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 | ¨ |
Page No. | ||
Condensed Consolidated Statements of Operations – Three Months and Nine Months Ended September 24, 2016 and September 26, 2015 | ||
Condensed Consolidated Statements of Comprehensive Income (Loss) – Three Months and Nine Months Ended September 24, 2016 and September 26, 2015 | ||
Condensed Consolidated Balance Sheets as of September 24, 2016 and December 26, 2015 | ||
Condensed Consolidated Statements of Cash Flows – Nine Months Ended September 24, 2016 and September 26, 2015 | ||
ITEM 1. | FINANCIAL STATEMENTS |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(In millions, except per share amounts) | |||||||||||||||
Net revenue | $ | 1,307 | $ | 1,061 | $ | 3,166 | $ | 3,033 | |||||||
Cost of sales | 1,248 | 822 | 2,519 | 2,236 | |||||||||||
Gross margin | 59 | 239 | 647 | 797 | |||||||||||
Research and development | 259 | 241 | 744 | 718 | |||||||||||
Marketing, general and administrative | 117 | 108 | 339 | 373 | |||||||||||
Amortization of acquired intangible assets | — | — | — | 3 | |||||||||||
Restructuring and other special charges, net | — | 48 | (10 | ) | 135 | ||||||||||
Licensing gain | (24 | ) | — | (57 | ) | — | |||||||||
Operating loss | (293 | ) | (158 | ) | (369 | ) | (432 | ) | |||||||
Interest expense | (41 | ) | (39 | ) | (122 | ) | (119 | ) | |||||||
Other income (expense), net | (63 | ) | — | 87 | (3 | ) | |||||||||
Loss before equity loss and income taxes | (397 | ) | (197 | ) | (404 | ) | (554 | ) | |||||||
Provision for income taxes | 4 | — | 34 | 4 | |||||||||||
Equity in income (loss) of ATMP JV | (5 | ) | — | (8 | ) | — | |||||||||
Net loss | $ | (406 | ) | $ | (197 | ) | $ | (446 | ) | $ | (558 | ) | |||
Net loss per share | |||||||||||||||
Basic | $ | (0.50 | ) | $ | (0.25 | ) | $ | (0.56 | ) | $ | (0.72 | ) | |||
Diluted | $ | (0.50 | ) | $ | (0.25 | ) | $ | (0.56 | ) | $ | (0.72 | ) | |||
Shares used in per share calculation | |||||||||||||||
Basic | 815 | 785 | 801 | 780 | |||||||||||
Diluted | 815 | 785 | 801 | 780 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(In millions) | |||||||||||||||
Net loss | $ | (406 | ) | $ | (197 | ) | $ | (446 | ) | $ | (558 | ) | |||
Other comprehensive income (loss): | |||||||||||||||
Unrealized gains (losses) on available-for-sale securities: | |||||||||||||||
Unrealized gains (losses) arising during the period, net of tax effects of $0, $0, $1 and $0 | 1 | (3 | ) | — | (3 | ) | |||||||||
Unrealized gains (losses) on cash flow hedges: | |||||||||||||||
Unrealized gains (losses) arising during the period, net of tax effects of $0, $0, $3 and $0 | — | (13 | ) | 4 | (21 | ) | |||||||||
Reclassification adjustment for (gains) losses realized and included in net income (loss), net of tax effects of $0, $0, $0 and $0 | (1 | ) | 6 | 1 | 14 | ||||||||||
Total other comprehensive income (loss) | — | (10 | ) | 5 | (10 | ) | |||||||||
Total comprehensive loss | $ | (406 | ) | $ | (207 | ) | $ | (441 | ) | $ | (568 | ) |
September 24, 2016 | December 26, 2015 | ||||||
(In millions, except par value amounts) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,258 | $ | 785 | |||
Accounts receivable, net of allowances of $0 and $0 | 640 | 533 | |||||
Inventories, net | 772 | 678 | |||||
Prepayment and other - GLOBALFOUNDRIES | 13 | 33 | |||||
Prepaid expenses | 63 | 43 | |||||
Other current assets | 78 | 248 | |||||
Total current assets | 2,824 | 2,320 | |||||
Property, plant and equipment, net | 161 | 188 | |||||
Goodwill | 289 | 278 | |||||
Investment in ATMP JV | 60 | — | |||||
Other assets | 282 | 298 | |||||
Total assets | $ | 3,616 | $ | 3,084 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||
Current liabilities: | |||||||
Short-term debt | $ | — | $ | 230 | |||
Accounts payable | 582 | 279 | |||||
Payable to GLOBALFOUNDRIES | 284 | 245 | |||||
Payable to ATMP JV | 144 | — | |||||
Accrued liabilities | 384 | 472 | |||||
Other current liabilities | 25 | 124 | |||||
Deferred income on shipments to distributors | 54 | 53 | |||||
Total current liabilities | 1,473 | 1,403 | |||||
Long-term debt, net | 1,632 | 2,007 | |||||
Other long-term liabilities | 126 | 86 | |||||
Commitments and contingencies (See Note 13) | |||||||
Stockholders’ equity (deficit): | |||||||
Capital stock: | |||||||
Common stock, par value $0.01; 1,500 shares authorized on September 24, 2016 and December 26, 2015; shares issued: 941 shares on September 24, 2016 and 806 shares on December 26, 2015; shares outstanding: 926 shares on September 24, 2016 and 792 shares on December 26, 2015 | 9 | 8 | |||||
Additional paid-in capital | 8,258 | 7,017 | |||||
Treasury stock, at cost (15 shares on September 24, 2016 and 14 shares on December 26, 2015) | (127 | ) | (123 | ) | |||
Accumulated deficit | (7,752 | ) | (7,306 | ) | |||
Accumulated other comprehensive loss | (3 | ) | (8 | ) | |||
Total stockholders’ equity (deficit) | 385 | (412 | ) | ||||
Total liabilities and stockholders’ equity (deficit) | $ | 3,616 | $ | 3,084 |
(1) Amounts reflected adoption of FASB ASU 2015-17, Balance Sheet Classification of Deferred Taxes beginning in the first quarter of 2016. | ||||||
(2) Amounts reflected adoption of FASB ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs beginning in the first quarter of 2016. |
Nine Months Ended | |||||||
September 24, 2016 | September 26, 2015 | ||||||
(In millions) | |||||||
Cash flows from operating activities: | |||||||
Net Loss | $ | (446 | ) | $ | (558 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Net gain on sale of equity interests in ATMP JV | (146 | ) | — | ||||
Equity in loss of ATMP JV | 1 | — | |||||
Depreciation and amortization | 99 | 133 | |||||
Provision for deferred income taxes | 11 | — | |||||
Stock-based compensation expense | 57 | 47 | |||||
Non-cash interest expense | 11 | 8 | |||||
Restructuring and other special charges, net | — | 83 | |||||
Loss on debt redemption | 61 | — | |||||
Fair value of warrant issued related to sixth amendment to the WSA | 240 | — | |||||
Other | (5 | ) | 12 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (107 | ) | 164 | ||||
Inventories | (94 | ) | (93 | ) | |||
Prepayment and other - GLOBALFOUNDRIES | 20 | 97 | |||||
Prepaid expenses and other assets | (134 | ) | (113 | ) | |||
Payable to ATMP JV | 144 | — | |||||
Payable to GLOBALFOUNDRIES | 39 | 9 | |||||
Accounts payable, accrued liabilities and other | 151 | (74 | ) | ||||
Net cash used in operating activities | $ | (98 | ) | $ | (285 | ) | |
Cash flows from investing activities: | |||||||
Net proceeds from sale of equity interests in ATMP JV | 346 | — | |||||
Purchases of available-for-sale securities | — | (227 | ) | ||||
Purchases of property, plant and equipment | (56 | ) | (64 | ) | |||
Proceeds from maturities of available-for-sale securities | — | 462 | |||||
Proceeds from sale of property, plant and equipment | — | 8 | |||||
Other | 3 | — | |||||
Net cash provided by investing activities | $ | 293 | $ | 179 | |||
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 | 12 | 1 | |||||
Proceeds from (repayments of) borrowings, net | (230 | ) | 100 | ||||
Repayments of long-term debt | (848 | ) | (44 | ) | |||
Other | (5 | ) | (1 | ) | |||
Net cash provided by financing activities | $ | 278 | $ | 56 | |||
Net increase (decrease) in cash and cash equivalents | 473 | (50 | ) | ||||
Cash and cash equivalents at beginning of period | 785 | 805 | |||||
Cash and cash equivalents at end of period | $ | 1,258 | $ | 755 |
September 24, 2016 | |||
(In millions) | |||
Principal amounts: | |||
Principal | $ | 700 | |
Unamortized debt discount(1) | (273 | ) | |
Unamortized debt issuance costs | (12 | ) | |
Net carrying amount | $ | 415 | |
Carrying amount of the equity component(2) | $ | 266 |
(1) | Included in the consolidated balance sheets within Long-term debt, net and amortized over the remaining life of the notes on the straight-line basis as it approximates the effective interest rate method. |
(2) | Included in the consolidated balance sheets within additional paid-in capital, net of $8 million in equity issuance costs. |
September 24, 2016 | |||
(In millions) | |||
Contractual interest expense | $ | — | |
Interest cost related to amortization of debt issuance costs | — | ||
Interest cost related to amortization of the debt discount | $ | 1 |
September 24, 2016 | December 26, 2015 | ||||||
(In millions) | |||||||
Raw materials | $ | 15 | $ | 16 | |||
Work in process | 533 | 482 | |||||
Finished goods | 224 | 180 | |||||
Total inventories, net | $ | 772 | $ | 678 |
September 24, 2016 | December 26, 2015 | ||||||
(In millions) | |||||||
Assets held-for-sale | $ | — | $ | 183 | |||
Other current assets | 78 | 65 | |||||
Total other current assets | $ | 78 | $ | 248 |
September 24, 2016 | December 26, 2015 | ||||||
(In millions) | |||||||
Leasehold improvements | $ | 148 | $ | 146 | |||
Equipment | 741 | 821 | |||||
Construction in progress | 10 | 17 | |||||
Property, plant and equipment, gross | 899 | 984 | |||||
Accumulated depreciation and amortization | (738 | ) | (796 | ) | |||
Total property, plant and equipment, net | $ | 161 | $ | 188 |
September 24, 2016 | December 26, 2015 | ||||||
(In millions) | |||||||
Software and technology licenses, net | $ | 235 | $ | 189 | |||
Other | 47 | 109 | |||||
Total other assets | $ | 282 | $ | 298 |
September 24, 2016 | December 26, 2015 | ||||||
(In millions) | |||||||
Accrued compensation and benefits | $ | 131 | $ | 95 | |||
Marketing programs and advertising expenses | 97 | 109 | |||||
Software and technology licenses payable | 43 | 50 | |||||
Other | 113 | 218 | |||||
Total accrued liabilities | $ | 384 | $ | 472 |
September 24, 2016 | December 26, 2015 | ||||||
(In millions) | |||||||
Liabilities related to assets held-for-sale | $ | — | $ | 79 | |||
Other current liabilities | 25 | 45 | |||||
Total other current liabilities | $ | 25 | $ | 124 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(In millions, except per share amounts) | |||||||||||||||
Numerator – Net loss: | |||||||||||||||
Numerator for basic and diluted net loss per share | $ | (406 | ) | $ | (197 | ) | $ | (446 | ) | $ | (558 | ) | |||
Denominator – Weighted average shares | |||||||||||||||
Denominator for basic and diluted net loss per share | 815 | 785 | 801 | 780 | |||||||||||
Net loss per share: | |||||||||||||||
Basic | $ | (0.50 | ) | $ | (0.25 | ) | $ | (0.56 | ) | $ | (0.72 | ) | |||
Diluted | $ | (0.50 | ) | $ | (0.25 | ) | $ | (0.56 | ) | $ | (0.72 | ) |
September 24, 2016 | December 26, 2015 | ||||||
(In millions) | |||||||
Cash and cash equivalents | |||||||
Cash | $ | 306 | $ | 409 | |||
Level 2(1) (2) | |||||||
Commercial paper | 952 | 376 | |||||
Total level 2 | 952 | 376 | |||||
Total | $ | 1,258 | $ | 785 |
(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 24, 2016 or the year ended December 26, 2015. |
(2) | The Company’s Level 2 short-term investments 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 24, 2016 | December 26, 2015 | ||||||||||||||
Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||
(In millions) | |||||||||||||||
Short-term debt | $ | — | $ | — | $ | 230 | $ | 230 | |||||||
Long-term debt(1) | $ | 1,630 | $ | 1,990 | $ | 2,000 | $ | 1,372 |
(1) | Carrying amounts of long-term debt are net of unamortized debt issuance costs of $26 million as of September 24, 2016 and $25 million as of December 26, 2015, based on the adoption of ASU 2015-03 and net of $273 million unamortized debt discount associated with the 2.125% Notes as of September 24, 2016. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(In millions) | |||||||||||||||
Foreign Currency Forward Contracts - gains (losses) | |||||||||||||||
Contracts designated as cash flow hedging instruments | |||||||||||||||
Other comprehensive income (loss) | $ | (1 | ) | $ | (7 | ) | $ | 7 | $ | (7 | ) | ||||
Cost of sales | — | (1 | ) | — | (2 | ) | |||||||||
Research and development | 1 | (3 | ) | — | (7 | ) | |||||||||
Marketing, general and administrative | — | (2 | ) | — | (5 | ) | |||||||||
Contracts not designated as hedging instruments | |||||||||||||||
Other income (expense), net | $ | — | $ | (2 | ) | $ | 2 | $ | (3 | ) |
September 24, 2016 | December 26, 2015 | ||||||
(In millions) | |||||||
Foreign Currency Forward Contracts - gains (losses) | |||||||
Contracts designated as cash flow hedging instruments | $ | 1 | $ | (6 | ) |
September 24, 2016 | December 26, 2015 | |||||||
(In millions) | ||||||||
Interest Rate Swap Contracts - gains (losses) | ||||||||
Contracts designated as fair value hedging instruments | $ | 2 | $ | 7 |
• | the Computing and Graphics segment, which primarily includes desktop and notebook processors and chipsets, discrete graphics processing units (GPUs) and professional graphics; 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 intellectual property portfolio. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(In millions) | |||||||||||||||
Net revenue: | |||||||||||||||
Computing and Graphics | $ | 472 | $ | 424 | $ | 1,367 | $ | 1,335 | |||||||
Enterprise, Embedded and Semi-Custom | 835 | 637 | 1,799 | 1,698 | |||||||||||
Total net revenue | $ | 1,307 | $ | 1,061 | $ | 3,166 | $ | 3,033 | |||||||
Operating income (loss): | |||||||||||||||
Computing and Graphics | $ | (66 | ) | $ | (181 | ) | $ | (217 | ) | $ | (403 | ) | |||
Enterprise, Embedded and Semi-Custom | 136 | 84 | 236 | 156 | |||||||||||
All Other | (363 | ) | (61 | ) | (388 | ) | (185 | ) | |||||||
Total operating loss | $ | (293 | ) | $ | (158 | ) | $ | (369 | ) | $ | (432 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(In millions) | |||||||||||||||
Operating loss: | |||||||||||||||
Stock-based compensation expense | $ | (23 | ) | $ | (13 | ) | $ | (57 | ) | $ | (47 | ) | |||
Restructuring and other special charges, net | — | (48 | ) | 10 | (135 | ) | |||||||||
Charge related to the Sixth Amendment to the WSA with GF | (340 | ) | — | (340 | ) | — | |||||||||
Other | — | — | (1 | ) | (3 | ) | |||||||||
Total operating loss | $ | (363 | ) | $ | (61 | ) | $ | (388 | ) | $ | (185 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(In millions) | |||||||||||||||
Cost of sales | $ | — | $ | — | $ | 1 | $ | 2 | |||||||
Research and development | 15 | 7 | 34 | 27 | |||||||||||
Marketing, general and administrative | 8 | 6 | 22 | 18 | |||||||||||
Stock-based compensation expense, net of tax of $0 | $ | 23 | $ | 13 | $ | 57 | $ | 47 |
Three Months Ended | Nine Months Ended | ||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||
Expected volatility | 59.85 | % | 71.71 | % | 59.85 | % | 60.19 | % | |||
Risk-free interest rate | 1.00 | % | 1.32 | % | 1.00 | % | 1.24 | % | |||
Expected dividends | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||
Expected life | 3.98 years | 3.91 years | 3.98 years | 3.91 years |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(In millions) | |||||||||||||||
Beginning balance | $ | 11 | $ | 17 | $ | 15 | $ | 19 | |||||||
New warranties issued | 5 | 7 | 15 | 21 | |||||||||||
Settlements | (5 | ) | (5 | ) | (13 | ) | (20 | ) | |||||||
Changes in liability for pre-existing warranties, including expirations | — | (4 | ) | (6 | ) | (5 | ) | ||||||||
Ending balance | $ | 11 | $ | 15 | $ | 11 | $ | 15 |
Severance and related benefits | Other exit related costs | Total | |||||||||
(In millions) | |||||||||||
Balance as of December 26, 2015 | $ | 14 | $ | — | $ | 14 | |||||
Charges (reversals), net | (1 | ) | — | (1 | ) | ||||||
Cash payments | (8 | ) | — | (8 | ) | ||||||
Balance as of September 24, 2016 | $ | 5 | $ | — | $ | 5 |
Severance and related benefits | Other exit related costs | Total | |||||||||
(In millions) | |||||||||||
Balance as of December 26, 2015 | $ | 5 | $ | 15 | $ | 20 | |||||
Charges (reversals), net | (2 | ) | (7 | ) | (9 | ) | |||||
Cash payments | (1 | ) | (5 | ) | (6 | ) | |||||
Balance as of September 24, 2016 | $ | 2 | $ | 3 | $ | 5 |
Three Months Ended | |||||||||||||||||||||||
September 24, 2016 | September 26, 2015 | ||||||||||||||||||||||
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 | $ | (2 | ) | $ | (1 | ) | $ | (3 | ) | $ | 1 | $ | (6 | ) | $ | (5 | ) | ||||||
Unrealized gains (losses) arising during the period | 1 | — | 1 | (3 | ) | (13 | ) | (16 | ) | ||||||||||||||
Reclassification adjustment for (gains) losses realized and included in net income (loss) | — | (1 | ) | (1 | ) | — | 6 | 6 | |||||||||||||||
Tax effect | — | — | — | — | — | — | |||||||||||||||||
Total other comprehensive income (loss) | 1 | (1 | ) | — | (3 | ) | (7 | ) | (10 | ) | |||||||||||||
Ending balance | $ | (1 | ) | $ | (2 | ) | $ | (3 | ) | $ | (2 | ) | $ | (13 | ) | $ | (15 | ) |
Nine Months Ended | |||||||||||||||||||||||
September 24, 2016 | September 26, 2015 | ||||||||||||||||||||||
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 | ) | $ | (7 | ) | $ | (8 | ) | $ | 1 | $ | (6 | ) | $ | (5 | ) | ||||||
Unrealized gains (losses) arising during the period | (1 | ) | 7 | 6 | (3 | ) | (21 | ) | (24 | ) | |||||||||||||
Reclassification adjustment for (gains) losses realized and included in net income (loss) | — | 1 | 1 | — | 14 | 14 | |||||||||||||||||
Tax effect | 1 | (3 | ) | (2 | ) | — | — | — | |||||||||||||||
Total other comprehensive income (loss) | — | 5 | 5 | (3 | ) | (7 | ) | (10 | ) | ||||||||||||||
Ending balance | $ | (1 | ) | $ | (2 | ) | $ | (3 | ) | $ | (2 | ) | $ | (13 | ) | $ | (15 | ) |
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; and |
• | server and embedded processors, semi-custom System-on-Chip (SoC) products and technology for game consoles. We also license portions of our intellectual property portfolio. |
• | the Computing and Graphics segment, which primarily includes desktop and notebook processors and chipsets, discrete GPUs and professional graphics; 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 intellectual property portfolio. |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | |||||||||||||
(In millions) | ||||||||||||||||
Net revenue: | ||||||||||||||||
Computing and Graphics | $ | 472 | $ | 424 | $ | 1,367 | $ | 1,335 | ||||||||
Enterprise, Embedded and Semi-Custom | 835 | 637 | 1,799 | 1,698 | ||||||||||||
Total net revenue | $ | 1,307 | $ | 1,061 | $ | 3,166 | $ | 3,033 | ||||||||
Operating income (loss): | ||||||||||||||||
Computing and Graphics | $ | (66 | ) | $ | (181 | ) | $ | (217 | ) | $ | (403 | ) | ||||
