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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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94-1692300
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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One AMD Place
Sunnyvale, California
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94085
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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þ
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page No.
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||
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||
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Condensed Consolidated Statements of Operations
–
Three Months and Nine Months Ended September 24, 2016 and September 26, 2015
|
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Condensed Consolidated Statements of Comprehensive Income (Loss)
–
Three Months and Nine Months Ended September 24, 2016 and September 26, 2015
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Condensed Consolidated Balance Sheets
as of September 24, 2016 and December 26, 2015
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Condensed Consolidated Statements of Cash Flows –
Nine Months Ended September 24, 2016 and September 26, 2015
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ITEM 1.
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FINANCIAL STATEMENTS
|
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Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
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September 24,
2016 |
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September 26,
2015 |
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September 24,
2016 |
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September 26,
2015 |
||||||||
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(In millions, except per share amounts)
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||||||||||||||
Net revenue
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$
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1,307
|
|
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$
|
1,061
|
|
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$
|
3,166
|
|
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$
|
3,033
|
|
Cost of sales
|
1,248
|
|
|
822
|
|
|
2,519
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|
|
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
|
)
|
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(404
|
)
|
|
(554
|
)
|
||||
Provision for income taxes
|
4
|
|
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—
|
|
|
34
|
|
|
4
|
|
||||
Equity in income (loss) of ATMP JV
|
(5
|
)
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
||||
Net loss
|
$
|
(406
|
)
|
|
$
|
(197
|
)
|
|
$
|
(446
|
)
|
|
$
|
(558
|
)
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Net loss per share
|
|
|
|
|
|
|
|
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|
||||
Basic
|
$
|
(0.50
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.56
|
)
|
|
$
|
(0.72
|
)
|
Diluted
|
$
|
(0.50
|
)
|
|
$
|
(0.25
|
)
|
|
$
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(0.56
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)
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|
$
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(0.72
|
)
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Shares used in per share calculation
|
|
|
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||||||||
Basic
|
815
|
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785
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|
801
|
|
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780
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||||
Diluted
|
815
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|
|
785
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801
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780
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Three Months Ended
|
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Nine Months Ended
|
||||||||||||
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September 24,
2016 |
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September 26,
2015 |
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September 24,
2016 |
|
September 26,
2015 |
||||||||
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(In millions)
|
||||||||||||||
Net loss
|
$
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(406
|
)
|
|
$
|
(197
|
)
|
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$
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(446
|
)
|
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$
|
(558
|
)
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Other comprehensive income (loss):
|
|
|
|
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|
||||||||
Unrealized gains (losses) on available-for-sale securities:
|
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||||||||
Unrealized gains (losses) arising during the period, net of tax effects of $0, $0, $1 and $0
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1
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(3
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)
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—
|
|
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(3
|
)
|
||||
Unrealized gains (losses) on cash flow hedges:
|
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||||||||
Unrealized gains (losses) arising during the period, net of tax effects of $0, $0, $3 and $0
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—
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(13
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)
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4
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|
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(21
|
)
|
||||
Reclassification adjustment for (gains) losses realized and included in net income (loss), net of tax effects of $0, $0, $0 and $0
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(1
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)
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6
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1
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|
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14
|
|
||||
Total other comprehensive income (loss)
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—
|
|
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(10
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)
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5
|
|
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(10
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)
|
||||
Total comprehensive loss
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$
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(406
|
)
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$
|
(207
|
)
|
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$
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(441
|
)
|
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$
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(568
|
)
|
|
September 24,
2016 |
|
December 26,
2015 |
||||
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(In millions, except par value amounts)
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||||||
ASSETS
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|
||||
Current assets:
|
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|
||||
Cash and cash equivalents
|
$
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1,258
|
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$
|
785
|
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Accounts receivable, net of allowances of $0 and $0
|
640
|
|
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533
|
|
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Inventories, net
|
772
|
|
|
678
|
|
||
Prepayment and other - GLOBALFOUNDRIES
|
13
|
|
|
33
|
|
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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
|
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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
no
t 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)
|