2017, the remaining life of the 2.125% Notes was approximately 108 months. Based on the closing price of the Company's common stock of $12.75 on September 29, 2017, the last business day of the third quarter of 2017, the if-converted value of the 2.125% Notes exceeded its principal amount by approximately $478 million. The effective interest rate of the liability component of the 2.125% Notes is 8%. This interest rate was based on the interest rates of similar liabilities at the time of issuance that did not have associated conversion features. The following table sets forth total interest expense recognized related to the 2.125% Notes:
6.75% Senior Notes Due 2019 On February 26, 2014, the Company issued $600 million of its 6.75% Senior Notes due 2019 (6.75% Notes). The 6.75% Notes are general unsecured senior obligations of the Company. Interest is payable on March 1 and September 1 of each year beginning September 1, 2014 until the maturity date of March 1, 2019. The 6.75% Notes are governed by the terms of an indenture (the 6.75% Indenture) dated February 26, 2014 between the Company and Wells Fargo Bank, N.A., as trustee. During the first nine months of 2017, the Company settled $5 million in aggregate principal amount of its 6.75% Notes with treasury stock. As of September 30, 2017, the outstanding aggregate principal amount of the 6.75% Notes was $191 million. 7.50% Senior Notes Due 2022 On August 15, 2012, the Company issued $500 million of its 7.50% Senior Notes due 2022 (7.50% Notes). The 7.50% Notes are general unsecured senior obligations of the Company. Interest is payable on February 15 and August 15 of each year beginning February 15, 2013 until the maturity date of August 15, 2022. The 7.50% Notes are governed by the terms of an indenture (the 7.50% Indenture) dated August 15, 2012 between the Company and Wells Fargo Bank, N.A., as trustee. During the first nine months of 2017, the Company settled $3 million in aggregate principal amount of its 7.50% Notes with treasury stock. As of September 30, 2017, the outstanding aggregate principal amount of the 7.50% Notes was $347 million. 7.00% Senior Notes Due 2024 On June 16, 2014, the Company issued $500 million of its 7.00% Senior Notes due 2024 (7.00% Notes). The 7.00% Notes are general unsecured senior obligations of the Company. Interest is payable on January 1 and July 1 of each year beginning January 1, 2015 until the maturity date of July 1, 2024. The 7.00% Notes are governed by the terms of an indenture (the 7.00% Indenture) dated June 16, 2014 between the Company and Wells Fargo Bank, N.A., as trustee. During the third quarter of 2017, the Company repurchased $26 million in aggregate principal amount of its 7.00% Notes for $28 million. During the first nine months of 2017, the Company settled $92 million in aggregate principal amount of its 7.00% Notes for $70 million in cash and $26 million in treasury stock. As of September 30, 2017, the outstanding aggregate principal amount of the 7.00% Notes was $324 million. Subsequent to the end of the third quarter of 2017 and through November 2, 2017, the Company repurchased $13 million in aggregate principal amount of its 7.00% Notes. Potential Repurchase of Outstanding Notes The Company may elect to purchase or otherwise retire the 6.75% Notes, 7.50% Notes, 7.00% Notes and 2.125% Notes with cash, stock or other assets from time to time in open market or privately negotiated transactions, either directly or through intermediaries, or by tender offer when the Company believes the market conditions are favorable. Secured Revolving Line of Credit Amended and Restated Loan and Security Agreement On April 14, 2015, the Company and its subsidiaries, AMD International Sales & Service, Ltd. (AMDISS) and ATI Technologies ULC (collectively, the Loan Parties), entered into an amended and restated loan and security agreement (the Amended and Restated Loan Agreement) by and among the Loan Parties, the financial institutions party thereto from time to time as lenders (the Lenders) and Bank of America, N.A., acting as agent for the Lenders (the Agent). Fifth Amendment to the Amended and Restated Loan and Security Agreement On March 21, 2017, the Loan Parties entered into a fifth amendment to the Amended and Restated Loan Agreement (the Fifth Amendment) by and among the Loan Parties, the financial institutions party thereto from time to time as lenders and the Agent, which modifies the Amended and Restated Loan Agreement. The Fifth Amendment amends the Amended and Restated Loan Agreement by, among other things, extending the maturity date of the Secured Revolving Line of Credit from April 14, 2020 to March 21, 2022, reducing the Applicable Margin (as defined in the Amended and Restated Loan Agreement), reducing the commitment fee, lowering the minimum threshold of Availability (as defined in the Amended and Restated Loan Agreement) required to be maintained by the Company and AMDISS in order to avoid cash dominion, amending the borrowing base reporting requirement, amending maximum dollar limits related to supply chain finance arrangements, and reducing the amount of the Secured Revolving Line of Credit available for the issuance for letters of credit from $75 million to $45 million. The Amended and Restated Loan Agreement provides for a Secured Revolving Line of Credit for a principal amount up to $500 million with up to $45 million available for issuance of letters of credit. Borrowings under the Secured Revolving Line of Credit are limited to up to 85% of eligible accounts receivable (90% for certain qualified eligible accounts receivable), minus specified reserves. The size of the commitments under the Secured Revolving Line of Credit may be increased by up to an aggregate amount of $200 million. The Secured Revolving Line of Credit is secured by a first priority security interest in the Loan Parties’ accounts receivable, inventory, deposit accounts maintained with the Agent and other specified assets, including books and records. Sixth Amendment to the Amended and Restated Loan and Security Agreement On September 19, 2017, the Loan Parties entered into a sixth amendment to the Amended and Restated Loan Agreement (the Sixth Amendment) by and among the Loan Parties, the financial institutions party thereto from time to time as lenders and the Agent, which modifies the Amended and Restated Loan Agreement. The Sixth Amendment amends the definition of the term “Qualified Factor Arrangement” to state that the amount held or owing or subject to repurchase is limited to (i) during the Company’s first fiscal quarter of each of its fiscal years, $220 million in the aggregate, (ii) during the Company’s second and third fiscal quarter of each of its fiscal years, $300 million in the aggregate, and (iii) (x) from the first day of the Company’s fourth fiscal quarter of each of its fiscal years to December 20 of each of its fiscal years, $300 million in the aggregate (provided, that not more than $220 million of such amount may consist of Qualified Factor Accounts (as defined in the Sixth Amendment) sold in such period) and (y) from December 21 of each of the Company’s fiscal years to and including the last day of the Company’s fourth fiscal quarter of each of its fiscal years, $220 million in the aggregate. As of September 30, 2017, the Secured Revolving Line of Credit had an outstanding loan balance of $70 million, at an interest rate of 4.75%. As of December 31, 2016, the Company did not have any borrowings outstanding under the Secured Revolving Line of Credit. As of September 30, 2017, the Company had $19 million letter of credit outstanding and up to $327 million available for future borrowings under the Secured Revolving Line of Credit. The Company reports its intra-period changes in its revolving credit balance on a net basis in its condensed consolidated statement of cash flows as the Company intends the period of the borrowings to be brief, repaying borrowed amounts within 90 days. As of September 30, 2017, the Company was in compliance with all required covenants in the Amended and Restated Loan Agreement. |