Enterprise, Embedded and Semi-Custom | 136 | 84 | 236 | 156 | ||||||||||||
All Other | (363 | ) | (61 | ) | (388 | ) | (185 | ) | ||||||||
Total operating loss | $ | (293 | ) | $ | (158 | ) | $ | (369 | ) | $ | (432 | ) |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | |||||||||||||
(In millions except for percentages) | ||||||||||||||||
Cost of sales | $ | 1,248 | $ | 822 | $ | 2,519 | $ | 2,236 | ||||||||
Gross margin | 59 | 239 | 647 | 797 | ||||||||||||
Gross margin percentage | 5 | % | 23 | % | 20 | % | 26 | % | ||||||||
Research and development | 259 | 241 | 744 | 718 | ||||||||||||
Marketing, general and administrative | 117 | 108 | 339 | 373 | ||||||||||||
Amortization of acquired intangible assets | — | — | — | 3 | ||||||||||||
Restructuring and other special charges, net | — | 48 | (10 | ) | 135 | |||||||||||
Licensing gain | (24 | ) | — | (57 | ) | — | ||||||||||
Interest expense | (41 | ) | (39 | ) | (122 | ) | (119 | ) | ||||||||
Other income (expense), net | (63 | ) | — | 87 | (3 | ) | ||||||||||
Loss before equity loss and income taxes | (397 | ) | (197 | ) | (404 | ) | (554 | ) | ||||||||
Provision for income taxes | 4 | — | 34 | 4 | ||||||||||||
Equity in income (loss) of ATMP JV | $ | (5 | ) | $ | — | $ | (8 | ) | $ | — |
Severance and related benefits | Other exit related costs | Total | |||||||||
(In millions) | |||||||||||
Balance as of December 26, 2015 | $ | 14 | $ | — | $ | 14 | |||||
Charges (reversals), net | (1 | ) | — | (1 | ) | ||||||
Cash payments | (8 | ) | — | (8 | ) | ||||||
Balance as of September 24, 2016 | $ | 5 | $ | — | $ | 5 |
Severance and related benefits | Other exit related costs | Total | |||||||||
(In millions) | |||||||||||
Balance as of December 26, 2015 | $ | 5 | $ | 15 | $ | 20 | |||||
Charges (reversals), net | (2 | ) | (7 | ) | (9 | ) | |||||
Cash payments | (1 | ) | (5 | ) | (6 | ) | |||||
Non-cash charges | — | — | — | ||||||||
Balance as of September 24, 2016 | $ | 2 | $ | 3 | $ | 5 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(In millions) | |||||||||||||||
Cost of sales | $ | — | $ | — | $ | 1 | $ | 2 | |||||||
Research and development | 15 | 7 | 34 | 27 | |||||||||||
Marketing, general and administrative | 8 | 6 | 22 | 18 | |||||||||||
Stock-based compensation expense, net of tax of $0 | $ | 23 | $ | 13 | $ | 57 | $ | 47 |
Payments due by period as of September 24, 2016 | |||||||||||||||||||||||||||
(In millions) | Total | Remainder of 2016 | 2017 | 2018 | 2019 | 2020 | 2021 and thereafter | ||||||||||||||||||||
6.75% Notes | $ | 196 | $ | — | $ | — | $ | — | $ | 196 | $ | — | $ | — | |||||||||||||
7.75% Notes | 208 | — | — | — | — | 208 | — | ||||||||||||||||||||
7.50% Notes | 350 | — | — | — | — | — | 350 | ||||||||||||||||||||
7.00% Notes | 475 | — | — | — | — | — | 475 | ||||||||||||||||||||
2.125% Notes | 700 | — | — | — | — | — | 700 | ||||||||||||||||||||
Other long-term liabilities | 97 | — | 9 | 45 | 35 | 6 | 2 | ||||||||||||||||||||
Aggregate interest obligation (1) | 702 | 26 | 106 | 106 | 99 | 91 | 274 | ||||||||||||||||||||
Operating leases | 393 | 13 | 46 | 47 | 44 | 43 | 200 | ||||||||||||||||||||
Purchase obligations (2) | 344 | 202 | 92 | 35 | 13 | 2 | — | ||||||||||||||||||||
Obligations to GF (3) | 3,199 | 257 | 650 | 748 | 764 | 780 | — | ||||||||||||||||||||
Total contractual obligations (4) | $ | 6,664 | $ | 498 | $ | 903 | $ | 981 | $ | 1,151 | $ | 1,130 | $ | 2,001 |
(1) | Represents estimated aggregate interest obligations for our outstanding debt obligations that are payable in cash, excluding non-cash amortization of debt issuance costs and the impacts of the interest rate swap agreements. |
(2) | 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. In addition, we have included in the table above obligations for software technology and licenses and IP licenses where payments are fixed and non-cancelable. |
(3) | Includes our currently expected purchases from GF for the remainder of 2016 for wafer manufacturing and research and development activities and minimum purchase obligations for wafer purchases for years 2017 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. |
(4) | Total amount excludes contractual obligations already recorded on our condensed consolidated balance sheets except for debt obligations and other long-term liabilities. |
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 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 exeptions). |
• | 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 |
4.1 | First Supplemental Indenture dated as of September 23, 2016, entered into by and among Advanced Micro Devices, Inc. and Wells Fargo Bank, National Association under the indenture dated as of August 4, 2010, providing for the issuance of the Company’s 7.75% Senior Notes due 2020. | |
4.2 | Indenture between Advanced Micro Devices, Inc. and Wells Fargo Bank, National Association, as Trustee, dated September 14, 2016, filed as Exhibit 4.1 to AMD’s Current Report on Form 8-K dated September 8, 2016, is hereby incorporated by reference. | |
4.3 | First Supplemental Indenture governing the 2.125% Senior Notes due 2026, including the form of the 2.125% Note, between Advanced Micro Devices, Inc. and Wells Fargo, National Association, as Trustee, dated September 14, 2016, filed as Exhibit 4.2 to AMD’s Current Report on Form 8-K dated September 8, 2016, is hereby incorporated by reference. | |
10.1 | First Amended and Restated Registration Rights Agreement dated as of August 30, 2016 between Advanced Micro Devices, Inc. and West Coast Hitech L.P. | |
10.2 | Fourth Amendment to Amended and Restated Loan and Security Agreement dated as of September 7, 2016 by and among Advanced Micro Devices, Inc., AMD International Sales & Service, Ltd., ATI Technologies ULC and Bank of America, N.A. | |
10.3* | Sixth Amendment to the Wafer Supply Agreement dated August 30, 2016 among Advanced Micro Devices, Inc., GLOBALFOUNDRIES INC. and GLOBALFOUNDRIES U.S. INC. | |
10.4 | Second Amendment to Master Transaction Agreement dated as of August 30, 2016 among Advanced Micro Devices, Inc. and Advanced Technology Investment Company LLC and West Coast Hitech L.P. | |
10.5 | Warrant to Purchase Shares of Common Stock, filed as Exhibit 10.1 to AMD’s Current Report on Form 8-K dated August 30, 2016, is hereby incorporated by reference. | |
31.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
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. |
* | Confidential treatment has been requested with respect to certain portions of the Sixth Amendment to the Wafer Supply Agreement. |
ADVANCED MICRO DEVICES, INC. | |||
October 26, 2016 | 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 |
1. | CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. |
2. | AMENDMENTS. |
a. | Subject to Section 3 hereof, Section 3.01 of the Indenture is hereby amended to read as follows: |
b. | Subject to Section 3 hereof, Section 3.03 of the Indenture is hereby amended to read as follows: |
(a) | the Redemption Date; |
(b) | the appropriate calculation of the redemption price; |
(c) | if fewer than all outstanding Notes are to be redeemed, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date and upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued; |
(d) | the name and address of the Paying Agent; |
(e) | that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; |
(f) | that unless the Company defaults in making the redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date; |
(g) | which paragraph of the Notes, and in the case of paragraph 5 which subsection of paragraph 5, is the provision of the Notes pursuant to which the redemption is occurring; and |
(h) | the aggregate principal amount of Notes that are being redeemed. |
c. | Subject to Section 3 hereof, paragraph 6 of the Notes is hereby amended to read as follows: |
3. | EFFECT AND OPERATION OF SUPPLEMENTAL INDENTURE. This Supplemental Indenture shall be effective and binding immediately upon its execution by the Company and the Trustee, and thereupon this Supplemental Indenture shall form a part of the Indenture for all purposes, and every Note heretofore or hereafter authenticated and delivered under the Indenture shall be bound hereby; provided, however notwithstanding anything in the Indenture or this Supplemental Indenture to the contrary, the amendments set forth in Section 2 of this Supplemental Indenture shall become operative only upon and simultaneously with, and shall have no force and effect prior to, such time that the Company accepts for purchase in the Tender Offer all outstanding Notes properly tendered and not withdrawn prior to the Consent Payment Deadline (as defined in the Statement) (if the Requisite Consents (as defined in the Statement) have been received and not withdrawn by the Consent Payment Deadline) or, otherwise, tendered prior to the Expiration Time. Prior to the time the Company purchases any Notes pursuant to the Tender Offer, the Company may terminate this Supplemental Indenture upon written notice to the Trustee, including in connection with any termination or withdrawal of the Tender Offer or the solicitation of Consents with respect to the Proposed Amendments or if for any other reason the Notes are not accepted for payment pursuant to the Tender Offer. If the Tender Offer is terminated or withdrawn, or the Company does not accept for purchase, and pay for, the Notes for any reason, this Supplemental Indenture shall not become operative. Except as modified and amended by this Supplemental Indenture, all provisions of the Indenture and the Notes shall remain in full force and effect. |
4. | INDENTURE AND SUPPLEMENTAL INDENTURE CONSTRUED TOGETHER. This Supplemental Indenture is an indenture supplemental to, and in implementation of, the Indenture, and the Indenture and this Supplemental Indenture shall henceforth be read and construed together. |
5. | TRUST INDENTURE ACT CONTROLS. If any provision of the Indenture, as amended by this Supplemental Indenture, limits, qualifies or conflicts with another provision which is required or deemed to be included in the Indenture, as amended by this Supplemental Indenture, by the Trust Indenture Act, such required or deemed provision of the Trust Indenture Act shall control. |
6. | NEW YORK LAW TO GOVERN. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. |
7. | SEPARABILITY. In case any provision in this Supplemental Indenture, the Indenture as supplemented by this Supplemental Indenture, or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. |
8. | EXECUTION IN COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this First Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this First Supplemental Indenture as to the parties hereto and may be used in lieu of the original First Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes. |
9. | EFFECT OF HEADINGS. The Section headings herein have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms and provisions hereof. |
10. | THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company. |
By: | /s/ Shahzad Khan Name: Shahzad Khan Title: Authorized Signatory |
OBLIGORS: | ADVANCED MICRO DEVICES, INC., a Delaware corporation |
AGENT AND LENDERS: | BANK OF AMERICA, N.A., as Agent and a Lender |
1. | TERM AND PRIOR AMENDMENTS |
a. | The term of this Sixth Amendment shall be concurrent with the 5-year Period. Except as specifically provided in Section 2(b) and Section 2(i)(i), this Sixth Amendment shall supersede all Prior Amendments, and such Prior Amendments shall have no further force and effect. |
b. | Prior to the expiration of the 5-year Period, and in any event no later than December 31, 2019, the Parties shall engage in good faith discussions to enter into another amendment to the WSA. In the event of a failure to agree to such an amendment, the terms of the Original WSA shall apply. |
2. | FUTURE TAPEOUTS, EXCLUSIVITY AND WAIVER PRODUCTS |
a. | General Exclusivity Obligations |
b. | [****] Waivers |
c. | [****] Waiver |
d. | [****] Waiver Payments |
i. | Intentionally omitted. |
ii. | Quarterly Payments. As partial consideration for the [****] Waivers, beginning in [****] 2017 with respect to [****] Waiver Products [****], and beginning in [****] 2017 with respect to [****] Waiver Products [****], AMD shall pay FoundryCo, on a quarterly basis, payments on a per-wafer basis to be calculated pursuant to Schedule 2(d)(i)(“[****] Quarterly [****] Waiver Payments”), such that for each relevant year in Column A, the total production wafer volume for such [****] Waiver Products supplied to AMD by [****] in the aggregate during such fiscal quarter is multiplied by the dollar amount in Column B that corresponds to [****] in Column C. The term “Total AMD [****] Wafers” means the [****]. The term “AMD [****] Wafers” means [****]. For purposes of calculating the [****] Quarterly [****] Waiver Payments, any AMD [****] Wafer volumes that were included in AMD’s Binding Forecasts to FoundryCo and were accepted by FoundryCo in writing, but that AMD subsequently purchased from [****] solely because FoundryCo subsequently informed AMD in writing that FoundryCo would not make the necessary capacity available to AMD (“Decommitted Wafers”), will be treated as if they had been purchased from FoundryCo rather than from [****]; provided, however, if AMD has not made cumulative [****] Quarterly [****] Waiver Payments to FoundryCo totaling at least [****] for wafers purchased by AMD from [****] other than such Decommitted Wafers (as reconciled by the annual true up process set forth in subsection 2.d.iii below), AMD will remain obligated to pay the [****] Quarterly [****] Waiver Payment amount for the quantity of Decommitted Wafers as necessary for FoundryCo to receive a cumulative total of [****] in [****] Quarterly [****] Waiver Payments. In order to facilitate and formalize the Parties’ |
iii. | Annual True Up. At the conclusion of each fiscal year and promptly following the payment of the [****] Quarterly [****] Waiver Payments for the fourth fiscal quarter of the relevant year, AMD shall calculate, pursuant to Schedule 2(d)(i) for each relevant year in Column A, the total production wafer volume for such [****] Waiver Products on an aggregate basis supplied to AMD by [****] during such fiscal year multiplied by the dollar amount in Column B that corresponds to [****] in Column C (such amount, the “[****] Annual [****] Waiver Payments”). To the extent the aggregate [****] Quarterly [****] Waiver Payments received by FoundryCo for the relevant year exceed the [****] Annual [****] Waiver Payments, then AMD shall invoice FoundryCo for the difference and FoundryCo shall reimburse |
e. | [****] Waiver Products [****] |
i. | AMD shall purchase from FoundryCo at least [****] of its [****] Waiver Products (relating to [****]), as measured on a [****] basis, by the end of [****]. By the end of [****], AMD shall purchase from FoundryCo at least [****] of its [****] Waiver Products (relating to [****]), as measured on a [****] basis. The foregoing [****] and [****] amounts are hereinafter referred to as “[****] Targets”. |
ii. | In order to support the achievement of the [****] Targets, AMD will tape out the Products listed below to FoundryCo pursuant to the dates below, and AMD will use commercially reasonable efforts to achieve the target Product ramp dates below: |
iii. | AMD agrees that its tape out and ramp support obligations set forth in Section 2(e)(ii) above related to the [****] Waiver Products apply even if the Products are or are planned to be manufactured at a different Process Node or technology node (e.g., [****]) at [****]. AMD may not avoid the requirements in Sections 2(c) through 2(e) by changing the names of Products or their scope. |
iv. | Furthermore, in support of the transition of [****] Waiver Products back to FoundryCo, AMD agrees to provide the following information and cooperation (collectively, the “[****] Plan”) to FoundryCo within [****] following execution of this Sixth Amendment [****]: (1) AMD [****] data requirements to assist FoundryCo in achieving supplier readiness; (2) scheduling information, including [****]; and (3) overview of AMD’s [****] strategy plans for [****], including AMD’s good faith estimate of the pricing necessary to [****], and [****] plans, including [****]. AMD shall update the [****] Plan on at least a [****] basis. |
v. | FoundryCo agrees that, in order to facilitate AMD’s efforts to [****], FoundryCo will provide AMD with [****] at [****], [****], and a total of [****] for design support (“[****] Design Support Payment”), with such [****] Design Support Payment provided to reimburse AMD on a [****] basis for design support expenses as incurred, to be paid within [****] following the end of the applicable fiscal quarter, beginning in the [****], and as expenses are incurred by AMD, subject to receiving documentation of expenditures reasonably acceptable to FoundryCo, with the remaining balance to be paid within [****] following tape out at FoundryCo. AMD’s [****] expenditure amount and documentation may be submitted for payment via email from AMD’s CFO to FoundryCo’s CFO. |
vi. | AMD and FoundryCo will discuss in good faith and mutually agree on [****], such discussion to include among other factors [****]. |
f. | [****] Waiver |
i. | Subject to AMD’s timely payment of the [****] Quarterly [****] Waiver Payments and [****] Quarterly [****] Waiver Payments pursuant to Sections 2(d) and 2(g), the fixed payment pursuant to Section 2(k) and any Mitigation Payments owed pursuant to Section 4 of this Sixth Amendment, and AMD’s continued compliance with Section 8 of this Sixth Amendment, FoundryCo agrees to waive any claim it may have arising out of or relating to the requirements of the Agreement with respect to the tape out and sourcing by AMD from [****] for the [****] Product [****] (the “[****] Waiver Products,” and the waiver relating to such [****] Waiver Product, the “[****] Waiver”), provided that with respect to the [****] Waiver Product, the [****] Waiver will be effective only if (a) FoundryCo fails to [****] by [****], if [****], and (b) AMD has [****]. In any event, if FoundryCo fails to [****], |
