United States securities and exchange commission logo
July 20, 2020
Devinder Kumar
Chief Financial Officer
ADVANCED MICRO DEVICES INC
2485 Augustine Drive
Santa Clara, CA 95054
Re: ADVANCED MICRO
DEVICES INC
Form 10-K for the
fiscal year ended December 28, 2019
Filed February 4,
2020
File No. 1-07882
Dear Mr. Kumar:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the fiscal year ended December 28, 2019
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Critical Accounting Estimates, page 35
1. Please enhance your
critical accounting estimate disclosures to more fully address the
following:
We note you
establish provisions for rights of return and price protection on unsold
products held by
distributors and we note certain OEMs may be entitled to rights of
return and rebates
under OEM agreements. Explain the material assumptions you
used to estimate
these provisions, quantify the impact these assumptions had during
each period, and
discuss the impact potential changes in these assumptions
could have on
future results. Your disclosures should consider addressing any
material
differences between assumptions related to distributors and OEMs.
We note your
disclosures related to inventory valuation. Explain the material
assumptions you
used to estimate reserves, quantify the impact these assumptions had
Devinder Kumar
ADVANCED MICRO DEVICES INC
July 20, 2020
Page 2
during each period, and discuss the impact potential changes in
these assumptions
could have on future results.
We note your disclosures related to income taxes. Explain the
specific facts and
circumstances that resulted in you concluding recovery of
deferred tax assets is not
more likely than not and discuss the potential facts and
circumstances that may
change that conclusion.
Liquidity and Capital Resources
Operating Activities, page 38
2. Please quantify and discuss the reasons for material fluctuations in
working capital
components, including the reasons for increases in accounts
receivable,
inventories, prepaid expenses and other assets, and accounts payable,
accrued liabilities
and other. In this regard, we note your reference to higher cash
collections; however, we
note accounts receivable have increased at a substantially higher rate
than revenue. We
also note your reference to the timing of accounts payable payments
with no explanation
why the timing changed. Please enhance your disclosures to discuss the
reasons for
material variations in working capital components.
Consolidated Financial Statements
Consolidated Balance Sheets, page 45
3. Please provide roll-forwards of activity in your valuation and
qualifying accounts in the
notes to the financial statements or in the schedule required by Rule
12-09 of Regulation
S-X.
Notes to Consolidated Financial Statements
NOTE 2: Summary of Significant Accounting Policies
Revenue Recognition, page 49
4. Please enhance your revenue recognition disclosures to more fully
address the following:
Describe your contracts and whether they include multiple elements
or single
products and services.
Explain how you determine each performance obligation and, if
applicable, how you
estimate standalone selling prices.
Address whether estimates for variable consideration are
constrained.
Regarding revenue for custom products, explain why recognizing
revenue over time
based on the value of the inventory and expected margin is the most
appropriate
method.
Regarding revenue for licensing agreements, explain the nature of
the arrangements
FirstName LastNameDevinder Kumar
that are used to determine whether revenue is recognized over time
or at a point in
Comapany time.
NameADVANCED MICRO DEVICES INC
July 20,Please
2020 refer
Page to
2 ASC 606-10-50.
FirstName LastName
Devinder Kumar
FirstName LastNameDevinder Kumar
ADVANCED MICRO DEVICES INC
Comapany
July NameADVANCED MICRO DEVICES INC
20, 2020
July 20,
Page 3 2020 Page 3
FirstName LastName
5. Please explain your consideration of providing additional disclosures
that disaggregate
revenue recognized from contracts with customers into categories that
more fully depict
how the nature, amount, timing and uncertainty of revenue and cash
flows are effected by
economic factors. For example, we note that you recognize revenue
using both point in
time and over time methods and that you sell products to both
distributors and OEMs. We
also note from your MD&A disclosures and earnings calls that revenue
from certain
products can substantially impact your margins and results. Please
more fully explain
your consideration of the provisions of ASC 606-10-50-5 and ASC
606-10-55-89 to 91.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Mindy Hooker at 202-551-3732 or Anne McConnell at
202-551-3709
with any questions.
Sincerely,
Division of
Corporation Finance
Office of
Manufacturing