Hi guys, I am trying to properly answer an accounting question concerning shares, bonds, and stock. I was given two annual reports, and am asked to make a decision on one of the companies depending on a scenario and the companies respective reports. I will post the scenario description, the annual reports, and my solution so far. Here is the scenario description:

Scenario 1And the Winner Is: The will of a distant eclectic relative left you and your cousin as sole beneficiaries of an estate consisting of $500,000 in shares in Facebook, $500,000 in shares in Advanced Micro Devices (AMD), and $6,000,000 in bonds that will mature five years from now. The terms of the will stipulate that one of you will get all the Facebook shares, and the other will get all the AMD shares. When the bonds mature, they will be sold and the full proceeds from that sale will be given to the one of you two whose shares had been the most profitable investment. The will did not specify which one of you should get which shares. Instead, it required that the winner of a coin toss would get to select which shares to take. As luck woulds have it, you won the flip of the coin and get to choose which shares will be yours. To make the choice, your only resources are financial statements in the annual reports of the two companies. Make your choice and explain what information in the financial statements was particularly important for your decision.

My solution:

On making a choice onto which company to buy shares in, I considered the following major factors:

• Price and valuation
• Evaluation of financial health
• Evaluation of competitive sustainability

Table 1 ? Comparative Stock Statistics

Categories	Price (par value)	Price per share	Common Stock (millions)	Amount of Common Stock shares (as of 2014)	Amount of Outstanding Common Stock shares (as of 2014)	Cash flow from operations 2012 (millions)	Cash flow from operations 2012 (millions)
Facebook	$0.000006	$38.00 (May 2012)	$615	1,975,722,473	574,020,314	$148	$4,222
AMD	$0.01	$4.08 (Jan., 2013)	$7	612,745,098		$338	$1,612

I am not completely done trying to answer this. I guess my main question is based on the scenario, what information from the annual reports can you extract to decide which company will be the most profitable investment, and which would you choose?

One figure I could not find was the common stock for facebook. I got 615 from the convertible preferred stock, although I think this is wrong