ii. | AMD shall purchase at least [****] of its [****] Waiver Products (if applicable pursuant to Section 2(f)(i), relating to [****]) from FoundryCo, with such purchase requirements to be treated in the same manner as the [****] Targets for [****] Waiver products pursuant to Section 2(e) above, and subject to the Exclusive Remedy unless one of the exclusions set forth in Section 2(e)(i) (a), (b) or (c) applies with respect to [****] Waiver Products. In order to achieve such [****] Waiver Products purchase requirements at FoundryCo, AMD shall also [****]. For purposes of clarification, FoundryCo shall not be required to [****]. Furthermore, the Parties will agree upon a plan for information and cooperation consistent with the requirements in the [****] Plan. |
iii. | AMD agrees that its obligations of this Sixth Amendment related to the [****] Waiver Product apply even if the product is or is planned to be manufactured at a different Process Node or technology node at [****]. |
g. | [****] Quarterly [****] Waiver Payments |
h. | [****] Limited Waiver |
i. | During [****], the Parties shall review [****] and discuss in good faith the following: [****]. If FoundryCo is determined to [****], the Parties shall meet and discuss in good faith [****]. In the event of a disagreement between |
ii. | If it is determined pursuant to the above process that [****], and subject to AMD’s continued compliance with Section 8 of this Sixth Amendment, the [****] Limited Waiver will apply to [****] production wafers. In addition, notwithstanding the [****] Limited Waiver, the Parties shall continue to work toward completion of the [****] with the objective of enabling FoundryCo to [****] as soon as possible. In any event, once the [****], AMD will [****]. Upon the [****], AMD will [****]. If it is determined that FoundryCo is [****], then the parties will negotiate in good faith to (A) [****] and/or (B) [****]; and (C) if either or both of (A) or (B) are agreed, the parties shall also negotiate in good faith the appropriate compensation to FoundryCo for such additional waivers. The Parties’ discussions shall take into consideration [****], as well as AMD’s continued compliance with Section 8 of this Sixth Amendment. |
iii. | The [****] Limited Waiver does not apply to [****], and AMD will purchase [****] from FoundryCo, with pricing for such Products to be agreed by the Parties in the same manner as [****] Products as set forth in Section 3(b) of this Sixth Amendment. |
i. | [****] Products |
i. | Section 2.1(c) of the Original WSA is hereby amended and restated in its entirety to read as follows: |
j. | Chipset Products |
k. | AMD Fixed Payment |
3. | AMENDMENTS RELATED TO PRODUCT AND PRODUCT PRICING |
a. | Product Forecasts, Purchase Orders and Roadmaps |
i. | In lieu of the forecasting requirements of Section 5.1 of the Original WSA, AMD will provide FoundryCo, in writing on a monthly basis, with a non-binding, rolling [****] forecast of its monthly volume requirements for [****] MPU Products, [****] MPU Products, GPU Products, Chipset Products and Other Future Products, identified by Process Node. Notwithstanding the foregoing, the first [****] of the [****] rolling forecast referenced above will detail AMD’s monthly volume requirements by Product and will be binding with respect to the total Wafer volume on a Product level basis during such [****] period only, and the [****] of the [****] rolling forecast will be binding with respect to the total Wafer volume on a technology basis during such [****] period only (accordingly, notwithstanding the Original WSA, the term “Binding Forecast” will mean AMD’s Product forecast for the first [****] of such [****] forecast as provided herein, and “Binding Forecast Period” will mean such [****] period). AMD acknowledges and agrees that FoundryCo may rely on such forecasts for the purposes of scheduling manufacturing and other resources in accordance with the terms of the Agreement. |
ii. | In addition to the forecast requirements described in Section 3(a)(i) above, AMD shall provide FoundryCo the following within [****] following the execution of this Sixth Amendment: |
1. | A non-binding product roadmap by technology that includes the tape-out dates for a [****] horizon (i.e., [****]), to be updated and provided to FoundryCo on a [****] basis (end of each [****]); and |
2. | A non-binding volumes forecast that includes all products, separately aggregated by technology and by product type ([****] MPU Products, [****] MPU Products, GPU Products, Chipset Products, and Other Future Products), for a [****] horizon, to be updated and provided to FoundryCo on or before [****] of each year. |
iii. | AMD agrees to provide FoundryCo detailed Product mix information and purchase orders, on the date hereof, for all 2016 Production Wafers scheduled for delivery in the [****] of 2016. Notwithstanding the foregoing or any other provision of this Agreement or any purchase order to the contrary, FoundryCo acknowledges and agrees that AMD may update actual Product mix information in accordance with AMD’s [****] process (currently referred to as the Universal Order Book process), by which AMD will provide FoundryCo updated Product mix information by [****]. The Parties agree to meet and discuss in good faith any flexibility regarding Product volumes, taking into consideration purchase orders, pricing, capacity constraints, Products started to date and margin. In the event the Parties are unable to agree within [****] after discussing in good faith, such disagreement will be escalated to the Partnership Committee and, if required, the Parties’ respective Chief Executive Officers pursuant to Section 3.2 of the Agreement. |
iv. | AMD agrees to provide FoundryCo detailed Product mix information and purchase orders on a [****] frequency. The Product mix information and purchase orders shall be released and reflect the Product mix for at least [****] in advance of the commencement of manufacturing for each Product. Notwithstanding the foregoing or any other provision of this Agreement or any purchase order to the contrary, but without diminishing any of AMD’s obligations to comply with Section 4 of this Sixth Amendment, FoundryCo acknowledges and agrees that AMD may update actual Product mix information in accordance with AMD’s [****] process (currently referred to as the Universal Order Book process), by which AMD will provide FoundryCo updated Product mix information by [****]. Without diminishing any of AMD’s obligations to comply with Section 4 of this Sixth Amendment, the Parties agree to meet and discuss in good faith any flexibility regarding product volumes, taking into consideration purchase orders, pricing, capacity constraints, Product started to date and margin. In the event the Parties are unable to agree within [****] days after discussing in good faith, such disagreement will be escalated to the Partnership Committee and, if required, the Parties’ respective Chief Executive Officers pursuant to Section 3.2 of the Agreement. |
v. | FoundryCo may at its option [****]. Within [****] of receiving such notice, AMD shall provide FoundryCo with its desired Product mix for such [****] period, and FoundryCo will adhere to such Product mix. If AMD does not respond within [****], FoundryCo may build ahead Products based on the latest the Product mix information released by AMD to FoundryCo and such Product mix shall be binding upon AMD. |
vi. | If and to the extent that AMD has not delivered the applicable Product mix information relating to Production Wafers in accordance with the dates set forth in Section3(a)(iii) or 3(a)(iv) above, then FoundryCo may manufacture such Production Wafers based on the most recent Product mix information provided by AMD pursuant to Section 3(a)(i) above; provided, that if AMD had not previously made available the contemplated Product mix information FoundryCo may develop and submit its plan for production of Products to AMD for discussion, and in the absence of a definitive response by AMD within [****] of receipt of such plan FoundryCo may manufacture such Production Wafers based on its proposed plan and AMD shall be obligated to take delivery of and pay for such Wafers pursuant to the payment provisions set forth in the Agreement. If and to the extent that AMD has not delivered purchase orders for specified Production Wafers in accordance with the dates set forth in Section 3(a)(iii) or 3(a)(iv) above, then FoundryCo shall thereafter have the right to send an invoice to AMD at the time when the applicable specified Production Wafers are delivered reflecting the price of the applicable Production Wafers for which such purchase orders have not been provided. |
b. | Product Pricing |
i. | Notwithstanding Section 7.1 and Exhibit A of the Original WSA, the Parties agree to the pricing for 2016 products as set forth in Schedule 3(b) herein. |
ii. | Subject at all times to the exclusivity obligations of the Agreement and the Annual Effective Revenue Floor requirements set forth in Section 4 of this Sixth Amendment, AMD and FoundryCo agree to use commercially reasonable efforts to agree within [****] following execution of this Sixth Amendment on 2017 pricing, and by [****] of each of 2017, 2018 and 2019 on the pricing for the annual period following December 31 of such year. |
iii. | With respect to [****] and [****] Products only, the Parties agree that pricing will be set at [****] and to the extent mutually agreed, [****]. If the Parties are unable to agree upon the [****] and [****], if any, for [****] and [****] Products, FoundryCo may elect to consult with a third party independent advisor (“[****] Advisor”) to provide a prompt opinion as to the [****]. The identity of the [****] Advisor must also be reasonably agreeable to AMD, and both Parties shall consider the opinion of the [****] Advisor in good faith. The Parties shall also discuss in good faith the inclusion of [****] in the pricing for [****] and [****] Products. |
iv. | If AMD and FoundryCo are unable to agree on the pricing pursuant to Section 3(b)(ii) or 3(b)(iii) above with respect to any calendar year, then the price for all existing [****] Products (including, for avoidance of doubt, any [****] and [****] Products), shall [****]. With respect to any such [****] Products on [****], the prices shall [****]. In addition, Section 7.1(b) of the Agreement shall be amended and restated in its entirety to read as follows: |
v. | Section 7.1 of the Agreement shall be amended by the addition of the following language as a new sub-Section 7.1(c-2) (to be inserted between existing sub-Sections 7.1(c) and 7.1(d)), which shall read in its entirety as follows: |
c. | Subsection 3(b)(iii) above will expire at the end of the 5-year Period; provided, however, if prior to December 31, 2020 the Parties have agreed that the pricing for any [****] and [****] Products will be effective for a period of time following the expiration of the 5-year Period, such pricing shall survive for the previously agreed period of time. The remainder of this Section 3 shall survive the expiration of the 5-year Period. |
4. | ANNUAL FLOOR[****]; MITIGATION PAYMENTS |
a. | Annual Revenue Floor[****] |
i. | AMD shall purchase from FoundryCo, for each fiscal year from 2016 until 2020, at a minimum the applicable Annual Effective Revenue Floor, which shall be defined as the dollar amount equal to the greater of: |
1. | The [****]; or |
2. | The [****]. |
ii. | For the purposes of this Sixth Amendment, the following definitions shall apply: |
1. | “[****]” shall for a given fiscal year equal the dollar amounts set forth for that year in Schedule 4(a)(ii)(3) attached hereto. |
2. | “[****]” for a given fiscal year shall be as set forth for that year in Schedule 4(a)(ii)(5) attached hereto. |
3. | “[****]” shall mean for a given fiscal year the dollar amount equal to [****]. |
4. | “Delta from the Applicable Floor” shall mean, in cases where FoundryCo’s Actual Annual Revenue from AMD is less than the Annual Effective Revenue Floor in any given year, the dollar amount equal to the difference between these two amounts. |
5. | “FoundryCo’s Actual Annual Revenue From AMD” shall mean the total amounts invoiced by FoundryCo ([****]) from AMD’s purchase of Production Wafers from FoundryCo during each fiscal year. For the avoidance of doubt, “FoundryCo’s Actual Annual Revenue From AMD” shall include [****]. |
6. | “Total Annual AMD Foundry Wafer Spend” shall mean the total amounts invoiced to AMD ([****]) by FoundryCo or any other permitted foundry for all of its MPU Product, GPU Product, Chipset Product and Other Future Product production wafer purchases for a given fiscal year. For the avoidance of doubt, “Total Annual AMD Foundry Wafer Spend” shall include [****]. |
7. | “[****]” shall mean [****]. For the avoidance of doubt, “[****]” shall include [****]. |
b. | In the event FoundryCo’s Actual Annual Revenue From AMD is less than the Annual Effective Revenue Floor, AMD shall make mitigation payments (“Mitigation Payments”) to FoundryCo, within [****] of the end of such fiscal year, equal to the following: |
i. | In the event the Delta from the Applicable Floor is less than [****] for the applicable year, AMD shall pay to FoundryCo an amount equal to [****] of the Delta from the Applicable Floor for the applicable fiscal year. |
ii. | In the event the Delta from the Applicable Floor is greater than or equal to [****] for the applicable year, AMD shall pay to Foundry an amount equal to [****] of the Delta from the Applicable Floor for the applicable fiscal year. |
iii. | An illustrative example of the calculation of Mitigation Payments is set forth in Schedule 4(b)(iii) attached hereto. |
c. | In the event AMD is unable to meet the requirements of Section 4(a) as a direct result of FoundryCo having insufficient capacity (as acknowledged in a writing |
d. | If FoundryCo is determined to be [****], then provided that (i) AMD has been taking, and will continue to take, all reasonable measures to achieve the applicable [****] for [****], including in particular [****]; (ii) AMD is [****]; (iii) AMD has continued to cooperate with the 7nm Operational Plan; (iv) AMD has continued to cooperate with the [****] Plan; and (v) AMD has complied with the exclusivity requirements to date during the 5-year Period; the Parties will engage in good faith discussions during the [****] period prior to end of [****] to mutually agree on an appropriate reduction to the [****] for the applicable year, taking into account FoundryCo’s capacity and any constraints to such capacity or supply. |
e. | FoundryCo agrees that receipt of the Mitigation Payments shall be the sole and exclusive remedy for AMD’s failure to meet the applicable Annual Effective Revenue Floor. For avoidance of doubt, and without prejudice to Section 2(e)(i) of this Sixth Amendment, the foregoing sentence shall not limit FoundryCo’s remedies with respect to any other failure or breach of the Agreement by AMD, including without limitation any failure by AMD to comply with its exclusivity obligations, [****] and its obligations to remit payments for Products, services and waivers in a timely manner. |
f. | The provisions of this Section 4 shall survive the expiration of the 5-year Period but only as applicable to any Mitigation Payments owed with respect to the 5-year Period. |
5. | SORTING AND MASK SERVICES |
a. | The Parties agree that Section 4.2(a) of the Original WSA will no longer apply, and that the Parties shall negotiate in good faith and mutually agree upon terms and conditions to govern AMD’s future purchases of Sort Services from FoundryCo. Notwithstanding the foregoing, AMD shall [****]. The Parties’ good faith discussions shall take into account FoundryCo’s utilization of its existing equipment and tooling, and its performance of Sort Services on all new Products (including [****]), and that consignment by AMD of equipment and tooling necessary for FoundryCo to perform Sort Services, [****], will be only as mutually agreed. |
b. | AMD agrees that it shall procure mask services for Production Wafers provided by FoundryCo [****] from FoundryCo during the 5-Year Period. |
6. | [****] |
a. | Notwithstanding Section [****] of the Original WSA, the provisions of Exhibit B as relate to [****] and the related provisions regarding [****] shall govern. Except for the [****] and [****] provided in Exhibit B, which shall only apply to [****] Products and [****] Products, there are no [****] or [****] requirements or other committed [****] with respect to any Products to be delivered by FoundryCo to AMD during the 5-Year Period. Except as otherwise stated above, FoundryCo’s obligations with respect to [****] and [****] shall remain as set forth in the Original WSA. |
7. | REPORTS AND AUDIT |
a. | Reports Related to Waived Products. In order to assist FoundryCo in confirming AMD’s compliance with the exclusivity obligations set forth in the Agreement and the applicable waiver payments, AMD agrees to provide the following written reports, which AMD represents to be true and accurate upon issuance of each report and which, in all cases, shall be subject to the audit provisions set forth in Section 8 of the Agreement. |
i. | No later than [****] following the conclusion of each [****], AMD shall provide FoundryCo with a written report stating: |
1. | the name and technology node of each [****] Waiver Product, [****] Waiver Product, [****] Waiver Product and [****] Limited Waiver Product. |
2. | the total Wafer volumes for the [****] Waiver Products, [****] Waiver Products, [****] Waiver Products and [****] Waiver Product (each such category collectively) purchased during the prior [****] that were manufactured at FoundryCo; and |
3. | the total wafer volumes purchased of the [****] Waiver Products, [****] Waiver Products, [****] Waiver Products and [****] Waiver Product that were manufactured at [****] during the prior [****]. |
ii. | Upon the execution of this Sixth Amendment, AMD shall provide the same information above corresponding to the [****] of 2016 with respect to all waiver products, as well as a good faith forecast of the same for the [****] of 2016. |
b. | Reports Related to Annual Volumes and Mitigation Payments. In order to assist FoundryCo in confirming AMD’s compliance with its Annual Revenue Floor as set forth in the Agreement and any applicable Mitigation Payments, AMD agrees to provide the following written reports, which AMD represents |