Net Income (Loss) Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share is computed based on the weighted average number of shares outstanding. Diluted net income (loss) per share is computed based on the weighted average number of shares outstanding plus any potentially dilutive shares outstanding. Potentially dilutive shares include stock options, restricted stock units, shares issuable upon conversion of the 2.125% Notes and the exercise of the warrant under the Warrant Agreement. The following table sets forth the components of basic and diluted net income (loss) per share:
Potential shares from certain employee stock options, restricted stock units and the conversion of the 2.125% Notes totaling 102 million for the third quarter of 2017 and potential shares from certain employee stock options, restricted stock units, the conversion of the 2.125% Notes and the warrants under the Warrant Agreement totaling 144 million for the third quarter of 2016 were not included in the net income (loss) per share calculations because their inclusion would have been anti-dilutive. Potential shares from certain employee stock options, restricted stock units, the conversion of the 2.125% Notes and the warrants under the Warrant Agreement totaling 193 million for the nine months ended September 30, 2017 and potential shares from certain employee stock options, restricted stock units, the conversion of the 2.125% Notes and the warrants under the Warrant Agreement totaling 217 million for the nine months ended September 24, 2016 were not included in the net loss per share calculations because their inclusion would have been anti-dilutive. |
Financial Instruments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments Cash and Cash Equivalents Cash and financial instruments measured and recorded at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 are summarized below:
In addition to those amounts presented above, as of September 30, 2017 and December 31, 2016, the Company had approximately $2 million of investments in government money market funds, used as collateral for letters of credit deposits, which were included in Other current assets on the Company’s condensed consolidated balance sheets. These government money market funds are classified within Level 1 because they are valued using quoted prices for identical instruments in active markets. Their amortized cost approximates the fair value for all periods presented. The Company is restricted from accessing these deposits. As of September 30, 2017 and December 31, 2016, the Company also had approximately $17 million and $15 million, respectively, of investments in mutual funds held in a Rabbi trust established for the Company's deferred compensation plan, which were included in Other assets on the Company's condensed consolidated balance sheets. These mutual funds are classified within Level 1 because they are valued using quoted prices for identical instruments in active markets. Their amortized cost approximates the fair value for all periods presented. The Company is restricted from accessing these investments. Financial Instruments Not Recorded at Fair Value on a Recurring Basis. The Company carries its financial instruments at fair value with the exception of its debt. Financial instruments that are not recorded at fair value are measured at fair value on a quarterly basis for disclosure purposes. The carrying amounts and estimated fair values of financial instruments not recorded at fair value are as follows:
The Company’s long-term debt is classified within Level 2. The fair value of the debt was estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. The fair value of the Company’s accounts receivable, accounts payable and other short-term obligations approximate their carrying value based on existing payment terms. Hedging Transactions and Derivative Financial Instruments Cash Flow Hedges The following table shows the amount of gain (loss) included in accumulated other comprehensive gain (loss) and the amount of gain (loss) reclassified from accumulated other comprehensive gain (loss) and included in earnings related to the foreign currency forward contracts designated as cash flow hedges:
The Company’s foreign currency derivative contracts are classified within Level 2 because the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets, such as currency spot and forward rates. The following table shows the fair value amounts included in Other current assets should the foreign currency forward contracts be in a gain position or included in Other current liabilities should these contracts be in a loss position. These amounts were recorded in the Company's condensed consolidated balance sheets as follows:
For the foreign currency contracts designated as cash flow hedges, the ineffective portions of the hedging relationship and the amounts excluded from the assessment of hedge effectiveness were immaterial. As of September 30, 2017 and December 31, 2016, the notional values of the Company’s outstanding foreign currency forward contracts were $305 million and $138 million, respectively. All the contracts mature within 12 months, and, upon maturity, the amounts recorded in Accumulated other comprehensive gain (loss) are expected to be reclassified into earnings. The Company hedges its exposure to the variability in future cash flows for forecasted transactions over a maximum of 12 months. |
