(solution) You are a partner in a prestigious accounting firm, and you just

(solution) You are a partner in a prestigious accounting firm, and you just

You are a partner in a prestigious accounting firm, and you just received requests for proposal from two companies; Advanced Micro Devices, and Facebook. The deadline for the proposals is, as is typical, very tight. In fact, with the staff you can pull together for proposal writing right now, you have determined that dividing the effort between two proposals will not work, and you must limit your efforts to one proposal.

Being an accountant, you know you understand financials and can draw lots of pertinent  information from the financial statements in the annual reports of the two companies. It is late evening and tomorrow morning, you?ll need to get the staff working on the proposal of your choice right away.

You study the financial statements in detail and based on that make a decision of which proposal you will get your staff started on in the morning.

Identify your choice and list the particular elements of the financial statements that formed the basis for your choice.

Attached are the annual reports:

2013 ANNUAL REPORT ON FORM 10-K Dear Stockholders:
In 2013, we made significant progress in bringing AMD closer to our mission of
becoming the world?s leading designer and integrator of innovative, tailored technology
solutions that empower people to push the boundaries of what is possible. Throughout
the year, we achieved many goals the Company set going into 2013 despite broader
PC industry challenges.
Transformation and Progress: Profitability and Acceleration of Our Business
Our strategic three-phase plan to transform AMD began with resetting and
restructuring our business to lay the foundation for the acceleration of our growth. By
the end of 2013, we successfully implemented phase one and phase two of our
turnaround plan to create a more efficient and sustainable business model in the
following ways:
? Reducing our operating expenses more than 30 percent from the first quarter of 2012 to the fourth quarter of
2013. ? Generating more than 30 percent of our net revenues in the second half of 2013 from our semi-custom and
embedded businesses, both high-growth focus areas for AMD. ? Exiting the year with cash balances, including marketable securities, of $1.2 billion, above our optimal cash
balance target of $1.1 billion, and establishing an incremental secured revolving line of credit up to $500 million. ? Returning to profitability and free cash flow in the second half of the year. I?m very pleased to report that AMD has also made steady progress on phase three of our plan: to transform our
business into a high-growth market competitor. Our business transformation is being propelled by an increasingly
diversified product portfolio and a focus on driving to 50 percent of AMD revenue from five high-growth markets by the
end of 2015: semi-custom solutions, ultra-low power client PC, embedded, dense server, and professional graphics. We
will measure our success in 2014 and beyond as follows:
? Increasing profitability. ? Further expanding our portfolio of differentiated and reusable IP, and leveraging our IP across a broader set of
products. ? Generating preference for the AMD brand and our products globally, spring-boarding off the comprehensive
brand revitalization work we executed this year. ? Retaining the industry?s best top talent and capabilities. As we drive results externally, I?m proud to report that motivation and morale is very high internally, as well. In fact, AMD
employees are among the most engaged and optimistic in the industry. Even in the face of difficult cost-cutting and
restructuring actions, our 2013 annual employee satisfaction survey yielded our highest levels of employee engagement
and confidence in leadership that we?ve seen in more than five years because our people believe in and are committed
to our transformation plan.
Solid Foundation for Growth: Unique, World-Class Strengths are Setting AMD Apart
As we continue to successfully achieve the milestones we?ve set along our transformation journey, it?s exciting to see the
industry taking notice of our progress. AMD is being recognized as an innovation powerhouse with a highly-prized IP
portfolio that uniquely positions our business to meet the needs of customers across a variety of growth markets. Our IP
prowess and capabilities as a world-class System-on-Chip (SoC) designer were perhaps most evident in 2013 in the
gaming space, with tailored AMD solutions powering the world?s newest gaming and entertainment consoles from
Microsoft and Sony, who chose AMD because of our ability to meet each of their exacting standards for these most
critical products. More than seven million Sony Playstation® 4 and Microsoft® Xbox One? units were shipped globally in
less than two months following their respective launches, and AMD executed flawlessly to ensure these customers were
able to meet the incredible worldwide demand they experienced.
As a part of AMD?s push into embedded markets, we also extended our product portfolio with the world?s first quad-core
x86 SoC, the new low-power AMD Embedded G-Series SoC for fanless designs at approximately 3-watts average power.1
The G-Series SoC has received numerous industry awards, and wide-ranging adoption by industry-leading companies like
GE Intelligent Platforms and Fujitsu, which helped our embedded business achieve record revenue in 2013. We also