i. | No later than [****] following each [****], AMD shall provide FoundryCo with a written report stating the [****] for such [****]. |
ii. | No later than [****] after the execution of this Sixth Amendment, AMD shall provide the same information above corresponding to the [****] of 2016. |
iii. | No later than [****] following each [****], AMD shall disclose to FoundryCo the Total Annual AMD Foundry Wafer Spend. |
c. | Audit Rights. Section 8.1(b) of the Original WSA is hereby amended and restated in its entirety as follows: |
d. | The provisions of this Section 7 shall survive the expiration of the 5-year Period but only as applicable to activities that occurred during the 5-year Period, and payments owed in connection with such activities. |
8. | 7NM OPERATIONAL PLAN |
a. | The Parties shall work in a spirit of partnership and good faith to focus resources to assist FoundryCo to develop its 7nm process technology in accordance with its time schedule. AMD shall provide such cooperation as reasonably required to enable FoundryCo to manufacture 7nm products for AMD consistent with AMD’s time schedule for 7nm Products. The details of such cooperation will be mutually agreed and set forth in an operational plan, which plan shall be based on the elements further described in Exhibit A (the “7nm Operational |
2. | PRIOR AMENDMENTS |
a. | Section 1.48 of the Agreement is hereby amended and restated in its entirety to read as follows: |
b. | Section 15.11(c) of the Agreement shall be amended and restated in its entirety as follows: |
c. | The provisions of this Section 9 shall survive the expiration of the 5-year Period. |
10. | ADDITIONAL AGREEMENTS |
a. | As partial consideration for the mutual agreements and covenants set forth in this Sixth Amendment, including but not limited to the [****] Waivers, [****] Waivers, the [****] Waivers, and the [****] Limited Waiver, AMD and USOpCo agree that AMD and West Coast Hitech L.P. will enter into a separate agreement (the “Warrant Agreement”) whereby AMD will grant to West Coast Hitech L.P. the right to purchase from AMD seventy-five million (75,000,000) shares of AMD Common Stock, pursuant to the terms, conditions and restrictions set forth in the Warrant Agreement. |
b. | Section 15.4 of the Original WSA is hereby amended and restated in its entirety as follows: |
c. | The provisions of this Section 10 shall survive the expiration of the 5-year Period. |
11. | MISCELLANEOUS |
a. | The Partnership Committee will consist of the people listed in Schedule 11.a or their equivalent replacements. The Partnership Committee may invite any other executives or subject matter experts to attend a Partnership Committee meeting to the extent required to resolve a dispute. For the avoidance of doubt, the Partnership Committee responsibilities, in addition to the responsibilities set forth in Section 3.2(a) of the Agreement, include the following specific items: |
1. | Any disputes arising out of the 7nm Operational Plan; |
2. | Any disputes arising out of the calculations or payments to be made as a result of [****], [****], [****] Waiver Payments or other payments to be made under this Sixth Amendment; and |
3. | Any disputes arising out of the calculations or payments to be made pursuant to Section 4 of this Sixth Amendment. |
b. | Each of FoundryCo and AMD represents and warrants that this Sixth Amendment has been duly authorized, executed and delivered by it, that this |
c. | Each of FoundryCo and AMD acknowledges the importance of prompt collaboration and communication with respect to all communications and announcements, whether by press release or otherwise, in respect of their commercial relationship and, as such, agrees to work together and coordinate such communications and announcements, and will make such communications and announcements available to the other party in advance to the extent reasonably possible. This Section 11(c) shall not affect, waive or otherwise amend the existing provisions of the Agreement with respect to communications and announcements. |
d. | In order to avoid miscommunications or misunderstandings concerning whether a Party has agreed to amend or waive any provision of the Agreement, no amendments or waivers shall be effective or agreed by any Party unless such amendment or waiver is expressed in a writing specifically identified as such and signed by the Chief Executive Officer or Chief Financial Officer of FoundryCo and by the Chief Executive Officer or Chief Financial Officer of AMD, and no emails or other written communications, oral communications or actions or inactions by employees of any Party that may be inconsistent with the expressed written provisions of the Agreement shall serve as a basis for any Party to argue or establish that an amendment, waiver, or estoppel has been effected with respect to any written provision of this Agreement. |
e. | All references to “fiscal quarter” or “fiscal year” herein shall mean FoundryCo’s fiscal quarter or fiscal year, unless explicitly noted otherwise. |
f. | Other than as expressly provided in this Sixth Amendment, no other amendments are being made to the Agreement, and all other provisions of the Agreement shall remain in full force and effect in accordance with the terms of the Agreement. |
1. | DEFINITIONS: |
a. | “[****]” with respect to a particular Product shall mean [****]. The Parties agree that [****]. |
b. | “[****]” shall mean [****]. |
c. | “[****]” shall mean [****]. |
d. | “[****]” means[****]. |
e. | “[****]” shall mean [****]. |
f. | “[****]” for a particular time period and Product shall mean[****]. [****]. |
g. | “[****]” for [****] shall mean [****] (as calculated below) [****] setting forth such [****] for such [****], equal to the [****] AMD [****] in order to [****] FoundryCo for the [****] to AMD as relates to any [****] as a result of FoundryCo [****] the [****] for such time period for such Product after taking into account the provisions of Section 5 below. |
2. | [****] |
a. | [****] for a particular Product shall [****] for such Product and [****]. The Parties may otherwise mutually agree on limited shipments of scrap wafers. |
b. | In the event [****]. If [****], the Parties shall [****]. If the Parties are unable to agree upon a resolution, the issue may be escalated by either Party to the Partnership Committee. |
c. | [****]. |
d. | For the purposes of [****]. For the purposes of [****]. [****]. |
e. | In the event any process changes are proposed and demonstrated to improve or modify Yield performance, capacity or reliability of Production Wafers, AMD will provide prompt change support. If such change support is not provided promptly by AMD, [****]. The Parties further agree that prior to FoundryCo instituting any such changes, the Parties will align in good faith to: (i) understand the approval and/or data requirements necessary for such changes; and (ii) to seek prompt approval from AMD’s customers as necessary to implement the changes. |
f. | [****]. |
3. | [****] |
a. | In the event that, due to a [****], FoundryCo fails to [****] during a [****], then FoundryCo agrees, subject to any modifications resulting from Section 5 below, to provide [****]. In the event FoundryCo exceeds [****] during a [****], then FoundryCo will receive, subject to any modifications resulting from Section 5 below, [****]. |
4. | [****] |
a. | In the event that Foundry Co has elected to provide [****] in the form of [****], [****] shall be delivered to AMD [****] but in no case will the delivery date exceed [****] from the date of the determination of any [****] related thereto. [****] are expected to be [****] to the [****] for the applicable Product during the [****] in which they are delivered to AMD; if any [****] fail to meet such [****], then the Parties will meet to discuss the issue in good faith. |
b. | In the event FoundryCo has elected to provide [****] in the form of [****], FoundryCo will discuss the [****] to be provided with AMD in good faith in advance of Wafer starts and, at AMD’s option, [****] may take the form of [****] of [****], provided those [****] are of the same technology, and FoundryCo and AMD will agree on which and on how much [****] will be provided (taking into consideration [****]). Notwithstanding the forgoing, to the extent [****]. |
c. | If [****] is requested by AMD, FoundryCo will [****] pursuant to terms and conditions of [****] to be mutually agreed by the Parties. |
d. | In the event Foundry has elected to provide [****] in the form of [****], a [****] in the amount of such [****] will be issued to AMD for use in the subsequent [****]. |
5. | [****] |
a. | If, on a quarterly basis, the [****] in the actual [****] versus the [****] for a particular Product is [****] such [****] by an amount less than [****] (on a [****] basis compared to such [****]), then the Parties agree that any such resulting [****] or [****] from the [****] produced shall be applied to the Parties [****] or [****] accordingly. |
b. | If, on a quarterly basis, the actual [****] for a Product is [****] the applicable [****] by an amount greater than [****] (on a [****] basis compared to such [****]), then the Parties agree that the first [****] of any such [****] shall be [****] by the Parties pursuant to Section 5(a) above, but amounts in excess of [****] will be, in the event of a [****], solely to the benefit of [****] (i.e. [****] the [****] as relates to that Product), and in the event of a [****], solely at the cost of [****] (i.e. [****] the [****] as relates to that Product). |
c. | Notwithstanding anything herein to the contrary, the Parties agree that this Section 5(c) and the related [****] shall not apply to (X) Wafers that are [****] by FoundryCo [****] as a result of a [****] or (Y) the [****] for the [****]. As relates to the [****], the following provisions set forth in this Section 5(c) shall apply: |
i. | If, on a quarterly basis, [****] is less than the [****] for the production of [****], AMD shall be entitled to [****]; |
ii. | If, on a quarterly basis, [****] is greater than the [****] for the production of [****], then [****] shall be payable to FoundryCo for any amounts by which [****]. |
ADVANCED MICRO DEVICES, INC. | ||
By: | /s/ Devinder Kumar | |
Name: | Devinder Kumar | |
Title: | SVP, Chief Financial Officer & Treasurer | |
ADVANCED TECHNOLOGY INVESTMENT COMPANY LLC | ||
By: | /s/ Samak L. Azar | |
Name: | Samak L. Azar | |
Title: | Authorized Signatory | |
WEST COAST HITECH L.P. | ||
By: | West Coast Hitech G.P., Ltd., its general partner | |
By: | /s/ Shahzad Khan | |
Name: | Shahzad Khan | |
Title: | Authorized Signatory |
Date: October 26, 2016 | /s/ Lisa Su | |
Lisa T. Su President and Chief Executive Officer (Principal Executive Officer) | ||
Date: October 26, 2016 | /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 24, 2016 (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: October 26, 2016 | /s/ Lisa 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 24, 2016 (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: October 26, 2016 | /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. 24, 2016 |
Oct. 21, 2016 |
|
Document Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 24, 2016 | |
Document Fiscal Year Focus | 2016 | |
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 | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 926,868,716 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Income Statement [Abstract] | ||||
Net revenue | $ 1,307 | $ 1,061 | $ 3,166 | $ 3,033 |
Cost of sales | 1,248 | 822 | 2,519 | 2,236 |
Gross margin | 59 | 239 | 647 | 797 |
Research and development | 259 | 241 | 744 | 718 |
Marketing, general and administrative | 117 | 108 | 339 | 373 |
Amortization of acquired intangible assets | 0 | 0 | 0 | 3 |
Restructuring and other special charges, net | 0 | 48 | (10) | 135 |
Licensing gain | (24) | 0 | (57) | 0 |
Operating loss | (293) | (158) | (369) | (432) |
Interest expense | (41) | (39) | (122) | (119) |
Other income (expense), net | (63) | 0 | 87 | (3) |
Loss before equity loss and income taxes | (397) | (197) | (404) | (554) |
Provision for income taxes | 4 | 0 | 34 | |
Equity in income (loss) of ATMP JV | (5) | 0 | (8) | 0 |
Net loss | $ (406) | $ (197) | $ (446) | $ (558) |
Net loss per share | ||||
Basic (in usd per share) | $ (0.50) | $ (0.25) | $ (0.56) | $ (0.72) |
Diluted (in usd per share) | $ (0.50) | $ (0.25) | $ (0.56) | $ (0.72) |
Shares used in per share calculation | ||||
Basic (in shares) | 815 | 785 | 801 | 780 |
Diluted (in shares) | 815 | 785 | 801 | 780 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (406) | $ (197) | $ (446) | $ (558) |
Unrealized gains (losses) on available-for-sale securities: | ||||
Unrealized gains (losses) arising during the period, net of tax effects of $0, $0, $1 and $0 | 1 | (3) | 0 | (3) |
Unrealized gains (losses) on cash flow hedges: | ||||
Unrealized gains (losses) arising during the period, net of tax effects of $0, $0, $3 and $0 | 0 | (13) | 4 | (21) |
Reclassification adjustment for (gains) losses realized and included in net income (loss), net of tax effects of $0, $0, $0 and $0 | (1) | 6 | 1 | 14 |
Total other comprehensive income (loss) | 0 | (10) | 5 | (10) |
Total comprehensive loss | $ (406) | $ (207) | $ (441) | $ (568) |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Tax effects related to unrealized gains (losses) on available-for-sale securities: | ||||
Unrealized gains (losses) arising during the period | $ 0 | $ 0 | $ 1 | $ 0 |
Tax effects related to unrealized gains (losses) on cash flow hedges: | ||||
Unrealized gains (losses) arising during the period | 0 | 0 | 3 | 0 |
Reclassification adjustment for (gains) losses realized and included in net income (loss) | $ 0 | $ 0 | $ 0 | $ 0 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions |
Sep. 24, 2016 |
Dec. 26, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 0 | $ 0 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,500,000,000 | 1,500,000,000 |
Common stock, shares issued | 941,000,000 | 806,000,000 |
Common stock, shares outstanding | 926,000,000 | 792,000,000 |
Treasury stock, shares | 15,000,000 | 14,000,000 |
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Cash flows from operating activities: | ||
Net Loss | $ (446) | $ (558) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Net gain on sale of equity interests in ATMP JV | (146) | 0 |
Equity in loss of ATMP JV | 1 | 0 |
Depreciation and amortization | 99 | 133 |
Provision for deferred income taxes | 11 | 0 |
Stock-based compensation expense | 57 | 47 |
Non-cash interest expense | 11 | 8 |
Restructuring and other special charges, net | 0 | 83 |
Loss on debt redemption | 61 | 0 |
Fair value of warrant issued related to sixth amendment to the WSA | 240 | 0 |
Other | (5) | 12 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (107) | 164 |
Inventories | (94) | (93) |
Prepayment and other - GLOBALFOUNDRIES | 20 | 97 |
Prepaid expenses and other assets | (134) | (113) |
Payable to ATMP JV | 144 | 0 |
Payable to GLOBALFOUNDRIES | 39 | 9 |
Accounts payable, accrued liabilities and other | 151 | (74) |
Net cash used in operating activities | (98) | (285) |
Cash flows from investing activities: | ||
Net proceeds from sale of equity interests in ATMP JV | 346 | 0 |
Purchases of available-for-sale securities | 0 | (227) |
Purchases of property, plant and equipment | (56) | (64) |
Proceeds from maturities of available-for-sale securities | 0 | 462 |
Proceeds from sale of property, plant and equipment | 0 | 8 |
Other | 3 | 0 |
Net cash provided by investing activities | 293 | 179 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock, net of issuance costs | 668 | 0 |
Proceeds from issuance of convertible senior notes, net of issuance costs | 681 | 0 |
Proceeds from issuance of common stock under stock-based compensation equity plans | 12 | 1 |
Proceeds from (repayments of) borrowings, net | (230) | 100 |
Repayments of long-term debt | (848) | (44) |
Other | (5) | (1) |
Net cash provided by financing activities | 278 | 56 |
Net increase (decrease) in cash and cash equivalents | 473 | (50) |
Cash and cash equivalents at beginning of period | 785 | 805 |
Cash and cash equivalents at end of period | $ 1,258 | $ 755 |
Basis of Presentation and Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 24, 2016 | |