Income Taxes |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes In the third quarter of 2017, the Company recorded an income tax provision of $19 million, consisting primarily of withholding taxes applicable to IP related revenue from foreign locations. For the nine months ended September 30, 2017, the Company recorded an income tax provision of $27 million, consisting primarily of withholding taxes applicable to IP related revenue and licensing gain from foreign locations. In the third quarter of 2016, the Company recorded an income tax provision of $4 million, consisting of $3 million for withholding taxes applicable to licensing gain from foreign locations and $1 million of foreign taxes in profitable locations. For the nine months ended September 24, 2016, the Company recorded an income tax provision of $34 million, including $6 million of foreign taxes in profitable locations, $5 million for withholding taxes primarily applicable to licensing gain from foreign locations and $4 million of tax benefits arising from other comprehensive income and Canadian tax credits. In addition, the Company recorded the tax effect of completion of the sale of a majority equity interest in two subsidiaries comprising $21 million of income tax expense in China and $6 million of withholding tax expense associated with a future repatriation of the gain generated in China by the Chinese portion of that transaction (see Note 4. Equity Interest Purchase Agreement - ATMP Joint Venture). The Company has not recognized the tax benefit of future foreign tax credits associated with the withholding tax expense as the size and age profile of existing tax attributes does not allow it to satisfy the “more likely than not” criterion for the recognition of deferred tax assets. As of September 30, 2017, substantially all of the Company’s U.S. and Canadian deferred tax assets, net of deferred tax liabilities, continue to be subject to a valuation allowance. The realization of these assets is dependent on substantial future taxable income which, as of September 30, 2017, in management’s estimate, is not more likely than not to be achieved. The Company's total gross unrecognized tax benefits increased from $58 million in prior quarter to $61 million as of September 30, 2017. This increase was due to additional R&D unrecognized tax benefits in foreign locations. The Company does not believe it is reasonably possible that unrecognized tax benefits will materially change in the next 12 months. However, the settlement, resolution or closure of tax audits are highly uncertain. |
Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting Management, including the Chief Operating Decision Maker, who is the Company’s Chief Executive Officer, reviews and assesses operating performance using segment net revenue and operating income (loss) before interest, other income (expense), net and income taxes. These performance measures include the allocation of expenses to the operating segments based on management’s judgment. The Company has the following two reportable segments:
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 management does not consider these expenses and credits in evaluating the performance of the reportable segments. This category also includes employee stock-based compensation expense and restructuring and other special charges, net. The following table provides a summary of net revenue and operating income (loss) by segment:
The following table provides major items included in All Other category:
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Stock-Based Incentive Compensation Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Incentive Compensation Plans | Stock-Based Incentive Compensation Plans Stock Options The weighted average assumptions applied in the lattice-binomial model that the Company uses to estimate the fair value of employee stock options are as follows:
During the quarter and nine months ended September 30, 2017 and quarter and nine months ended September 24, 2016, the Company granted 0.9 million and 2.2 million shares of employee stock options, respectively, with weighted average grant date fair value per share of $5.46 and $3.10, respectively. Restricted Stock Units In the third quarter of 2017, the Company granted 8.3 million shares of restricted stock units, including 0.8 million performance-based restricted stock units (PRSUs) with market conditions discussed below, with weighted average grant date fair value per share of $13.24. In the third quarter of 2016, the Company granted 19.5 million shares of restricted stock units including, 2.0 million PRSUs with market conditions discussed below, with weighted average grant date fair value per share of $5.10. During the nine months ended September 30, 2017, the Company granted 10.4 million shares of restricted stock units including, 0.8 million PRSUs with market conditions discussed below, with weighted average grant date fair value per share of $13.03. During the nine months ended September 24, 2016, the Company granted 26 million shares of restricted stock units including, 2.0 million PRSUs with market conditions discussed below, with weighted average grant date fair value per share of $4.55. Performance-based Restricted Stock Units with Market Conditions During the third quarter of 2017, the Company granted restricted stock units with both a market condition and a service condition (market-based restricted stock units) to the Company's senior executives. The vesting is based on relative Total Shareholder Return (TSR) performance. The number of shares that may be earned is calculated based on the TSR of AMD's common stock as compared to the TSR of the companies included in the PHLX Semiconductor Sector Index (SOX), with the potential payout level of shares within a range from 0% to 250% of the target number of shares granted. These payout levels can be adjusted by two criteria - one based on AMD's TSR and one based on AMD's stock price during the last year of performance period; and an overall payout cap based on total value. Any shares earned shall vest upon the compensation committee's certification of the attainment of the performance level, subject to the recipient's continuous employment or service through each such vesting date. The Company estimated the fair value of the market-based restricted stock units using a Monte Carlo simulation model on the date of grant. As of September 30, 2017 there were 0.8 million market-based restricted stock units with potential payout level at 100% with a grant date fair value per share of $17.18. During the third quarter of 2016, the Company granted market-based restricted stock units to the Company’s senior executives. The number of shares that may be earned is based on three-year compounded annual growth rate milestones related to the Company’s closing stock price that may be attained within the three-year performance period, with the potential payout levels of shares at 50%, 100%, 150%, 200% and 250% of the target number of shares granted. Any shares earned pursuant to the attainment of a performance level shall vest 50% upon the compensation committee's certification of the attainment of the performance level (provided, however, that no shares may be earned or vest prior to the first anniversary of the grant date) and the remaining 50% shall vest at the end of the performance period, subject to the recipient’s continuous employment or service through each such vesting date. The Company estimated the fair value of the market-based restricted stock units using a Monte Carlo simulation model on the date of grant. As of September 24, 2016, there were 2.0 million market-based restricted stock units with the potential payout level at 100% with a grant date fair value per share of $4.50. As of September 30, 2017, all the 2016 market-based restricted stock units achieved the 250% payout level. |