detailed our plans to become the first company to offer both 64-bit ARM® and x86 embedded solutions in 2014.
Our semi-custom and embedded products enabled us to exceed the goal we set for those businesses to generate over
30 percent of AMD?s net revenue by the third and fourth quarters of 2013.
We are also making strides in other growth markets we?ve targeted. Our professional graphics business set a record for
full-year revenue in 2013. Apple?s new Mac Pro desktop with dual AMD FirePro? graphics processing units (GPUs) is a
perfect example of our momentum in this margin-accretive market. HP?s new thin and light HP ZBook 14 mobile
workstations also rely on AMD FirePro? professional graphics. We believe we can drive additional growth in the
professional graphics market as we further strengthen our product offerings, expand our work with key software
developers, and secure more design wins. In dense servers, we remained on track to launch one of the industry?s first 64-bit ARM server SoCs in 2014. Our unique
position offering both x86 and ARM solutions combined with our years of experience in the server market and industryleading fabric technology differentiates us as we bring an expanding set of solutions to this important market. Verizon
selected AMD to drive its high-performance public cloud ? one of the largest public cloud deployments in the world ?
choosing our best-in-class reliability powered by SeaMicro SM15000? servers. We collaborated with Verizon to codevelop a tailored global cloud solution that provides unprecedented performance and high reliability.
In our traditional server business, we launched AMD Opteron? X-Series processors, the industry?s highest performance
small core x86 server processors.2 In our mainstream graphics business, we launched a new family of discrete mobile
GPU products in the AMD Radeon? R9, R7, and R5 M200 Series mobile GPUs ? all powered by our award-winning
Graphics Core Next (GCN) architecture and bolstered by our groundbreaking Mantle technology, which enables game
developers to more easily harness the full capabilities of AMD graphics silicon across PCs and consoles and deliver
unmatched levels of performance and image quality to users. These new Radeon offerings include the fastest3 desktop
and notebook graphics solutions in the world for enthusiasts wanting the best PC gaming experience the market has to
offer. Our mainstream graphics and semi-custom businesses have enabled AMD to become the world?s leading silicon
provider in gaming, and we expect to regain share in the graphics market in 2014 based on continued channel
momentum, secured wins for our new AMD Radeon R7 and R9 discrete mobile GPUs.
Earlier in 2013, we unleashed new additions to our A-Series and E-Series Mobile Accelerated Processing Units (APUs)
for notebooks and desktop PCs, focusing on increased performance and power efficiency, as well as superior gaming
and graphics capabilities. We launched the 2013 AMD Elite Mobility APU (codenamed ?Temash?) ? the world?s first
28nm, quad-core x86 SoC APU designed for touch small form-factor notebooks, tablets, and hybrids, and the 2013 AMD
Mainstream APU (codenamed ?Kabini?) ? the first and only quad-core x86 SoC solution for entry-level and small-form
factor touch notebooks. AMD APUs are enabling our customers and partners to win. As an example, AMD worked with
HP to sell over one million APU-powered HP laptops to high school graduates in India?s northern state of Uttar Pradesh
in 2013. In addition, our commercial client business in India has also grown tremendously, and in 2013 one in three
commercial notebooks in India was powered by AMD APUs.
And as we deliver exciting new products, we remain mindful of our environmental, social and governance performance.
AMD consistently ranks very highly in this area and has been recognized by third party groups, such as the Dow Jones
Sustainability Indexes. In 2013, we were added to Corporate Responsibility magazine?s 100 Best Corporate Citizens list,
listed as a Prime Environmental, Social and Governance Investment by Oekom Research and received Grade ?A? in the
2013 Intangible Asset Rating from Morgan Stanley Capital International . These ratings and awards reflect our strong
and supportive culture, which makes AMD a great place to work, innovate, and win.
The Road Ahead: Managing our Business
We began 2014 the same way we ended 2013, with a focus on consistently executing our new product introduction
commitments for the year and building on the positive progress our Company made in the second half of 2013.
It is easy to sound cliché, but cloud computing truly does change everything. The cloud resets consumer expectations for
not only when and how they access their data but for how this information is presented in a consistent, easy-to-consume
manner independent of a device?s technical specifics. Continued consumer adoption of cloud-dependent devices
presents new challenges and opportunities for the providers of server computers, as well. The industry must work to find
new ways to deliver this ever increasing need to store and access the data that defines the modern computing
experience in vast data centers in the most energy and space efficient way possible.
Our industry continues to evolve, and the companies who will win will be the ones who embrace the changes being
driven by the increasing proliferation of cloud-based computing. AMD is one of these companies, and we are wellpositioned to leverage our unique IP to capitalize in the growth markets we have targeted. In 2014, we expect to realize