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 24, 2016 shown in this report are not necessarily indicative of results to be expected for the full year ending December 31, 2016. 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 26, 2015. The Company uses a 52 or 53 week fiscal year ending on the last Saturday in December. The quarters and nine months ended September 24, 2016 and September 26, 2015 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 Issued Accounting Standards Income Tax. In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-17, Balance Sheet Classification of Deferred Taxes (ASU 2015-17), which simplifies the presentation of deferred income taxes by requiring that all deferred tax assets and liabilities be classified as non-current on the consolidated balance sheet. The Company adopted ASU 2015-17 prospectively in the first quarter of 2016. As a result, the Company netted $31 million of deferred tax assets and deferred tax liabilities, respectively, and reclassified $8 million current deferred tax assets and $6 million current deferred tax liabilities to non-current deferred tax assets and liabilities, respectively, on its condensed consolidated balance sheet as of March 26, 2016. The prior period information was not retrospectively adjusted. Interest—Imputation of Interest. In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03), which requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years, with early adoption permitted. The new guidance will be applied retrospectively to each prior period presented. In August 2015, the FASB issued ASU 2015 -15 to amend ASU 2015-03 and address debt issuance costs related to line-of-credit arrangements. ASU 2015-15 allows an entity to present debt issuance costs related to a line-of-credit as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the arrangement. This accounting standard update did not impact the effective date of the previously issued guidance. The Company retrospectively adopted ASU 2015-03 and 2015-15 in the first quarter of 2016. As a result, the Company reclassified the debt issuance costs from long-term assets to long-term debt by $23 million and $25 million as of March 26, 2016 and December 26, 2015, respectively, on its consolidated balance sheets. Inventory. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (ASU 2015-11), which simplifies the measurement of inventory by requiring certain inventory to be measured at the lower of cost or net realizable value. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016 and for interim periods therein, with early adoption permitted. The Company is currently evaluating the impact from its adoption of ASU 2015-11 on its consolidated financial statements. Disclosure of Going Concern Uncertainties. In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (ASU 2014-15), which provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for fiscal years ending after December 15, 2016 and for interim and annual periods therein with early adoption permitted. The Company is not expecting any material impact of its pending adoption of ASU 2014-15 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. The core principle of ASU 2014-09 is that revenue should be recognized in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process in order to achieve this core principle, which may require the use of judgment and estimates. ASU 2014-09 also requires expanded qualitative and quantitative disclosures relating to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including significant judgments and estimates used. In July 2015, FASB announced a decision to defer the effective date for this ASU. ASU 2014-09 is effective for the Company in the first quarter of 2018 with early adoption permitted (for annual reporting periods beginning after December 15, 2016). The Company may adopt ASU 2014-09 either by using a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. The Company is currently evaluating the impact of its pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined which approach it will apply. Financial Instruments. In January 2016, FASB issued ASU No. 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01), which provides guidance related to accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including 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. Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02), which increases transparency and comparability among organizations by recognizing all lease transactions (with terms in excess of 12 months) on the balance sheet as a lease liability and a right-of-use asset (as defined). ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early application permitted. Upon adoption, the lessee will apply the new standard retrospectively to all periods presented or retrospectively using a cumulative effect adjustment in the year of adoption. The Company is currently evaluating the impact of its pending adoption of ASU 2016-02 on its consolidated financial statements. 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. ASU 2016-07 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years with early application permitted. The Company is not expecting any material impact from its adoption of ASU 2016-07 on its consolidated financial statements. Stock Compensation. In March 2016, the FASB issued ASU No. 2016-09, Stock Compensation (ASU 2016-09), which is intended to simplify several aspects of the accounting for share-based payment award transactions. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods. The Company is not expecting any material impact from its adoption of ASU 2016-09 on its consolidated financial statements. 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 addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and 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, including adoption in an interim period. The Company is currently evaluating the impact of its pending adoption of ASU 2016-15 on its consolidated financial statements. 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. |
Globalfoundries |
9 Months Ended |
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Sep. 24, 2016 | |
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). Fifth Amendment to Wafer Supply Agreement. On April 16, 2015, the Company entered into a fifth amendment to the WSA (the Fifth Amendment). The primary effect of the fifth amendment was to establish volume purchase commitments and fixed pricing for the 2015 calendar year as well as to modify certain other terms of the WSA applicable to wafers for some of the Company's microprocessor unit, graphics processor unit and semi-custom products to be delivered by GF to the Company during the 2015 calendar year. Sixth Amendment to Wafer Supply Agreement. On August 30, 2016, the Company entered into a sixth amendment (the Sixth Amendment) to the WSA. The Sixth Amendment modifies 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 agreed to establish a comprehensive framework for technology collaboration for the 7nm technology node. The 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 will pay GF $100 million, which will be paid in installments starting in the fourth fiscal quarter of 2016 through the third fiscal quarter of 2017. 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 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 current business and market expectations and take into account the limited waiver it has received for certain products. 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’s total purchases from GF related to wafer manufacturing and research and development activities for the quarters ended September 24, 2016 and September 26, 2015 were $186 million and $288 million, respectively. The Company’s total purchases from GF related to wafer manufacturing and research and development activities for the nine months ended September 24, 2016 and September 26, 2015 were $479 million and $704 million, respectively. The Company's currently expected purchases from GF for wafer manufacturing and research and development activities are approximately $257 million for the remainder of fiscal 2016. The Company expects that its future purchases from GF under the WSA, which is in place until 2024, will continue to be material. Warrant Agreement. Also on August 30, 2016, in consideration for the limited waiver and rights under the 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 under the Warrant Agreement is exercisable in whole or in part until February 29, 2020, provided that the maximum number of Warrant Shares that may be exercised under the one-year anniversary of the Warrant Agreement shall not exceed 50 million. 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. During the quarter and nine months ended September 24, 2016, the Company recorded a charge of $340 million, consisting of the $100 million payment under the Sixth Amendment and the $240 million value of the warrant under the Warrant Agreement issued in consideration of the Sixth Amendment. The warrant, which was recorded as additional paid-in capital, was valued using the Black-Scholes Model, which considers the assumptions of 47.1% implied volatility and 0.99% risk-free rate based on the 3.5-year warrant term, the Company's stock price of $7.49 per share on August 30, 2016 and the $5.98 strike price. GF continues to be a related party of the Company because Mubadala and Mubadala Technology Investments LLC (Mubadala Tech) are affiliated with WCH, the Company’s largest stockholder. GF, WCH and Mubadala Tech are wholly-owned subsidiaries of Mubadala. |
Debt |
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Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | 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 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 only under 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 Company may not redeem the notes prior to the maturity date, and no sinking fund is provided for the notes. The conversion rate will initially be 125.0031 shares of common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $8.00 per share of common stock). The conversion rate will be 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 notes at a fundamental change repurchase price equal to 100% of the principal amount of the 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 convertible 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 are netted against the equity component in additional paid-in capital. The Company recorded liability issuance costs of $12 million and equity issuance costs of $8 million. The 2.125% Notes consisted of the following:
As of September 24, 2016, the remaining life of the 2.125% Notes is approximately 120 months. Based on the closing price of the Company's common stock of $6.55 on September 23, 2016, the last business day of the third fiscal quarter, the if-converted value of the 2.125% Notes was less than the principal amount thereof. 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 convertible features. The following table sets forth total interest expense recognized related to the 2.125% Notes for the three months ended September 24, 2016:
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. 6.75% Senior Notes Due 2019 During the third quarter of 2016, the Company repurchased $404 million in aggregate principal amount of its 6.75% Senior Notes Due 2019 (6.75% Notes) pursuant to a partial tender offer for $442 million, which included payment of accrued and unpaid interest of $2 million. The Company incurred a total loss of $41 million in connection with the foregoing repurchase of the 6.75% Notes. As of September 24, 2016, the outstanding aggregate principal amount of the 6.75% Notes was $196 million. 7.75% Senior Notes Due 2020 During the third quarter of 2016, the Company repurchased $242 million in aggregate principal amount of its 7.75% Senior Notes Due 2020 (7.75% Notes) pursuant to a partial tender offer for $251 million, which included payment of accrued and unpaid interest of $3 million. The Company incurred a total loss of $9 million in connection with the foregoing repurchase of the 7.75% Notes. As of September 24, 2016, the outstanding aggregate principal amount of the 7.75% Notes was $208 million. On September 28, 2016, the Company redeemed the remaining $208 million in aggregate principal amount of the 7.75% Notes. 7.50% Senior Notes Due 2022 During the third quarter of 2016, the Company repurchased $125 million in aggregate principal amount of its 7.50% Senior Notes Due 2022 (7.50% Notes) pursuant to a partial tender offer for $135 million, which included payment of accrued and unpaid interest of $1 million. The Company incurred a total loss of $10 million in connection with the foregoing repurchase of the 7.50% Notes. As of September 24, 2016, the outstanding aggregate principal amount of the 7.50% Notes was $350 million. 7.00% Senior Notes Due 2024 During the third quarter of 2016, the Company repurchased $25 million in aggregate principal amount of its 7.00% Senior Notes Due 2024 (7.00% Notes) pursuant to a partial tender offer for $26 million, which included payment of accrued and unpaid interest that was less than $1 million. The Company incurred a total loss of $1 million in connection with the foregoing repurchase of the 7.00% Notes. As of September 24, 2016, the outstanding aggregate principal amount of the 7.00% Notes was $475 million. |
Supplemental Balance Sheet Information |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Balance Sheet Information | Supplemental Balance Sheet Information Inventories
Other Current Assets
Property, Plant and Equipment
Other Assets
Accrued Liabilities
Other Current Liabilities
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Equity Interest Purchase Agreement - ATMP Joint Venture |
9 Months Ended |
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Sep. 24, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Equity Interest Purchase Agreement - ATMP 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 Nantong Fujitsu Microelectronics Co., Ltd., a Chinese joint stock company (NFME), to form two joint ventures (collectively, the ATMP JV). As a result of the sale, NFME’s affiliates own 85% of the equity interests in each ATMP JV while certain of the Company’s subsidiaries own the remaining 15%. The Company has no obligations to fund the ATMP JV. As the result of the transaction, the Company received approximately $346 million, including purchase price adjustments, in net cash proceeds for selling 85% of the equity interest in each of Suzhou TF-AMD Semiconductor Co., Ltd. and TF AMD Microelectronics (Penang) Sdn. Bhd. These proceeds, net of certain transaction costs, were included in investing activities on the Company's condensed consolidated statements of cash flows for the nine months ended September 24, 2016. As a result of certain purchase price adjustments, the Company recognized a charge of $4 million in the third quarter of 2016, which resulted in a cumulative pre-tax gain on the sale of its 85% equity interest in ATMP JV of $146 million for the nine months ended September 24, 2016, which was recognized within Other income (expense), net on the Company's condensed consolidated statements of operations. The net pre-tax gain reflects the excess of the sum of net cash proceeds and fair value of the Company's retained 15% equity interests in the ATMP JV over the sum of the net book values of the Company's former subsidiaries and other closing costs directly attributed to the divestiture. The above gain includes $11 million of excess of fair value of the Company's retained interest over the corresponding net book values. In determining the fair value of the Company's retained 15% equity interests in the ATMP JV, the Company used quoted prices from comparable bids for this transaction. The Company also considered other factors including the control premium and the amount of consideration received for the portion sold. 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 24, 2016, the carrying value of the Company's investment in the ATMP JV was approximately $60 million. Following the deconsolidation, the ATMP JV is a related party of the Company. The ATMP JV provides assembly, test, mark and pack (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 quarter and nine months ended September 24, 2016 amounted to approximately $107 million and $173 million, respectively. The Company’s payable to the ATMP JV, as of September 24, 2016 was $144 million. During the quarter and nine months ended September 24, 2016, the Company recorded $5 million and $8 million, respectively, of loss in Equity in income (loss) of ATMP JV on its condensed consolidated statements of operations, which includes certain expenses incurred by the Company on behalf of the ATMP JV. |
Equity Joint Venture - Intellectual Property Licensing Agreement |
9 Months Ended |
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Sep. 24, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Joint Venture - Intellectual Property Licensing Agreement | Equity Joint Venture - Intellectual Property Licensing Agreement 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 China JVs). 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 China JVs’ operations. The Company has no obligations to fund the China JVs. The China JVs’ primary purpose is to support the Company’s expansion into the server and workstation product market in China. The Company licensed certain of its intellectual property (Licensed IP) to the China JVs for a total of approximately $293 million in license fees payable over several years contingent upon achievement of certain milestones. The Company also expects to receive a royalty based on the sales of the China JVs’ products to be developed on the basis of such Licensed IP. The Company will also provide certain engineering and technical support to the China JVs in connection with the product development. 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 and will not consolidate either of these entities. The Company accounts for its investments in the China JVs under the equity method of accounting. Income related to the Licensed IP will be recognized 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, and thereafter, together with royalty payments, will be recognized in income once earned. The Company will classify Licensed IP income and royalty income as other operating income. During the quarter and nine months ended September 24, 2016, the Company recognized $24 million and $57 million, respectively, of operating income related to the Licensed IP. The Company’s total exposure to losses through its investment into the China JVs is limited to the Company’s investments in the China JVs, which was zero as of September 24, 2016. The Company’s share in the net losses of the China JVs for the quarter and nine months ended September 24, 2016 was not material and is not recorded in the Company’s condensed consolidated statement of operations since the Company is not obligated to fund the China JVs losses in excess of the Company’s investment in the China JVs. As of September 24, 2016, the total assets and liabilities of the China JVs were not material. |
Net Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed based on the weighted average number of shares outstanding. Diluted net 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 and restricted stock units and potentially dilutive 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 loss per share:
Potential shares from stock options, restricted stock units and the 2.125% Notes totaling 144 million for the third quarter of 2016 and potential shares from stock options and restricted stock units totaling 64 million for the third quarter of 2015 were not included in the net loss per share calculations, because their inclusion would have been anti-dilutive. Potential shares from employee stock options, restricted stock units, the 2.125% Notes and the warrant under the Warrant Agreement totaling 217 million for the nine months ended September 24, 2016 and potential shares from stock options and restricted stock units totaling 61 million for the nine months ended September 26, 2015 were not included in the net loss per share calculation, 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 24, 2016 and December 26, 2015 are summarized below:
Available-for-sale securities held by the Company as of September 24, 2016 and December 26, 2015 consisted of commercial paper. The amortized cost of available-for-sale securities approximated the fair value for all periods presented. In addition to those amounts presented above, as of September 24, 2016 and December 26, 2015, the Company had approximately $3 million and $1 million, respectively, of available-for-sale investments in money market funds, used as collateral for letters of credit deposits, which were included in Other current assets and Other assets, respectively, on the Company’s condensed consolidated balance sheets. These money market funds are classified within Level 1 because they are valued using quoted prices for identical instruments in active markets. Their amortized costs are the same as the fair value for all periods presented. The Company is restricted from accessing these deposits. Also in addition to those amounts presented above, as of September 24, 2016 and December 26, 2015, the Company had approximately $14 million and $15 million, respectively, of available-for-sale 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 short-term and long-term debt are 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 income (loss), the amount of gain (loss) reclassified from accumulated other comprehensive income (loss) and included in earnings related to the foreign currency forward contracts designated as cash flow hedges and the amount of gain (loss) included in other income (expense), net, related to contracts not designated as hedging instruments, which was allocated in the condensed consolidated statements of operations:
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 24, 2016 and December 26, 2015, the notional values of the Company’s outstanding foreign currency forward contracts were $152 million and $156 million, respectively. All the contracts mature within 12 months, and, upon maturity, the amounts recorded in Accumulated other comprehensive income (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. Fair Value Hedges The Company’s fair value hedge 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. The following table shows the fair value amounts included in Other assets should the fair value hedge derivative contracts be in a gain position or included in Other long-term 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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Income Taxes |
9 Months Ended |
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Sep. 24, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes In the third quarter of 2016, the Company recorded an income tax provision of $4 million, consisting of $1 million of foreign taxes in profitable locations and $3 million for withholding taxes applicable to license fee revenue from foreign 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 applicable to license fee revenue 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 5. Equity Interest Purchase Agreement - ATMP Joint Venture). The Company now applies the equity method of accounting to its 15% investment in the two former subsidiaries. The Company's share of applicable tax expense will be netted with the equity share of future profits or losses. In 2015, the Company recorded an income tax provision of $2 million related to the activities of the two former subsidiaries. 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. In the third quarter of 2015 the Company did not record any income tax provision. For the nine months ended September 26, 2015, the Company recorded an income tax provision of $4 million due to foreign taxes in profitable locations. As of September 24, 2016, 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 24, 2016, in management’s estimate, is not more likely than not to be achieved. The Company's total gross unrecognized tax benefits as of September 24, 2016 were $41 million. 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. Also included in this category are, employee stock-based compensation expense, restructuring and other special charges, net, charge related to the Sixth Amendment to the WSA with GF and amortization of acquired intangible assets. 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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Public Offering of Common Stock |
9 Months Ended |
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Sep. 24, 2016 | |
Equity [Abstract] | |
Public Offering of Common Stock | Public Offering of Common Stock On September 14, 2016, the Company completed its registered underwritten public offering of 100 million shares of the Company’s common stock, par value $0.01 per share, at a public offering price of $6.00 per share, pursuant to an underwriting agreement with J.P. Morgan Securities LLC, Barclays Capital Inc. and Credit Suisse Securities (USA) LLC, as representatives of the several underwriters named therein. The Company also granted to the underwriters a 30-day option to purchase up to 15 million additional shares of common stock. As of September 24, 2016, the resulting aggregate net proceeds to the Company from the common stock offering including the sale of the additional shares to the underwriters pursuant to the option described above, were approximately $668 million, after deducting underwriting discounts and offering expenses totaling approximately $22 million. |
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 The following table summarizes stock-based compensation expense related to employee stock options and restricted stock units, which is allocated within the Company’s condensed consolidated statements of operations as follows:
For all periods presented, the Company did not realize any excess tax benefit related to stock-based compensation and therefore did not record any related financing cash flows. 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:
In the third quarter of 2016 and 2015, the Company granted 2.2 million and 5.2 million shares of employee stock options, respectively, with weighted average grant date fair value per share of $3.10 and $0.94, respectively. For the nine months ended September 24, 2016 and September 26, 2015, the Company granted 2.2 million and 5.9 million employee stock options, respectively, with weighted average grant date fair value per share of $3.10 and $0.96, respectively. Restricted Stock Units In the third quarter of 2016, the Company granted 19.5 million shares of restricted stock units including 2.0 million performance-based restricted stock units (PRSUs) with market conditions referenced below, and in the third quarter of 2015, the Company granted 25.0 million shares of restricted stock units including 3.3 million PRSUs with market conditions referenced below with a weighted average grant date fair value per share of $5.10 and $1.79, respectively. For the nine months ended September 24, 2016, the Company granted 26.0 million shares of restricted stock units including 2.0 million PRSUs with market conditions referenced below, with weighted average grant date fair values per share of $4.55. For the nine months ended September 26, 2015, the Company granted 33.9 million shares of restricted stock units including 3.3 million PRSUs with market conditions referenced below and 0.8 million PRSUs, with a weighted average grant date fair value per share of $1.96. Performance-based Restricted Stock Units with Market Conditions During the third quarter of 2016, 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 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. During the third quarter of 2015, 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 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%, 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 26, 2015, there were 3.3 million market-based restricted stock units with the potential payout level at 100% with a grant date fair value per share of $1.44. As of September 24, 2016, all the 2015 market-based restricted stock units achieved the 250% payout level. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 is ongoing. 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. 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, results of operations or cash flows. |
Restructuring and Other Special Charges, Net |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Special Charges, Net | Restructuring and Other Special Charges, Net 2015 Restructuring Plan In the third quarter of 2015, the Company implemented a restructuring plan (the 2015 Restructuring Plan) focused on its ongoing efforts to simplify its business and better align resources around its priorities and business outlook. The 2015 Restructuring Plan largely involved a reduction of global headcount by approximately 5% and includes organizational actions such as outsourcing certain IT services and application development. In the first nine months of 2015, the Company recorded a $41 million restructuring charge, which consisted of $31 million for severance and benefit costs, $1 million for facilities-related costs and $9 million of intangible-asset-related charges. The actions associated with the 2015 Restructuring Plan are expected to be substantially completed by the end of the fourth quarter of 2016. The following table provides a summary of the restructuring activities in the first nine months of 2016 and the related liabilities recorded in Other current liabilities and Other long-term liabilities on the Company’s condensed consolidated balance sheets as of September 24, 2016:
2014 Restructuring Plan In the fourth quarter of 2014, the Company implemented a restructuring plan (the 2014 Restructuring Plan) designed to improve operating efficiencies. The 2014 Restructuring Plan involved a reduction of global headcount by approximately 6% and an alignment of its real estate footprint with its reduced headcount. In the first nine months of 2015, the Company recorded an $18 million restructuring charge, which consisted of a $5 million non-cash charge related to asset impairments, $4 million for severance and benefit costs and $9 million for facilities related costs. The 2014 Restructuring Plan was largely completed by the end of the third quarter of 2015. During the first nine months of 2016, the Company recorded a restructuring charge reversal of $7 million, of which $5 million related to facilities costs associated with a lease amendment which reduced a lease liability previously accrued under this plan. The following table provides a summary of the restructuring activities in the first nine months of 2016 and the related liabilities recorded in Other current liabilities and Other long-term liabilities on the Company’s condensed consolidated balance sheets as of September 24, 2016:
Dense Server Systems Business Exit As a part of the Company’s strategy to simplify and sharpen its investment focus, the Company exited the dense server systems business, formerly SeaMicro, in the first quarter of 2015. As a result, the Company recorded a charge of $76 million in Restructuring and other special charges, net on the Company’s condensed consolidated statements of operations in the first nine months of 2015. This charge included an impairment charge of $62 million related to the acquired intangible assets. The Company concluded that the carrying value of the acquired intangible assets associated with its dense server systems business was fully impaired as the Company did not have plans to utilize the related freedom fabric technology in any of its future products nor did it have any plans at that time to monetize the associated intellectual property. In addition, the exit charge consisted of a $7 million non-cash charge related to asset impairments, $4 million of severance and related benefits and $3 million for contract or program termination costs. The Company substantially completed this exit activity during the second quarter of 2016. |
Accumulated Other Comprehensive Income (Loss) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The tables below summarize the changes in accumulated other comprehensive income (loss) by component:
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Secured Revolving Line of Credit |
9 Months Ended |
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Sep. 24, 2016 | |
Debt Disclosure [Abstract] | |
Secured Revolving Line of Credit | Secured Revolving Line of Credit Amended and Restated Loan and Security Agreement On April 14, 2015, AMD and its subsidiaries, AMD International Sales & Service, Ltd. 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). 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 $75 million available for issuance of letters of credit, which remained unchanged from the loan and security agreement dated November 12, 2013, as amended on December 11, 2014. 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 matures on April 14, 2020 and 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. During the third quarter of 2016, the Company repaid the $226 million outstanding balance. As of September 24, 2016, the Company did not have any borrowings outstanding under the Secured Revolving line of Credit. At December 26, 2015, the Secured Revolving Line of Credit had an outstanding loan balance of $230 million, at an interest rate of 4.00%. At September 24, 2016, the Secured Revolving Line of Credit had $21 million related to outstanding letters of credit and up to $395 million available for future borrowings. 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 24, 2016, the Company was in compliance with all required covenants stated in the Amended and Restated Loan Agreement. First Amendment to the Amended and Restated Loan and Security Agreement On June 10, 2015, the Loan Parties entered into a first amendment to the Amended and Restated Loan and Security Agreement (the First Amendment) by and among the Loan Parties, the Lenders and the Agent, which modifies the Amended and Restated Loan and Security Agreement. Amendments to the Amended and Restated Loan Agreement effected by the First Amendment included the addition of exceptions to the liens and asset sale covenants to permit the Loan Parties to enter into certain supply chain finance arrangements, as well as the addition of certain definitions related thereto. Second Amendment to the Amended and Restated Loan and Security Agreement On April 29, 2016, the Loan Parties entered into a second amendment to the Amended and Restated Loan and Security Agreement (the Second Amendment) by and among the Loan Parties, the Lenders and the Agent, which modifies the Amended and Restated Loan and Security Agreement. The primary amendment to the Amended and Restated Loan Agreement effected by the Second Amendment related to the expansion of the definition of permitted asset dispositions to include the sale or transfer of inventory to the ATMP JV pursuant to the Equity Interest Purchase Agreement between AMD and NFME. Third Amendment to the Amended and Restated Loan and Security Agreement On June 21, 2016, the Loan Parties entered into a third amendment to the Amended and Restated Loan and Security Agreement (the Third Amendment) by and among the Loan Parties, the Lenders and the Agent, which modifies the Amended and Restated Loan and Security Agreement. Amendments to the Amended and Restated Loan Agreement effected by the Third Amendment included the further expansion of the asset sale covenants to permit the Loan Parties to enter into certain supply chain finance arrangements. Fourth Amendment to the Amended and Restated Loan and Security Agreement On September 7, 2016, the Loan Parties entered into a fourth amendment to the Amended and Restated Loan and Security Agreement (the Fourth Amendment) by and among the Loan Parties, the Lenders and the Agent, which modifies the Amended and Restated Loan and Security Agreement. The primary amendment to the Amended and Restated Loan agreement effected by the Fourth Amendment was to increase the dollar limit as set forth in the definition related to certain supply chain finance arrangements. |
Basis of Presentation and Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 24, 2016 | |
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 24, 2016 shown in this report are not necessarily indicative of results to be expected for the full year ending December 31, 2016. 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 26, 2015. |