Commitments and Contingencies |
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Commitments and Contingencies | Commitments and Contingencies Warranties and Indemnities The Company generally warrants that its products sold to its customers will conform to the Company’s approved specifications and be free from defects in material and workmanship under normal use and service for one year. Subject to certain exceptions, the Company also offers a three-year limited warranty to end users for only those central processing unit (CPU) and AMD accelerated processing unit (APU) products that are commonly referred to as “processors in a box” and for certain server CPU products. The Company also offers extended limited warranties to certain customers of “tray” microprocessor products and/or professional graphics products who have written agreements with the Company and target their computer systems at the commercial and/or embedded markets. Changes in the Company’s estimated liability for product warranty were as follows:
In addition to product warranties, the Company, from time to time in its normal course of business, indemnifies other parties, with whom it enters into contractual relationships, including customers, lessors and parties to other transactions with the Company, with respect to certain matters. In these limited matters, the Company has agreed to hold certain third parties harmless against specific types of claims or losses, such as those arising from a breach of representations or covenants, third-party claims that the Company’s products, when used for their intended purpose(s) and under specific conditions, infringe the intellectual property rights of a third party, or other specified claims made against the indemnified party. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the unique facts and circumstances that are likely to be involved in each particular claim and indemnification provision. Historically, payments made by the Company under these obligations have not been material. Contingencies Securities Class Action On January 15, 2014, a class action lawsuit captioned Hatamian v. AMD, et al., C.A. No. 3:14-cv-00226 (the Hatamian Lawsuit) was filed against the Company in the United States District Court for the Northern District of California. The complaint purports to assert claims against the Company and certain individual officers for alleged violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Rule 10b-5 of the Exchange Act. The plaintiffs seek to represent a proposed class of all persons who purchased or otherwise acquired the Company's common stock during the period April 4, 2011 through October 18, 2012. The complaint seeks damages allegedly caused by alleged materially misleading statements and/or material omissions by the Company and the individual officers regarding the Company's 32nm technology and “Llano” product, which statements and omissions, the plaintiffs claim, allegedly operated to artificially inflate the price paid for the Company's common stock during the period. The complaint seeks unspecified compensatory damages, attorneys’ fees and costs. On July 7, 2014, the Company filed a motion to dismiss plaintiffs’ claims. On March 31, 2015, the Court denied the motion to dismiss. On May 14, 2015, the Company filed its answer to plaintiffs’ corrected amended complaint. On September 4, 2015, plaintiffs filed their motion for class certification, and on March 16, 2016, the Court granted plaintiffs' motion. A court-ordered mediation held in January 2016 did not result in a settlement of the lawsuit. The discovery process was concluded. The plaintiffs and defendants filed cross-motions for summary judgment, and briefing on those motions was completed in July 2017. On October 9, 2017, the parties signed a definitive settlement agreement resolving this matter and submitted it to the Court for approval. Under the terms of this agreement, the settlement will be funded entirely by certain of AMD’s insurance carriers and the defendants will continue to deny any liability or wrongdoing. Based upon information presently known to management, the Company believes that the potential liability, if any, will not have a material adverse effect on its financial condition, cash flows or results of operations. Shareholder Derivative Lawsuits On March 20, 2014, a purported shareholder derivative lawsuit captioned Wessels v. Read, et al., Case No. 1:14 cv-262486 (Wessels) was filed against the Company (as a nominal defendant only) and certain of its directors and officers in the Santa Clara County Superior Court of the State of California. The complaint purports to assert claims against the Company and certain individual directors and officers for breach of fiduciary duty, waste of corporate assets and unjust enrichment. The complaint seeks damages allegedly caused by alleged materially misleading statements and/or material omissions by the Company and the individual directors and officers regarding its 32nm technology and “Llano” product, which statements and omissions, the plaintiffs claim, allegedly operated to artificially inflate the price paid for the Company's common stock during the period. On April 27, 2015, a similar purported shareholder derivative lawsuit captioned Christopher Hamilton and David Hamilton v. Barnes, et al., Case No. 5:15-cv-01890 (Hamilton) was filed against the Company (as a nominal defendant only) and certain of its directors and officers in the United States District Court for the Northern District of California. The case was transferred to the judge handling the Hatamian Lawsuit and is now Case No. 4:15-cv-01890. On September 29, 2015, a similar purported shareholder derivative lawsuit captioned Jake Ha v Caldwell, et al., Case No. 3:15-cv-04485 (Ha) was filed against the Company (as a nominal defendant only) and certain of its directors and officers in the United States District Court for the Northern District of California. The lawsuit also seeks a court order voiding the stockholder vote on the Company’s 2015 proxy. The case was transferred to the judge handling the Hatamian Lawsuit and is now Case No. 4:15-cv-04485. The Wessels, Hamilton and Ha shareholder derivative lawsuits are currently stayed. Based upon information presently known to management, the Company believes that the potential liability, if any, will not have a material adverse effect on its financial condition, cash flows or results of operations. ZiiLabs Litigation On December 16, 2016, a patent lawsuit captioned ZiiLabs v. AMD, C.A. No. 2:16-cv-1418 in the United States District Court for Eastern District of Texas (the ZiiLabs Lawsuit) was filed against the Company. The complaint alleged that the Company infringed four patents related generally to graphics processors and memory controllers. The complaint sought damages, interest, and attorneys’ fees. ZiiLabs filed several similar lawsuits against other companies on the same day. On the same date, ZiiLabs also filed a complaint with the United