the following indicators of continued progress:
? Consistent execution and increased revenue year-over-year. ? Net income profitability for the year. ? Non-GAAP operating expenses in the range of approximately $420 million to $450 million per quarter. ? Remaining at the optimal cash balance target of $1 billion at the end of the year. Our focus is on developing winning, leadership products, and becoming a stronger company with a more predictable,
profitable and balanced business. I am confident we will deliver. We are midway through our multi-year turnaround
strategy and are motivated by the progress we have made. We remain on track to generate approximately 50 percent of
our revenue from high growth markets by the end of 2015. This is possible thanks to our most important competitive
advantage ? our people. We are building strong leaders aligned with the AMD Way of ownership and commitment,
customer focus and innovation leadership. Together we are determined to win, and to do what it takes to continue to
improve our performance. In short, AMD is a different company today. We are stronger, building on a more stable business foundation. Our
financial performance is improved. Our technology and capabilities are differentiated, creating a variety of opportunities
for us to grow more strategic customer relationships with the world?s top technology brands. We will continue taking
steps to transform into a more predictable and balanced business, by driving a richer product mix and focusing on the
parts of the market where our unique IP gives us a competitive advantage.
Sincerely, Rory P. Read
President and Chief Executive Officer
AMD
March, 2014 1 2 3 The average power for the AMD GX-210JA SOC is approximately 3 watts, determined by extrapolating the average of the
results of the measured average power of the GX-210HA 9W SOC running the following benchmarks: 3DMark® 11, AMD
Sys Stress Test CPU, AMD Sys Stress Test CPU & GPU, AMD Sys Stress Test GPU, Winbench® 99, CoreMark, Game:
Meat Boy, PCMark® 7, POV-Ray, Sandra 2011, Game: Street Fighter. Testing was performed on an AMD E1-2100 (Rev A1)
that is equivalent to the AMD GX-210HA SOC. System configuration: AMD E1-2100 @ 70°C, ?Larne? development platform,
4GB RAM, Windows® 7 Ultimate. Please see AMD Publication ID 53395A for more information. EMB-48
Based on AMD?s small core Opteron? processor Model X1150 vs. Intel® Atom? Model S1260, Intel?s highest performance
small core processor. Highest density based on cores/rack. Since Opteron X-Series has double the number of cores of Intel
Atom S1200 series, it has the double the density among small core x86 processors. Most power efficient small core x86
processor as measured by SPECint®_rate_base2006 estimates divided by TDP.
In tests by AMD as of 28 February, 2013, the AMD Radeon? HD 7990 showed higher average performance than the
NVIDIA® GeForce® GTX 690 in the 3DMark® Fire Strike Extreme (FS6407 vs. FS5316) and Crysis 3 (1080p & 1600p at all
quality presets). System configuration: Intel® Core? i7-3960X (3.30 GHz), MSI X79A-GD65, 16GB DDR3-1600 and
Windows 8 x64. AMD Radeon? HD 7990 evaluated with AMD Catalyst? 13.2 Beta 6. NVIDIA® GeForce® GTX 690
evaluated with NVIDIA® ForceWare? 310.90 WHQL. GRDT-32 CAUTIONARY STATEMENT
The forward-looking statements contained herein are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements contained herein
involve risks and uncertainties that could cause actual results to differ materially from current expectations. We urge
investors to review in detail the risks and uncertainties in our Securities and Exchange Commission filings, including but
not limited to the Annual Report on Form 10-K for the year ended December 28, 2013. UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 FORM 10-K
(Mark One) È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended December 28, 2013
OR ? TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from
to
Commission File Number 001-07882 ADVANCED MICRO DEVICES, INC.
(Exact name of registrant as specified in its charter) Delaware 94-1692300 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) One AMD Place, Sunnyvale, California 94088 (Address of principal executive offices) (Zip Code) (408) 749-4000
(Registrant?s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act:
(Title of each class) (Name of each exchange on which registered) Common Stock per share $0.01 par value
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes È No ?
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Exchange Act. Yes ? No È
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È No ?
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files): Yes È No ?
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant?s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. È
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company. See definition of ?large accelerated filer,? ?accelerated filer? and ?smaller reporting company? in
Rule 12b-2 of the Exchange Act (check one):
Large accelerated filer È
Accelerated filer ?
Non-accelerated filer ?
(Do not check if a smaller reporting company)
Smaller reporting company ?
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange
Act). Yes ? No È
As of June 29, 2013, the aggregate market value of the registrant?s common stock held by non-affiliates of the registrant was
approximately $2.5 billion based on the reported closing sale price of $4.08 per share as reported on the New York Stock