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 24, 2016 and September 26, 2015 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 Issued Accounting Standards | Recently Issued Accounting Standards Income Tax. In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-17, Balance Sheet Classification of Deferred Taxes (ASU 2015-17), which simplifies the presentation of deferred income taxes by requiring that all deferred tax assets and liabilities be classified as non-current on the consolidated balance sheet. The Company adopted ASU 2015-17 prospectively in the first quarter of 2016. As a result, the Company netted $31 million of deferred tax assets and deferred tax liabilities, respectively, and reclassified $8 million current deferred tax assets and $6 million current deferred tax liabilities to non-current deferred tax assets and liabilities, respectively, on its condensed consolidated balance sheet as of March 26, 2016. The prior period information was not retrospectively adjusted. Interest—Imputation of Interest. In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03), which requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years, with early adoption permitted. The new guidance will be applied retrospectively to each prior period presented. In August 2015, the FASB issued ASU 2015 -15 to amend ASU 2015-03 and address debt issuance costs related to line-of-credit arrangements. ASU 2015-15 allows an entity to present debt issuance costs related to a line-of-credit as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the arrangement. This accounting standard update did not impact the effective date of the previously issued guidance. The Company retrospectively adopted ASU 2015-03 and 2015-15 in the first quarter of 2016. As a result, the Company reclassified the debt issuance costs from long-term assets to long-term debt by $23 million and $25 million as of March 26, 2016 and December 26, 2015, respectively, on its consolidated balance sheets. Inventory. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (ASU 2015-11), which simplifies the measurement of inventory by requiring certain inventory to be measured at the lower of cost or net realizable value. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016 and for interim periods therein, with early adoption permitted. The Company is currently evaluating the impact from its adoption of ASU 2015-11 on its consolidated financial statements. Disclosure of Going Concern Uncertainties. In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (ASU 2014-15), which provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for fiscal years ending after December 15, 2016 and for interim and annual periods therein with early adoption permitted. The Company is not expecting any material impact of its pending adoption of ASU 2014-15 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. The core principle of ASU 2014-09 is that revenue should be recognized in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process in order to achieve this core principle, which may require the use of judgment and estimates. ASU 2014-09 also requires expanded qualitative and quantitative disclosures relating to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including significant judgments and estimates used. In July 2015, FASB announced a decision to defer the effective date for this ASU. ASU 2014-09 is effective for the Company in the first quarter of 2018 with early adoption permitted (for annual reporting periods beginning after December 15, 2016). The Company may adopt ASU 2014-09 either by using a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. The Company is currently evaluating the impact of its pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined which approach it will apply. Financial Instruments. In January 2016, FASB issued ASU No. 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01), which provides guidance related to accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including 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. Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02), which increases transparency and comparability among organizations by recognizing all lease transactions (with terms in excess of 12 months) on the balance sheet as a lease liability and a right-of-use asset (as defined). ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early application permitted. Upon adoption, the lessee will apply the new standard retrospectively to all periods presented or retrospectively using a cumulative effect adjustment in the year of adoption. The Company is currently evaluating the impact of its pending adoption of ASU 2016-02 on its consolidated financial statements. 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. ASU 2016-07 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years with early application permitted. The Company is not expecting any material impact from its adoption of ASU 2016-07 on its consolidated financial statements. Stock Compensation. In March 2016, the FASB issued ASU No. 2016-09, Stock Compensation (ASU 2016-09), which is intended to simplify several aspects of the accounting for share-based payment award transactions. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods. The Company is not expecting any material impact from its adoption of ASU 2016-09 on its consolidated financial statements. 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 addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and 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, including adoption in an interim period. The Company is currently evaluating the impact of its pending adoption of ASU 2016-15 on its consolidated financial statements. 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. |
Debt (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 for the three months ended September 24, 2016:
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Supplemental Balance Sheet Information (Tables) |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories
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Other Current Assets | Other Current Assets
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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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Other Current Liabilities | Other Current Liabilities
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Net 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 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 24, 2016 and December 26, 2015 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 income (loss), the amount of gain (loss) reclassified from accumulated other comprehensive income (loss) and included in earnings related to the foreign currency forward contracts designated as cash flow hedges and the amount of gain (loss) included in other income (expense), net, related to contracts not designated as hedging instruments, which was allocated in the condensed consolidated statements of operations:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Amounts of Fair Value Hedge Derivative Contracts in Balance Sheet | The following table shows the fair value amounts included in Other assets should the fair value hedge derivative contracts be in a gain position or included in Other long-term liabilities should these contracts be in a loss position. These amounts were recorded in the Company’s condensed consolidated balance sheets as follows:
|
Segment Reporting (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-based Compensation Expense, Allocation of Recognized Period Costs | The following table summarizes stock-based compensation expense related to employee stock options and restricted stock units, which is allocated within the Company’s condensed consolidated statements of operations as follows:
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Weighted Average Valuation Assumptions for 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:
|
Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
Restructuring and Other Special Charges, Net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 Restructuring Plan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Activities and Related Liabilities | The following table provides a summary of the restructuring activities in the first nine months of 2016 and the related liabilities recorded in Other current liabilities and Other long-term liabilities on the Company’s condensed consolidated balance sheets as of September 24, 2016:
|
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2014 Restructuring Plan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Activities and Related Liabilities | The following table provides a summary of the restructuring activities in the first nine months of 2016 and the related liabilities recorded in Other current liabilities and Other long-term liabilities on the Company’s condensed consolidated balance sheets as of September 24, 2016:
|
Accumulated Other Comprehensive Income (Loss) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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) - USD ($) $ in Millions |
Sep. 24, 2016 |
Mar. 26, 2016 |
Dec. 26, 2015 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Unamortized debt issuance costs | $ 26 | $ 25 | |
Accounting Standards Update 2015-03 | Long-term Assets | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Unamortized debt issuance costs | $ (23) | (25) | |
Accounting Standards Update 2015-03 | Long-term Debt | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Unamortized debt issuance costs | 23 | $ 25 | |
New Accounting Pronouncement, Early Adoption, Effect | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Deferred tax assets | 31 | ||
Deferred tax liabilities | 31 | ||
Reclassification of current deferred tax assets to noncurrent | 8 | ||
Reclassification of current deferred tax liabilities to noncurrent | $ 6 |
Globalfoundries (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Aug. 30, 2016 |
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 23, 2016 |
Dec. 26, 2015 |
|
Related Party Transaction [Line Items] | |||||||
Payable to GLOBALFOUNDRIES | $ 284 | $ 284 | $ 245 | ||||
Share price (in usd per share) | $ 6.55 | ||||||
Related Party | |||||||
Related Party Transaction [Line Items] | |||||||
Charge related to the Sixth Amendment to the WSA with GF | 340 | 340 | |||||
Related Party | WCH | |||||||
Related Party Transaction [Line Items] | |||||||
Charge related to the Sixth Amendment to the WSA with GF | 240 | 240 | |||||
Related Party | WCH | Fair Value of Warrant | |||||||
Related Party Transaction [Line Items] | |||||||
Fair value assumptions, implied volatility rate | 47.10% | ||||||
Fair value assumptions, risk-free rate | 0.99% | ||||||
Fair value assumptions, warrant term | 3 years 6 months | ||||||
Share price (in usd per share) | $ 7.49 | ||||||
Fair value assumptions, exercise price (in usd per share) | $ 5.98 | ||||||
Related Party | WCH | WCH Warrant | |||||||
Related Party Transaction [Line Items] | |||||||
Number of securities called by warrants (in shares) | 75,000,000 | ||||||
Exercise price of warrants (in usd per share) | $ 5.98 | ||||||
Number of securities called by warrants, maximum exercisable within one year of grant (in shares) | 50,000,000 | ||||||
Related Party | Mubadala | WCH Warrant | |||||||
Related Party Transaction [Line Items] | |||||||
Maximum allowed percent of capital stock owned | 19.99% | ||||||
Related Party | GF | |||||||
Related Party Transaction [Line Items] | |||||||
Purchases from related party | 186 | $ 288 | 479 | $ 704 | |||
Currently expected purchases | 257 | 257 | |||||
Related Party | GF | Limited waiver | |||||||
Related Party Transaction [Line Items] | |||||||
Payable to GLOBALFOUNDRIES | 100 | 100 | |||||
Charge related to the Sixth Amendment to the WSA with GF | $ 100 | $ 100 | |||||
Related Party | GF | Wafers | |||||||
Related Party Transaction [Line Items] | |||||||
Long-term purchase commitment, period | 5 years |
Debt (Narrative) (Details) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 14, 2016
USD ($)
day
$ / shares
|
Sep. 24, 2016
USD ($)
|
Sep. 24, 2016
USD ($)
|
Sep. 26, 2015
USD ($)
|
Sep. 28, 2016
USD ($)
|
Sep. 23, 2016
$ / shares
|
|
Debt Instrument [Line Items] | ||||||
Share price (in usd per share) | $ / shares | $ 6.55 | |||||
Gain (Loss) on Extinguishment of Debt | $ (61) | $ 0 | ||||
Convertible Debt | 2.125% Convertible Senior Notes due 2026 | ||||||
Debt Instrument [Line Items] | ||||||
Principal | $ 700 | $ 700 | 700 | |||
Debt Instrument, Interest Rate, Stated Percentage | 2.125% | |||||
Debt Instrument, Convertible, Conversion Ratio | 0.1250031 | |||||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 8.00 | |||||
Debt Issuance Cost, Gross, Noncurrent | 12 | 12 | ||||
Equity issuance costs | $ 8 | $ 8 | ||||
Debt Instrument, Convertible, Remaining Life | 120 months | |||||
Debt Instrument, Interest Rate, Effective Percentage | 8.00% | 8.00% | ||||
Convertible Debt | 2.125% Convertible Senior Notes due 2026 | Debt Instrument, Conversion Circumstance 1 | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Convertible, Threshold Trading Days | day | 20 | |||||
Debt Instrument, Convertible, Threshold Consecutive Trading Days | 30 days | |||||
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger | 130.00% | |||||
Convertible Debt | 2.125% Convertible Senior Notes due 2026 | Debt Instrument, Conversion Circumstance 2 | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Convertible, Threshold Consecutive Trading Days | 10 days | |||||
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger | 98.00% | |||||
Debt Instrument, Convertible, Conversion Period After Threshold Period Days | day | 5 | |||||
Convertible Debt | 2.125% Convertible Senior Notes Due 2026, Over-Allotment Option | Subsequent Event | ||||||
Debt Instrument [Line Items] | ||||||
Principal | $ 105 | |||||
Senior Notes | 6.75% Senior Notes due 2019 | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.75% | 6.75% | ||||
Debt Instrument, Repurchased Face Amount | $ 404 | $ 404 | ||||
Early Repayment of Senior Debt | 442 | |||||
Interest Paid | 2 | |||||
Gain (Loss) on Extinguishment of Debt | (41) | |||||
Outstanding Aggregate Principal Amount | $ 196 | $ 196 | ||||
Senior Notes | 7.75% Senior Notes due 2020 | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 7.75% | 7.75% | ||||
Debt Instrument, Repurchased Face Amount | $ 242 | $ 242 | ||||
Early Repayment of Senior Debt | 251 | |||||
Interest Paid | 3 | |||||
Gain (Loss) on Extinguishment of Debt | (9) | |||||
Outstanding Aggregate Principal Amount | $ 208 | $ 208 | ||||
Senior Notes | 7.75% Senior Notes due 2020 | Subsequent Event | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Repurchased Face Amount | $ 208 | |||||
Senior Notes | 7.50% Senior Notes due 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 7.50% | 7.50% | ||||
Debt Instrument, Repurchased Face Amount | $ 125 | $ 125 | ||||
Early Repayment of Senior Debt | 135 | |||||
Interest Paid | 1 | |||||
Gain (Loss) on Extinguishment of Debt | (10) | |||||
Outstanding Aggregate Principal Amount | $ 350 | $ 350 | ||||
Senior Notes | 7.00% Senior Notes due 2024 | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 7.00% | 7.00% | ||||
Debt Instrument, Repurchased Face Amount | $ 25 | $ 25 | ||||
Early Repayment of Senior Debt | 26 | |||||
Interest Paid | 1 | |||||
Gain (Loss) on Extinguishment of Debt | (1) | |||||
Outstanding Aggregate Principal Amount | $ 475 | $ 475 |
Debt (Convertible Debt) (Details) - Convertible Debt - 2.125% Convertible Senior Notes due 2026 - USD ($) $ in Millions |
Sep. 24, 2016 |
Sep. 14, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Principal | $ 700 | $ 700 |
Unamortized debt discount | (273) | |
Unamortized debt issuance costs | (12) | |
Net carrying amount | 415 | |
Carrying amount of the equity component | 266 | |
Equity issuance costs | $ 8 |
Debt (Interest Expense Recognized) (Details) - Convertible Debt - 2.125% Convertible Senior Notes due 2026 $ in Millions |
3 Months Ended |
---|---|
Sep. 24, 2016
USD ($)
| |
Debt Instrument [Line Items] | |
Contractual interest expense | $ 0 |
Interest cost related to amortization of debt issuance costs | 0 |
Interest cost related to amortization of the debt discount | $ 1 |
Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions |
Sep. 24, 2016 |
Dec. 26, 2015 |
|||||
---|---|---|---|---|---|---|---|
Inventories | |||||||
Raw materials | $ 15 | $ 16 | |||||
Work in process | 533 | 482 | |||||
Finished goods | 224 | 180 | |||||
Total inventories, net | 772 | 678 | |||||
Other Current Assets | |||||||
Assets held-for-sale | 0 | 183 | |||||
Other current assets | 78 | 65 | |||||
Total other current assets | [1] | 78 | 248 | ||||
Property, Plant and Equipment | |||||||
Leasehold improvements | 148 | 146 | |||||
Equipment | 741 | 821 | |||||
Construction in progress | 10 | 17 | |||||
Property, plant and equipment, gross | 899 | 984 | |||||
Accumulated depreciation and amortization | (738) | (796) | |||||
Total property, plant and equipment, net | 161 | 188 | |||||
Other Assets | |||||||
Software and technology licenses, net | 235 | 189 | |||||
Other | 47 | 109 | |||||
Total other assets | [1],[2] | 282 | 298 | ||||
Accrued Liabilities | |||||||
Accrued compensation and benefits | 131 | 95 | |||||
Marketing programs and advertising expenses | 97 | 109 | |||||
Software and technology licenses payable | 43 | 50 | |||||
Other | 113 | 218 | |||||
Total accrued liabilities | [1] | 384 | 472 | ||||
Other Current Liabilities | |||||||
Liabilities related to assets held-for-sale | 0 | 79 | |||||
Other current liabilities | 25 | 45 | |||||
Total other current liabilities | $ 25 | $ 124 | |||||
|
Equity Interest Purchase Agreement - ATMP Joint Venture (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
Apr. 29, 2016 |
Dec. 26, 2015 |
|
Investment [Line Items] | ||||||
Ownership percentage | 15.00% | 15.00% | ||||
Net proceeds from sale of equity interests in ATMP JV | $ 346 | $ 0 | ||||
Gain on sale of equity interests in ATMP JV | 146 | 0 | ||||
Investment in ATMP JV | $ 60 | 60 | $ 0 | |||
Payable to ATMP JV | 144 | 144 | $ 0 | |||
Equity in income (loss) of ATMP JV | (5) | $ 0 | (8) | $ 0 | ||
ATMP JV | ||||||
Investment [Line Items] | ||||||
Net proceeds from sale of equity interests in ATMP JV | 346 | |||||
Purchase price adjustments | (4) | |||||
Excess of fair value of retained interest over net book values | 11 | |||||
Investment in ATMP JV | 60 | 60 | ||||
Purchases from related party | 107 | 173 | ||||
Payable to ATMP JV | 144 | 144 | ||||
Equity in income (loss) of ATMP JV | $ (5) | (8) | ||||
Other income (expense), net | ATMP JV | ||||||
Investment [Line Items] | ||||||
Gain on sale of equity interests in ATMP JV | $ 146 | |||||
NFME's Affiliates | ATMP JV | ||||||
Investment [Line Items] | ||||||
Ownership percentage | 85.00% | |||||
Company's Subsidiaries | ATMP JV | ||||||
Investment [Line Items] | ||||||
Ownership percentage | 15.00% |
Equity Joint Venture - Intellectual Property Licensing Agreement (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
Feb. 29, 2016 |
Dec. 26, 2015 |
|
Schedule of Equity Method Investments [Line Items] | ||||||
Operating income related to licensed IP | $ 24,000,000 | $ 0 | $ 57,000,000 | $ 0 | ||
Equity method investments | 60,000,000 | 60,000,000 | $ 0 | |||
China JVs | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Estimated license fees expected to be earned over several years pursuant to a licensing agreement | $ 293,000,000 | |||||
Operating income related to licensed IP | 24,000,000 | 57,000,000 | ||||
Equity method investments | $ 0 | $ 0 |
Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Numerator – Net loss: | ||||
Numerator for basic and diluted net loss per share | $ (406) | $ (197) | $ (446) | $ (558) |
Denominator – Weighted average shares | ||||
Denominator for basic and diluted net loss per share (in shares) | 815 | 785 | 801 | 780 |
Net loss per share: | ||||
Basic (in usd per share) | $ (0.50) | $ (0.25) | $ (0.56) | $ (0.72) |