States International Trade Commission (USITC) pursuant to Section 337 of the Tariff Act of 1930 against the Company and several other companies asserting the same four patents (USITC Proceeding). The complaint sought a limited exclusion order barring the importation of certain products that contain AMD memory controllers and graphics processors. Some of the Company’s customers are also named respondents. On January 18, 2017, the USITC announced that it would institute the investigation, entitled 337-TA-1037, In the Matter of Certain Graphics Processors, DDR Memory Controllers, and Products Containing the Same. On July 20, 2017, the Company obtained a license to the patents-in-suit. Accordingly, the USITC and the Court have dismissed the Company from the proceedings. The resulting settlement obligation was not material. The applicable amount of the patent license was capitalized on the Company's balance sheet in the third quarter of 2017 and amortized over its useful life. Dickey Litigation On October 26, 2015, a putative class action complaint captioned Dickey et al. v. AMD, No. 15-cv-04922 was filed against the Company in the United States District Court for the Northern District of California. Plaintiffs allege that the Company misled consumers by using the term "eight cores" in connection with the marketing of certain AMD FX CPUs that are based on the Company's “Bulldozer” core architecture. The plaintiffs allege these products cannot perform eight calculations simultaneously, without restriction. The plaintiffs seek to obtain damages under several causes of action for a nationwide class of consumers who allegedly were deceived into purchasing certain Bulldozer-based CPUs that were marketed as containing eight cores. The plaintiffs also seek attorneys' fees. On December 21, 2015, the Company filed a motion to dismiss the complaint, which was granted on April 7, 2016. The plaintiffs then filed an amended complaint with a narrowed putative class definition, which the Court dismissed upon the Company's motion on October 31, 2016. The plaintiffs subsequently filed a second amended complaint, and the Company filed a motion to dismiss the second amended complaint. On June 14, 2017, the Court issued an order granting in part and denying in part the Company's motion to dismiss, and allowing the plaintiffs to move forward with a portion of their complaint. The putative class definition does not encompass the Company's Ryzen or EYPC processors. Based upon information presently known to management, the Company believes that the potential liability, if any, will not have a material adverse effect on its financial condition, cash flows or results of operations. Other Legal Matters The Company is a defendant or plaintiff in various actions that arose in the normal course of business. With respect to these matters, based on the management’s current knowledge, the Company believes that the amount or range of reasonably possible loss, if any, will not, either individually or in the aggregate, have a material adverse effect on the Company’s business, financial position and results of operations or cash flows. |
Accumulated Other Comprehensive Income (Loss) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Income (Loss) The tables below summarize the changes in accumulated other comprehensive income (loss) by component:
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Basis of Presentation and Significant Accounting Policies (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation. The accompanying unaudited condensed consolidated financial statements of Advanced Micro Devices, Inc. and its subsidiaries (the Company or AMD) have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The results of operations for the quarter and nine months ended September 30, 2017 shown in this report are not necessarily indicative of results to be expected for the full year ending December 30, 2017. In the opinion of the Company’s management, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s results of operations, financial position and cash flows. All such adjustments are of a normal, recurring nature. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. |
Fiscal Period | The Company uses a 52 or 53 week fiscal year ending on the last Saturday in December. The quarters and nine months ended September 30, 2017 and September 24, 2016 each consisted of 13 weeks and 39 weeks, respectively. |
Principles of Consolidation | Principles of Consolidation. The condensed consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries. Upon consolidation, all significant inter-company accounts and transactions are eliminated. |
Recently Adopted and Issued Accounting Standards | Recently Adopted Accounting Standards Goodwill Impairment. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other: Topic 350: Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under the amendments in ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual and any interim impairment tests performed for periods beginning after December 15, 2019 on a prospective basis, and earlier adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company elected to early adopt this accounting standard update in the third quarter of 2017 on a prospective basis. The Company does not expect the standard to have an impact on its consolidated financial statements. The Company expects the adoption of this update to simplify its annual goodwill impairment testing process, by eliminating the need to estimate the implied fair value of a reporting unit’s goodwill, if its respective carrying value exceeds fair value. Stock Compensation. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), which is intended to simplify several aspects of the accounting for share-based payment award transactions. The Company adopted this guidance in the first quarter of 2017 and elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. In the first quarter of 2017, the Company recorded a $96 million cumulative-effect adjustment in accumulated deficit and an offsetting increase in deferred tax assets for previously unrecognized excess tax benefits that existed as of December 31, 2016. Since substantially all of the Company’s U.S. and foreign deferred tax assets, net of deferred tax liabilities, are subject to a valuation allowance and the realization of these assets is not more likely than not to be achieved, the Company recorded a $96 million valuation allowance against these deferred tax assets with an offsetting adjustment in accumulated deficit. The Company elected to report cash flows related to excess tax benefits as an operating activity on a prospective basis. The presentation requirement for cash flows related to employee taxes paid for withheld shares did not impact the statements of cash flows because such cash flows have historically been presented as a financing activity. Investments. In March 2016, the FASB issued ASU No. 2016-07, Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting (ASU 2016-07), which requires the equity method investor to add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment qualifies for equity method accounting. The Company adopted this guidance in the first quarter of 2017, and it did not have an impact on its consolidated financial statements. Inventory. In July 2015, the Financial Accounting Standards Board (FASB) issued ASU No. 2015-11, Simplifying the Measurement of Inventory (ASU 2015-11), which requires entities to measure inventory at the lower of cost or net realizable value. This ASU simplifies the subsequent measurement of inventory by replacing the lower of cost or market test with a lower of cost or net realizable value test. The Company adopted this guidance in the first quarter of 2017, and it did not have an impact on its consolidated financial statements. Recently Issued Accounting Standards Derivatives and Hedging. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12), which amends and simplifies existing guidance in order to allow companies to more accurately present the economic effects of risk management activities in the financial statements. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, including interim periods therein with early adoption permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements, as well as its planned adoption date. Although there are several other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its consolidated financial position or operating results. Stock Compensation. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation: Topic 718: Scope of Modification Accounting (ASU 2017-09) to provide clarity and reduce both the (1) diversity in practice and (2) cost and complexity when changing the terms or conditions of share-based payment awards. Under ASU 2017-09, modification accounting is required to be applied unless all of the following are the same immediately before and after the change: 1. The award’s fair value (or calculated value or intrinsic value, if those measurement methods are used). 2. The award’s vesting conditions. 3. The award’s classification as an equity or liability instrument. ASU 2017-09 is effective for annual and interim periods beginning after December 15, 2017 on a prospective basis, and early adoption is permitted. The Company has evaluated the impact of its pending adoption of ASU 2017-09 and does not expect that this guidance will have a significant impact on its financial statements. Income Taxes. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory (ASU 2016-16), which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This amends current GAAP which prohibits recognition of current and deferred income taxes for all types of intra-entity asset transfers until the asset has been sold to an outside party. ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, including interim periods therein with early adoption permitted. Upon adoption, the Company must apply a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact of this new standard on its consolidated financial statements, as well as its planned adoption date. Statement of Cash Flows. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15), which is intended to reduce the existing diversity in practice in how certain cash receipts and cash payments are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years with early adoption permitted, provided that all of the amendments are adopted in the same period. The Company is currently evaluating the impact of its pending adoption of ASU 2016-15 on its consolidated financial statements. Financial Instruments. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (ASU 2016-13). The standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently evaluating the timing of adoption and impact of ASU 2016-13 on its consolidated financial statements. Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02), which increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. Upon adoption, lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently evaluating the impact of its pending adoption of ASU 2016-02 on its consolidated financial statements. Financial Instruments. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01), which requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The ASU also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. Entities will have to assess the realizability of such deferred tax assets in combination with the entities' other deferred tax assets. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017 and for interim periods within that reporting period. The Company is currently evaluating the impact of its pending adoption of ASU 2016-01 on its consolidated financial statements. Revenue Recognition. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09), which creates a single source of revenue guidance under U.S. GAAP for all companies in all industries and replaces most existing revenue recognition guidance in U.S. GAAP. Under the new standard, 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 entity expects to receive in exchange for those goods or services. In addition, the new standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has issued several amendments to the new standard, including clarification on accounting for licenses of intellectual property and identifying performance obligations. The new standard is effective for annual reporting periods beginning after December 15, 2017. The new standard permits companies to early adopt the new standard, but not before annual reporting periods beginning after December 15, 2016. The Company will not early adopt the new standard and therefore the new standard will be effective for the Company in the first quarter of its fiscal 2018. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or prospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application and providing additional disclosures comparing results to the previous rules in the year of adoption of the new standard (the modified retrospective method or the cumulative catchup method). The Company currently anticipates adopting the standard using the full retrospective method to restate each prior reporting period presented. The Company’s ability to adopt utilizing the full retrospective method is dependent upon system readiness and the completion of its analysis of information necessary to restate prior period financial statements and the Company is progressing toward the adoption of the standard in the first quarter of fiscal 2018. As part of this plan, the Company is implementing changes to its policies, procedures and controls. The Company currently believes that the most significant impact relates to accelerated revenue recognition for sales to its distributors, whereby revenue is expected to be recognized upon the initial sale to the Company's distributors, instead of the current recognition upon resale by the distributors to the end customers. Additionally, the Company expects the timing and financial statement classification related to the accounting for some combined development and intellectual property licensing arrangements to change. Currently some of these arrangements result in both the reduction to research and development expenses and revenue recognition based on a fair value allocation of the consideration received. Some of these arrangements may result in the classification of the entire amount as revenue under the new revenue guidance. The Company currently expects other revenue streams to remain substantially unchanged. |