Exchange on June 28, 2013, which was the last business day of the registrant?s most recently completed second fiscal quarter.
Indicate the number of shares outstanding of each of the registrant?s classes of common stock, as of the latest practicable
date: 726,115,663 shares of common stock, $0.01 par value per share, as of February 14, 2014. DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Annual Meeting of Stockholders, which we expect will be held on or about May 8,
2014 (2014 Proxy Statement) are incorporated into Part III hereof. Advanced Micro Devices, Inc.
FORM 10-K
For The Fiscal Year Ended December 28, 2013
INDEX
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ITEM 1A. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ITEM 1B. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 ITEM 4. MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 ITEM 5. MARKET FOR REGISTRANT?S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 ITEM 7. MANAGEMENT?S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . 64 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . 110 ITEM 9A. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 ITEM 9B. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 ITEM 7A. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . 112 ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . 112 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 PRINCIPAL ACCOUNTING FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . 112 PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 ITEM 13.
ITEM 14. ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . 113 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 PART I
ITEM 1. BUSINESS Cautionary Statement Regarding Forward-Looking Statements
The statements in this report include forward-looking statements. These forward-looking statements are
based on current expectations and beliefs and involve numerous risks and uncertainties that could cause actual
results to differ materially from expectations. These forward-looking statements should not be relied upon as
predictions of future events as we cannot assure you that the events or circumstances reflected in these
statements will be achieved or will occur. You can identify forward-looking statements by the use of forwardlooking terminology including ?believes,? ?expects,? ?may,? ?will,? ?should,? ?seeks,? ?intends,? ?plans,?
?pro forma,? ?estimates,? or ?anticipates? or the negative of these words and phrases or other variations of
these words and phrases or comparable terminology. The forward-looking statements relate to, among other
things: demand for our products; the growth, change and competitive landscape of the markets in which we
participate; our ability to obtain sufficient external financing on favorable terms, or at all; the nature and extent
of our future payments to GLOBALFOUNDRIES Inc. (GF) and the materiality of these payments; the materiality
of our future purchases from GF; our ability to negotiate a fourth amendment to the WSA with GF; future patent
applications; sales patterns of our semi-custom System-on-Chip products for game consoles; expenditures
related to environmental compliance and conflict minerals disclosure requirements; PC market conditions; the
success of our transformation strategy; our ability to transform our business to attain approximately 50% of
revenue from high-growth markets by the end of 2015; the decline of royalty revenue received from third parties
as we transition to a semi-custom business model; the level of international sales as compared to total sales; that
we will sample our first ARM technology-based AMD Opteron? processor for servers in the first quarter of
2014; that our cash, cash equivalents and marketable securities and available external financing will be
sufficient to fund our operations including capital expenditures over the next twelve months; our dependence on
a small number of customers; our hedging strategy; and the timing of the implementation of certain
ENERGYSTAR specifications. Material factors and assumptions that were applied in making these forwardlooking statements include, without limitation, the following: the expected rate of market growth and demand for
our products and technologies (and the mix thereof); GF?s manufacturing yields and wafer volumes; our
expected market share; our expected product costs and average selling price; our overall competitive position
and the competitiveness of our current and future products; our ability to introduce new products, consistent with
our current roadmap; our ability to make additional investment in research and development and that such
opportunities will be available; the expected demand for computers; and the state of credit markets and
macroeconomic conditions. Material factors that could cause actual results to differ materially from current
expectations include, without limitation, the following: that Intel Corporation?s pricing, marketing and rebating
programs, product bundling, standard setting, new product introductions or other activities may negatively
impact our plans; that we will require additional funding and may be unable to raise sufficient capital on
favorable terms, or at all; that customers stop buying our products or materially reduce their operations or
demand for our products; that we may be unable to develop, launch and ramp new products and technologies in
the volumes that are required by the market at mature yields on a timely basis; that our third-party foundry
suppliers will be unable to transition our products to advanced manufact…