Diluted (in usd per share) | $ (0.50) | $ (0.25) | $ (0.56) | $ (0.72) |
Stock Options and Restricted Stock Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive shares | 144 | 64 | 217 | 61 |
Financial Instruments (Cash and Cash Equivalents and Fair Value Measurements) (Details) - USD ($) |
Sep. 24, 2016 |
Dec. 26, 2015 |
---|---|---|
Schedule of Investments [Line Items] | ||
Cash and cash equivalents | $ 1,258,000,000 | $ 785,000,000 |
Fair value, level 1 to level 2 transfers, amount | 0 | 0 |
Fair value, level 2 to level 1 transfers, amount | 0 | 0 |
Level 2 | ||
Schedule of Investments [Line Items] | ||
Cash and cash equivalents | 952,000,000 | 376,000,000 |
Cash | ||
Schedule of Investments [Line Items] | ||
Cash and cash equivalents | 306,000,000 | 409,000,000 |
Commercial Paper | Level 2 | ||
Schedule of Investments [Line Items] | ||
Cash and cash equivalents | $ 952,000,000 | $ 376,000,000 |
Financial Instruments (Narrative) (Details) - Level 1 - USD ($) $ in Millions |
Sep. 24, 2016 |
Dec. 26, 2015 |
---|---|---|
Money Market Funds | ||
Schedule of Investments [Line Items] | ||
Available-for-sale investments used as collateral | $ 3 | $ 1 |
Mutual Funds | ||
Schedule of Investments [Line Items] | ||
Restricted investments | $ 14 | $ 15 |
Financial Instruments (Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments not Recorded at Fair Value) (Details) - USD ($) $ in Millions |
Sep. 24, 2016 |
Dec. 26, 2015 |
---|---|---|
Carrying Amount | ||
Short-term debt | $ 0 | $ 230 |
Long-term debt | 1,630 | 2,000 |
Estimated Fair Value | ||
Unamortized debt issuance costs | 26 | 25 |
Level 2 | ||
Estimated Fair Value | ||
Short-term debt | 0 | 230 |
Long-term debt | 1,990 | $ 1,372 |
2.125% Convertible Senior Notes due 2026 | Convertible Debt | ||
Estimated Fair Value | ||
Unamortized debt discount | $ 273 |
Financial Instruments (Gain (Loss) from Hedging Transactions) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Contracts designated as cash flow hedging instruments | Cash flow hedging instruments | ||||
Foreign Currency Forward Contracts - gains (losses) | ||||
Other comprehensive income (loss) | $ (1) | $ (7) | $ 7 | $ (7) |
Contracts designated as cash flow hedging instruments | Cash flow hedging instruments | Cost of sales | ||||
Foreign Currency Forward Contracts - gains (losses) | ||||
Gain (loss) reclassified from accumulated OCI into income | 0 | (1) | 0 | (2) |
Contracts designated as cash flow hedging instruments | Cash flow hedging instruments | Research and development | ||||
Foreign Currency Forward Contracts - gains (losses) | ||||
Gain (loss) reclassified from accumulated OCI into income | 1 | (3) | 0 | (7) |
Contracts designated as cash flow hedging instruments | Cash flow hedging instruments | Marketing, general and administrative | ||||
Foreign Currency Forward Contracts - gains (losses) | ||||
Gain (loss) reclassified from accumulated OCI into income | 0 | (2) | 0 | (5) |
Contracts not designated as hedging instruments | Other income (expense), net | ||||
Foreign Currency Forward Contracts - gains (losses) | ||||
Gain (loss) included in other income (expense) | $ 0 | $ (2) | $ 2 | $ (3) |
Financial Instruments (Summary of Derivative Instruments) (Details) - USD ($) $ in Millions |
Sep. 24, 2016 |
Dec. 26, 2015 |
---|---|---|
Contracts designated as cash flow hedging instruments | Foreign Currency Forward Contracts | ||
Foreign Currency Forward Contracts - gains (losses) | ||
Derivative, notional amount | $ 152 | $ 156 |
Level 2 | Contracts designated as cash flow hedging instruments | Foreign Currency Forward Contracts | ||
Foreign Currency Forward Contracts - gains (losses) | ||
Contracts designated as cash flow hedging instruments | 1 | (6) |
Level 2 | Contracts designated as fair value hedging instruments | Interest Rate Swap Contracts | ||
Interest Rate Swap Contracts - gains (losses) | ||
Contracts designated as fair value hedging instruments | $ 2 | $ 7 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
Dec. 26, 2015 |
|
Income Tax Disclosure [Abstract] | |||||
Provision for income taxes | $ 4 | $ 0 | $ 34 | ||
Tax expenses (benefits) arising from other comprehensive income and Canadian tax credits | (4) | ||||
Provision (Benefit) for Income Taxes [Line Items] | |||||
Foreign taxes in profitable locations | 1 | 6 | $ 4 | ||
Withholding taxes applicable to license fee revenue from foreign locations | $ 3 | $ 5 | |||
Ownership percentage | 15.00% | 15.00% | |||
Income tax provision related to activities of two former subsidiaries | $ 2 | ||||
Gross unrecognized tax benefits | $ 41 | $ 41 | |||
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. 24, 2016
USD ($)
|
Sep. 26, 2015
USD ($)
|
Sep. 24, 2016
USD ($)
segment
|
Sep. 26, 2015
USD ($)
|
|
Segment Reporting [Abstract] | ||||
Number of reportable segments | segment | 2 | |||
Segment Reporting Information [Line Items] | ||||
Net revenue | $ 1,307 | $ 1,061 | $ 3,166 | $ 3,033 |
Operating income (loss) | (293) | (158) | (369) | (432) |
Operating Segments | Computing and Graphics | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 472 | 424 | 1,367 | 1,335 |
Operating income (loss) | (66) | (181) | (217) | (403) |
Operating Segments | Enterprise, Embedded and Semi-Custom | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 835 | 637 | 1,799 | 1,698 |
Operating income (loss) | 136 | 84 | 236 | 156 |
All Other | ||||
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | $ (363) | $ (61) | $ (388) | $ (185) |
Segment Reporting (All Other Category) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Operating loss: | ||||
Restructuring and other special charges, net | $ 0 | $ (48) | $ 10 | $ (135) |
Operating loss | (293) | (158) | (369) | (432) |
All Other | ||||
Operating loss: | ||||
Stock-based compensation expense | (23) | (13) | (57) | (47) |
Restructuring and other special charges, net | 0 | (48) | 10 | (135) |
Charge related to the Sixth Amendment to the WSA with GF | (340) | 0 | (340) | 0 |
Other | 0 | 0 | (1) | (3) |
Operating loss | $ (363) | $ (61) | $ (388) | $ (185) |
Public Offering of Common Stock (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 14, 2016 |
Sep. 24, 2016 |
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 23, 2016 |
Dec. 26, 2015 |
|
Class of Stock [Line Items] | ||||||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||
Shares offered, price per share (in usd per share) | $ 6.55 | |||||
Proceeds from issuance of common stock, net of issuance costs | $ 668 | $ 668 | $ 0 | |||
Stock issuance costs | $ 22 | |||||
Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Shares offered, price per share (in usd per share) | $ 6.00 | |||||
Common Stock | Public Offering | ||||||
Class of Stock [Line Items] | ||||||
Shares offered in public offering (in shares) | 100 | |||||
Common Stock | Over-Allotment Option | ||||||
Class of Stock [Line Items] | ||||||
Shares offered in public offering (in shares) | 15 | |||||
Over-allotment option, term | 30 days |
Stock-Based Incentive Compensation Plans (Share-based Compensation, Allocation of Recognized Period Costs) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense, net of tax | $ 23,000,000 | $ 13,000,000 | $ 57,000,000 | $ 47,000,000 |
Income tax benefit associated with stock-based compensation expense | 0 | 0 | 0 | 0 |
Cost of sales | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense, net of tax | 0 | 0 | 1,000,000 | 2,000,000 |
Research and development | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense, net of tax | 15,000,000 | 7,000,000 | 34,000,000 | 27,000,000 |
Marketing, general and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense, net of tax | $ 8,000,000 | $ 6,000,000 | $ 22,000,000 | $ 18,000,000 |
Stock-Based Incentive Compensation Plans (Weighted-average Valuation Assumptions) (Details) - Stock Options |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected volatility | 59.85% | 71.71% | 59.85% | 60.19% |
Risk-free interest rate | 1.00% | 1.32% | 1.00% | 1.24% |
Expected dividends | 0.00% | 0.00% | 0.00% | 0.00% |
Expected life | 3 years 11 months 23 days | 3 years 10 months 27 days | 3 years 11 months 23 days | 3 years 10 months 27 days |
Stock-Based Incentive Compensation Plans (Narrative) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Excess tax benefit related to stock-based compensation | $ 0 | $ 0 | $ 0 | $ 0 |
Stock options, shares granted | 2,200,000 | 5,200,000 | 2,200,000 | 5,900,000 |
Stock options, shares granted, weighted average estimated grant date fair value per share (in usd per share) | $ 3.10 | $ 0.94 | $ 3.10 | $ 0.96 |
Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock units, shares granted | 19,500,000 | 25,000,000 | 26,000,000 | 33,900,000 |
Stock units, shares granted, weighted average grant date fair value (in usd per share) | $ 5.10 | $ 1.79 | $ 4.55 | $ 1.96 |
PRSUs with Market Conditions | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock units, shares granted | 2,000,000 | 3,300,000 | 2,000,000 | 3,300,000 |
PRSUs without Market Conditions | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock units, shares granted | 800,000 | |||
The 2016 PRSU Grants | PRSUs with Market Conditions | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compounded annual growth rate period | 3 years | |||
Performance period | 3 years | |||
Potential payout level 1 | 50.00% | |||
Potential payout level 2 | 100.00% | |||
Potential payout level 3 | 150.00% | |||
Potential payout level 4 | 200.00% | |||
Potential payout level 5 | 250.00% | |||
Stock units, shares outstanding | 2,000,000 | 2,000,000 | ||
Stock units, shares outstanding, weighted average grant date fair value (in usd per share) | $ 4.50 | $ 4.50 | ||
The 2016 PRSU Grants | Certification of the attainment of the performance level | PRSUs with Market Conditions | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights, percentage | 50.00% | |||
The 2016 PRSU Grants | Prior to first anniversary of the grant date | PRSUs with Market Conditions | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights (in shares) | 0 | |||
The 2016 PRSU Grants | End of the Performance Period | PRSUs with Market Conditions | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights, percentage | 50.00% | |||
The 2015 PRSU Grants | PRSUs with Market Conditions | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compounded annual growth rate period | 3 years | |||
Performance period | 3 years | |||
Potential payout level 1 | 50.00% | |||
Potential payout level 2 | 100.00% | |||
Potential payout level 3 | 200.00% | |||
Potential payout level 4 | 250.00% | |||
Stock units, shares outstanding | 3,300,000 | 3,300,000 | ||
Stock units, shares outstanding, weighted average grant date fair value (in usd per share) | $ 1.44 | $ 1.44 | ||
Payout level achieved | 250.00% | 250.00% | ||
The 2015 PRSU Grants | Certification of the attainment of the performance level | PRSUs with Market Conditions | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights, percentage | 50.00% | |||
The 2015 PRSU Grants | Prior to first anniversary of the grant date | PRSUs with Market Conditions | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights (in shares) | 0 | |||
The 2015 PRSU Grants | End of the Performance Period | PRSUs with Market Conditions | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights, percentage | 50.00% |
Commitments and Contingencies (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Changes in Product Warranty Liability [Roll Forward] | ||||
Beginning balance | $ 11 | $ 17 | $ 15 | $ 19 |
New warranties issued | 5 | 7 | 15 | 21 |
Settlements | (5) | (5) | (13) | (20) |
Changes in liability for pre-existing warranties, including expirations | 0 | (4) | (6) | (5) |
Ending balance | $ 11 | $ 15 | $ 11 | $ 15 |
Restructuring and Other Special Charges, Net (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
Dec. 27, 2014 |
|
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and other special charges, net | $ 0 | $ 48 | $ (10) | $ 135 | |
Dense Server Systems Business Exit | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and other special charges, net | 76 | ||||
Acquired intangible assets impairment charge | 62 | ||||
Asset impairment charges | 7 | ||||
Severance and related benefits charges | 4 | ||||
Contract or program termination charges | $ 3 | ||||
2015 Restructuring Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Reduction of the Company's global workforce (as a percent) | 5.00% | 5.00% | |||
Restructuring charge | $ 41 | ||||
Restructuring charge reversal | (1) | ||||
2015 Restructuring Plan | Severance and Related Benefits | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charge | 31 | ||||
Restructuring charge reversal | (1) | ||||
2015 Restructuring Plan | Facility Related Costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charge | 1 | ||||
2015 Restructuring Plan | Intangible Asset Related Restructuring | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charge | 9 | ||||
2015 Restructuring Plan | Other exit related costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charge reversal | 0 | ||||
2014 Restructuring Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Reduction of the Company's global workforce (as a percent) | 6.00% | ||||
Restructuring charge | 18 | ||||
Restructuring charge reversal | (9) | ||||
2014 Restructuring Plan | Severance and Related Benefits | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charge | 4 | ||||
Restructuring charge reversal | (2) | ||||
2014 Restructuring Plan | Facility Related Costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charge | 9 | ||||
Restructuring charge reversal related to facility costs | (5) | ||||
2014 Restructuring Plan | Asset Impairment Related Restructuring | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charge | $ 5 | ||||
2014 Restructuring Plan | Other exit related costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charge reversal | $ (7) |
Restructuring and Other Special Charges, Net (Schedule of Restructuring Activities and Related Liabilities) (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 24, 2016
USD ($)
| |
2015 Restructuring Plan | |
Restructuring Reserve [Roll Forward] | |
Balance as of beginning of period | $ 14 |
Charges (reversals), net | (1) |
Cash payments | (8) |
Balance as of end of period | 5 |
2015 Restructuring Plan | Severance and related benefits | |
Restructuring Reserve [Roll Forward] | |
Balance as of beginning of period | 14 |
Charges (reversals), net | (1) |
Cash payments | (8) |
Balance as of end of period | 5 |
2015 Restructuring Plan | Other exit related costs | |
Restructuring Reserve [Roll Forward] | |
Balance as of beginning of period | 0 |
Charges (reversals), net | 0 |
Cash payments | 0 |
Balance as of end of period | 0 |
2014 Restructuring Plan | |
Restructuring Reserve [Roll Forward] | |
Balance as of beginning of period | 20 |
Charges (reversals), net | (9) |
Cash payments | (6) |
Balance as of end of period | 5 |
2014 Restructuring Plan | Severance and related benefits | |
Restructuring Reserve [Roll Forward] | |
Balance as of beginning of period | 5 |
Charges (reversals), net | (2) |
Cash payments | (1) |
Balance as of end of period | 2 |
2014 Restructuring Plan | Other exit related costs | |
Restructuring Reserve [Roll Forward] | |
Balance as of beginning of period | 15 |
Charges (reversals), net | (7) |
Cash payments | (5) |
Balance as of end of period | $ 3 |
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Changes in Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Beginning balance | $ (412) | |||
Total other comprehensive income (loss) | $ 0 | $ (10) | 5 | $ (10) |
Ending balance | 385 | 385 | ||
Unrealized gains (losses) on available-for-sale securities | ||||
Changes in Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Beginning balance | (2) | 1 | (1) | 1 |
Unrealized gains (losses) arising during the period | 1 | (3) | (1) | (3) |
Reclassification adjustment for (gains) losses realized and included in net income (loss) | 0 | 0 | 0 | 0 |
Tax effect | 0 | 0 | 1 | 0 |
Total other comprehensive income (loss) | 1 | (3) | 0 | (3) |
Ending balance | (1) | (2) | (1) | (2) |
Unrealized gains (losses) on cash flow hedges | ||||
Changes in Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Beginning balance | (1) | (6) | (7) | (6) |
Unrealized gains (losses) arising during the period | 0 | (13) | 7 | (21) |
Reclassification adjustment for (gains) losses realized and included in net income (loss) | (1) | 6 | 1 | 14 |
Tax effect | 0 | 0 | (3) | 0 |
Total other comprehensive income (loss) | (1) | (7) | 5 | (7) |
Ending balance | (2) | (13) | (2) | (13) |
Total | ||||
Changes in Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Beginning balance | (3) | (5) | (8) | (5) |
Unrealized gains (losses) arising during the period | 1 | (16) | 6 | (24) |
Reclassification adjustment for (gains) losses realized and included in net income (loss) | (1) | 6 | 1 | 14 |
Tax effect | 0 | 0 | (2) | 0 |
Total other comprehensive income (loss) | 0 | (10) | 5 | (10) |
Ending balance | $ (3) | $ (15) | $ (3) | $ (15) |
Secured Revolving Line of Credit (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Apr. 14, 2015 |
Sep. 24, 2016 |
Sep. 24, 2016 |
Dec. 26, 2015 |
|
Line of Credit Facility [Line Items] | ||||
Repayments of lines of credit | $ 226,000,000 | |||
Secured revolving line of credit, outstanding balance | 0 | $ 0 | $ 230,000,000 | |
Secured revolving line of credit, interest rate at period end | 4.00% | |||
Outstanding letters of credit | 21,000,000 | 21,000,000 | ||
Amount available for future borrowings (up to) | $ 395,000,000 | $ 395,000,000 | ||
Debt repayment period | 90 days | |||
Secured Revolving Line of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Secured revolving line of credit, maximum borrowing capacity | $ 500,000,000 | |||
Additional borrowing capacity (up to) | $ 200,000,000 | |||
Secured Revolving Line of Credit | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Percentage of eligible accounts receivable | 85.00% | |||
Percentage of certain qualified eligible accounts receivable | 90.00% | |||
Letter of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Secured revolving line of credit, maximum borrowing capacity | $ 75,000,000 |
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