Supplemental Balance Sheet Information (Tables) |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories
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Property, Plant and Equipment | Property, Plant and Equipment
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Other Assets | Other Assets
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Accrued Liabilities | Accrued Liabilities
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Debt and Secured Revolving Line of Credit (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Debt | The 2.125% Notes consisted of the following:
The following table sets forth total interest expense recognized related to the 2.125% Notes:
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Net Income (Loss) Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Basic and Diluted Loss Per Share | The following table sets forth the components of basic and diluted net income (loss) per share:
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Financial Instruments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents | Cash and financial instruments measured and recorded at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 are summarized below:
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Financial Instruments Not Recorded at Fair Value on a Recurring Basis | The carrying amounts and estimated fair values of financial instruments not recorded at fair value are as follows:
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Operations | The following table shows the amount of gain (loss) included in accumulated other comprehensive gain (loss) and the amount of gain (loss) reclassified from accumulated other comprehensive gain (loss) and included in earnings related to the foreign currency forward contracts designated as cash flow hedges:
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Schedule of Fair Value Amounts of Foreign Currency Forward Contracts in Balance Sheet | The following table shows the fair value amounts included in Other current assets should the foreign currency forward contracts be in a gain position or included in Other current liabilities should these contracts be in a loss position. These amounts were recorded in the Company's condensed consolidated balance sheets as follows:
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Segment Reporting (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Net Revenue and Operating Income (Loss) by Segment | The following table provides a summary of net revenue and operating income (loss) by segment:
The following table provides major items included in All Other category:
|
Stock-Based Incentive Compensation Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The weighted average assumptions applied in the lattice-binomial model that the Company uses to estimate the fair value of employee stock options are as follows:
|
Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Estimated Liability for Product Warranty | Changes in the Company’s estimated liability for product warranty were as follows:
|
Accumulated Other Comprehensive Income (Loss) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The tables below summarize the changes in accumulated other comprehensive income (loss) by component:
|
Basis of Presentation and Significant Accounting Policies (Details) - Accounting Standards Update 2016-09 [Member] $ in Millions |
Apr. 01, 2017
USD ($)
|
---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Deferred tax assets, net | $ 96 |
Valuation Allowance of Deferred Tax Assets [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Deferred tax assets, valuation allowance | 96 |
Accumulated Deficit [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect of new accounting principle | (96) |
Accumulated Deficit [Member] | Valuation Allowance of Deferred Tax Assets [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect of new accounting principle | $ 96 |
Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Accounts Receivable | ||
Unbilled accounts receivables | $ 16 | $ 37 |
Inventories | ||
Raw materials | 52 | 11 |
Work in process | 521 | 564 |
Finished goods | 221 | 176 |
Total inventories, net | 794 | 751 |
Property, Plant and Equipment | ||
Leasehold improvements | 151 | 148 |
Equipment | 758 | 714 |
Construction in progress | 69 | 19 |
Property, plant and equipment, gross | 978 | 881 |
Accumulated depreciation and amortization | (742) | (717) |
Total property, plant and equipment, net | 236 | 164 |
Other Assets | ||
Software technology and licenses, net | 248 | 232 |
Other | 57 | 47 |
Total other assets | 305 | 279 |
Accrued Liabilities | ||
Accrued compensation and benefits | 147 | 116 |
Marketing programs and advertising expenses | 124 | 102 |
Software technology and licenses payable | 54 | 24 |
Other | 135 | 149 |
Total accrued liabilities | $ 460 | $ 391 |
Mask [Member] | ||
Property, Plant and Equipment | ||
Useful life | 2 years |
Equity Interest Purchase Agreement - ATMP Joint Venture (Details) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2017
USD ($)
|
Sep. 24, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
|
Sep. 24, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
Apr. 29, 2016
joint_venture
|
|
Investment [Line Items] | ||||||
Number of Joint Ventures | joint_venture | 2 | |||||
Investment: equity method | $ 57 | $ 57 | $ 59 | |||
Payables to related parties | 444 | 444 | 383 | |||
Equity loss in investee | (2) | $ (5) | (7) | $ (8) | ||
ATMP JV [Member] | ||||||
Investment [Line Items] | ||||||
Investment: equity method | 57 | 57 | 59 | |||
Purchases from related party | 131 | 107 | 332 | 173 | ||
Payables to related parties | 174 | 174 | $ 128 | |||
Equity loss in investee | $ (2) | $ (5) | $ (7) | $ (8) | ||
Company's Subsidiaries [Member] | ATMP JV [Member] | ||||||
Investment [Line Items] | ||||||
Ownership percentage | 15.00% | |||||
TFME's Affiliates [Member] | ATMP JV [Member] | ||||||
Investment [Line Items] | ||||||
Ownership percentage | 85.00% |
Debt and Secured Revolving Line of Credit (Convertible Debt) (Details) - 2.125% Convertible Senior Notes Due 2026 [Member] - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
Sep. 28, 2016 |
Sep. 14, 2016 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Principal | $ 805,000,000 | $ 805,000,000 | $ 105,000,000 | $ 700,000,000 |
Unamortized debt discount | (291,000,000) | (308,000,000) | ||
Unamortized debt issuance costs | (13,000,000) | (14,000,000) | ||
Net carrying amount | 501,000,000 | 483,000,000 | ||
Carrying amount of the equity component | $ 305,000,000 | 305,000,000 | ||
Equity issuance costs | $ 9,000,000 |
Debt and Secured Revolving Line of Credit (Interest Expense Recognized) (Details) - 2.125% Convertible Senior Notes Due 2026 [Member] - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 24, 2016 |
Sep. 30, 2017 |
Sep. 24, 2016 |
|
Debt Instrument [Line Items] | ||||
Contractual interest expense | $ 4 | $ 0 | $ 13 | $ 0 |
Interest cost related to amortization of debt issuance costs | 0 | 0 | 1 | 0 |
Interest cost related to amortization of the debt discount | $ 6 | $ 1 | $ 17 | $ 1 |
Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 24, 2016 |
Sep. 30, 2017 |
Sep. 24, 2016 |
|
Numerator – Net income (loss): | ||||
Numerator for basic and diluted net income (loss) per share | $ 71 | $ (406) | $ (18) | $ (446) |
Denominator - Weighted average shares | ||||
Denominator for basic net income (loss) per share (in shares) | 957 | 815 | 947 | 801 |
Effect of potentially dilutive shares: | ||||
Employee stock options and restricted stock units | 44 | 0 | 0 | 0 |
Warrants | 41 | 0 | 0 | 0 |
Denominator for diluted net income (loss) per share | 1,042 | 815 | 947 | 801 |
Net income (loss) per share: | ||||
Basic (in usd per share) | $ 0.07 | $ (0.50) | $ (0.02) | $ (0.56) |
Diluted (in usd per share) | $ 0.07 | $ (0.50) | $ (0.02) | $ (0.56) |
Stock Options and Restricted Stock Units [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive shares | 102 | 144 | 193 | 217 |
Financial Instruments (Cash and Cash Equivalents Fair Value Measurements) (Details) - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule of Investments [Line Items] | ||
Cash and cash equivalents | $ 879 | $ 1,264 |
Fair Value, Inputs, Level 1 [Member] | ||
Schedule of Investments [Line Items] | ||
Cash and cash equivalents | 115 | 50 |
Fair Value, Inputs, Level 2 [Member] | ||
Schedule of Investments [Line Items] | ||
Cash and cash equivalents | 646 | 1,147 |
Cash [Member] | ||
Schedule of Investments [Line Items] | ||
Cash and cash equivalents | 118 | 67 |
Money Market Funds [Member] | ||
Schedule of Investments [Line Items] | ||
Cash and cash equivalents | 115 | 50 |
Commercial Paper [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Schedule of Investments [Line Items] | ||
Cash and cash equivalents | $ 646 | $ 1,147 |
Financial Instruments (Narrative) (Details) - Fair Value, Inputs, Level 1 [Member] - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Money Market Funds [Member] | ||
Schedule of Investments [Line Items] | ||
Investment in money market fund used as collateral | $ 2 | $ 2 |
Mutual Funds [Member] | ||
Schedule of Investments [Line Items] | ||
Restricted investments | $ 17 | $ 15 |
Financial Instruments (Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments not Recorded at Fair Value) (Details) - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Carrying Amount | ||
Short-term Debt | $ 70 | $ 0 |
Long-term debt, net | 1,356 | 1,435 |
Estimated Fair Value | ||
Unamortized debt issuance costs | 21 | 25 |
Fair Value, Inputs, Level 2 [Member] | ||
Estimated Fair Value | ||
Short-term Debt, Fair Value | 70 | 0 |
Long-term debt | 2,294 | 2,313 |
Financial Instruments Not Recorded at Fair Value on a Recurring Basis - Long-term debt, net [Member] | ||
Carrying Amount | ||
Long-term debt, net | $ 1,355 | 1,434 |
Convertible Debt [Member] | ||
Estimated Fair Value | ||
Debt Instrument, Interest Rate, Stated Percentage | 2.125% | |
Unamortized debt discount | $ 291 | $ 308 |
Financial Instruments (Summary of Derivative Instruments) (Details) - Contracts designated as cash flow hedging instruments - Foreign Currency Forward Contracts - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Foreign Currency Forward Contracts - gains (losses) | ||
Derivative, notional amount | $ 305 | $ 138 |
Fair Value, Inputs, Level 2 [Member] | ||
Foreign Currency Forward Contracts - gains (losses) | ||
Contracts designated as cash flow hedging instruments | $ 6 | $ (2) |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 24, 2016 |
Sep. 30, 2017 |
Sep. 24, 2016 |
Jul. 01, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Provision for income taxes | $ 19 | $ 4 | $ 27 | $ 34 | |
Provision (Benefit) for Income Taxes [Line Items] | |||||
Foreign taxes in profitable locations | 1 | 6 | |||
Withholding taxes applicable to license fee revenue from foreign locations | $ 3 | 5 | |||
Tax expenses (benefits) arising from other comprehensive income and Canadian tax credits | 4 | ||||
Gross unrecognized tax benefits | $ 61 | $ 61 | $ 58 | ||
China | |||||
Provision (Benefit) for Income Taxes [Line Items] | |||||
Foreign taxes in profitable locations | 21 | ||||
Withholding tax expense of future repatriation of foreign gains | $ 6 |
Segment Reporting (Net Revenue and Operating Income (Loss) by Segment) (Details) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017
USD ($)
|
Sep. 24, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
segment
|
Sep. 24, 2016
USD ($)
|
|
Segment Reporting [Abstract] | ||||
Number of reportable segments | segment | 2 | |||
Segment Reporting Information [Line Items] | ||||
Net revenue | $ 1,643 | $ 1,307 | $ 3,849 | $ 3,166 |
Operating income (loss) | 126 | (293) | 122 | (369) |
Operating Segments [Member] | Computing and Graphics | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 819 | 472 | 2,071 | 1,367 |
Operating income (loss) | 70 | (66) | 62 | (217) |
Operating Segments [Member] | Enterprise, Embedded and Semi-Custom | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 824 | 835 | 1,778 | 1,799 |
Operating income (loss) | 84 | 136 | 135 | 236 |
All Other | ||||
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | $ (28) | $ (363) | $ (75) | $ (388) |
Segment Reporting (All Other Category) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 24, 2016 |
Sep. 30, 2017 |
Sep. 24, 2016 |
|
Operating loss: | ||||
Restructuring and other special charges, net | $ 0 | $ 0 | $ 0 | $ 10 |
Operating loss | 126 | (293) | 122 | (369) |
All Other | ||||
Operating loss: | ||||
Stock-based compensation expense | (29) | (23) | (76) | (57) |
Restructuring and other special charges, net | 0 | 0 | 0 | 10 |
Charge related to the sixth amendment to the WSA with GF | 0 | (340) | 0 | (340) |
Other | 1 | 0 | 1 | (1) |
Operating loss | $ (28) | $ (363) | $ (75) | $ (388) |
Stock-Based Incentive Compensation Plans (Weighted-Average Valuation Assumptions) (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 24, 2016 |
Sep. 30, 2017 |
Sep. 24, 2016 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Expected volatility | 56.32% | 59.85% | 56.32% | 59.85% |
Risk-free interest rate | 1.65% | 1.00% | 1.65% | 1.00% |
Expected dividends | 0.00% | 0.00% | 0.00% | 0.00% |
Expected life | 3 years 11 months 1 day | 3 years 11 months 23 days | 3 years 11 months 1 day | 3 years 11 months 23 days |
Commitments and Contingencies (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 24, 2016 |
Sep. 30, 2017 |
Sep. 24, 2016 |
|
Changes in Product Warranty Liability [Roll Forward] | ||||
Beginning balance | $ 10 | $ 11 | $ 12 | $ 15 |
New warranties issued | 7 | 5 | 18 | 15 |
Settlements | (7) | (5) | (16) | (13) |
Changes in liability for pre-existing warranties, including expirations | 1 | 0 | (3) | (6) |
Ending balance | $ 11 | $ 11 | $ 11 | $ 11 |
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