2013 ANNUAL REPORT ON FORM 10-K Dear Stockholders: In 2013, we made significant progress in bringing AMD closer to our mission of becoming the world's leading designer and integrator of innovative, tailored technology solutions that empower people to push the boundaries of what is possible. Throughout the year, we achieved many goals the Company set going into 2013 despite broader PC industry challenges. Transformation and Progress: Profitability and Acceleration of Our Business Our strategic three-phase plan to transform AMD began with resetting and restructuring our business to lay the foundation for the acceleration of our growth. By the end of 2013, we successfully implemented phase one and phase two of our turnaround plan to create a more efficient and sustainable business model in the following ways: Reducing our operating expenses more than 30 percent from the first quarter of 2012 to the fourth quarter of 2013. Generating more than 30 percent of our net revenues in the second half of 2013 from our semi-custom and embedded businesses, both high-growth focus areas for AMD. Exiting the year with cash balances, including marketable securities, of $1.2 billion, above our optimal cash balance target of $1.1 billion, and establishing an incremental secured revolving line of credit up to $500 million. Returning to profitability and free cash flow in the second half of the year. I'm very pleased to report that AMD has also made steady progress on phase three of our plan: to transform our business into a high-growth market competitor. Our business transformation is being propelled by an increasingly diversified product portfolio and a focus on driving to 50 percent of AMD revenue from five high-growth markets by the end of 2015: semi-custom solutions, ultra-low power client PC, embedded, dense server, and professional graphics. We will measure our success in 2014 and beyond as follows: Increasing profitability. Further expanding our portfolio of differentiated and reusable IP, and leveraging our IP across a broader set of products. Generating preference for the AMD brand and our products globally, spring-boarding off the comprehensive brand revitalization work we executed this year. Retaining the industry's best top talent and capabilities. As we drive results externally, I'm proud to report that motivation and morale is very high internally, as well. In fact, AMD employees are among the most engaged and optimistic in the industry. Even in the face of difficult cost-cutting and restructuring actions, our 2013 annual employee satisfaction survey yielded our highest levels of employee engagement and confidence in leadership that we've seen in more than five years because our people believe in and are committed to our transformation plan. Solid Foundation for Growth: Unique, World-Class Strengths are Setting AMD Apart As we continue to successfully achieve the milestones we've set along our transformation journey, it's exciting to see the industry taking notice of our progress. AMD is being recognized as an innovation powerhouse with a highly-prized IP portfolio that uniquely positions our business to meet the needs of customers across a variety of growth markets. Our IP prowess and capabilities as a world-class System-on-Chip (SoC) designer were perhaps most evident in 2013 in the gaming space, with tailored AMD solutions powering the world's newest gaming and entertainment consoles from Microsoft and Sony, who chose AMD because of our ability to meet each of their exacting standards for these most critical products. More than seven million Sony Playstation 4 and Microsoft Xbox One units were shipped globally in less than two months following their respective launches, and AMD executed flawlessly to ensure these customers were able to meet the incredible worldwide demand they experienced. As a part of AMD's push into embedded markets, we also extended our product portfolio with the world's first quad-core x86 SoC, the new low-power AMD Embedded G-Series SoC for fanless designs at approximately 3-watts average power.1 The G-Series SoC has received numerous industry awards, and wide-ranging adoption by industry-leading companies like GE Intelligent Platforms and Fujitsu, which helped our embedded business achieve record revenue in 2013. We also detailed our plans to become the first company to offer both 64-bit ARM and x86 embedded solutions in 2014. Our semi-custom and embedded products enabled us to exceed the goal we set for those businesses to generate over 30 percent of AMD's net revenue by the third and fourth quarters of 2013. We are also making strides in other growth markets we've targeted. Our professional graphics business set a record for full-year revenue in 2013. Apple's new Mac Pro desktop with dual AMD FirePro graphics processing units (GPUs) is a perfect example of our momentum in this margin-accretive market. HP's new thin and light HP ZBook 14 mobile workstations also rely on AMD FirePro professional graphics. We believe we can drive additional growth in the professional graphics market as we further strengthen our product offerings, expand our work with key software developers, and secure more design wins. In dense servers, we remained on track to launch one of the industry's first 64-bit ARM server SoCs in 2014. Our unique position offering both x86 and ARM solutions combined with our years of experience in the server market and industryleading fabric technology differentiates us as we bring an expanding set of solutions to this important market. Verizon selected AMD to drive its high-performance public cloud one of the largest public cloud deployments in the world choosing our best-in-class reliability powered by SeaMicro SM15000 servers. We collaborated with Verizon to codevelop a tailored global cloud solution that provides unprecedented performance and high reliability. In our traditional server business, we launched AMD Opteron X-Series processors, the industry's highest performance small core x86 server processors.2 In our mainstream graphics business, we launched a new family of discrete mobile GPU products in the AMD Radeon R9, R7, and R5 M200 Series mobile GPUs - all powered by our award-winning Graphics Core Next (GCN) architecture and bolstered by our groundbreaking Mantle technology, which enables game developers to more easily harness the full capabilities of AMD graphics silicon across PCs and consoles and deliver unmatched levels of performance and image quality to users. These new Radeon offerings include the fastest3 desktop and notebook graphics solutions in the world for enthusiasts wanting the best PC gaming experience the market has to offer. Our mainstream graphics and semi-custom businesses have enabled AMD to become the world's leading silicon provider in gaming, and we expect to regain share in the graphics market in 2014 based on continued channel momentum, secured wins for our new AMD Radeon R7 and R9 discrete mobile GPUs. Earlier in 2013, we unleashed new additions to our A-Series and E-Series Mobile Accelerated Processing Units (APUs) for notebooks and desktop PCs, focusing on increased performance and power efficiency, as well as superior gaming and graphics capabilities. We launched the 2013 AMD Elite Mobility APU (codenamed \"Temash\") - the world's first 28nm, quad-core x86 SoC APU designed for touch small form-factor notebooks, tablets, and hybrids, and the 2013 AMD Mainstream APU (codenamed \"Kabini\") - the first and only quad-core x86 SoC solution for entry-level and small-form factor touch notebooks. AMD APUs are enabling our customers and partners to win. As an example, AMD worked with HP to sell over one million APU-powered HP laptops to high school graduates in India's northern state of Uttar Pradesh in 2013. In addition, our commercial client business in India has also grown tremendously, and in 2013 one in three commercial notebooks in India was powered by AMD APUs. And as we deliver exciting new products, we remain mindful of our environmental, social and governance performance. AMD consistently ranks very highly in this area and has been recognized by third party groups, such as the Dow Jones Sustainability Indexes. In 2013, we were added to Corporate Responsibility magazine's 100 Best Corporate Citizens list, listed as a Prime Environmental, Social and Governance Investment by Oekom Research and received Grade \"A\" in the 2013 Intangible Asset Rating from Morgan Stanley Capital International . These ratings and awards reflect our strong and supportive culture, which makes AMD a great place to work, innovate, and win. The Road Ahead: Managing our Business We began 2014 the same way we ended 2013, with a focus on consistently executing our new product introduction commitments for the year and building on the positive progress our Company made in the second half of 2013. It is easy to sound clich, but cloud computing truly does change everything. The cloud resets consumer expectations for not only when and how they access their data but for how this information is presented in a consistent, easy-to-consume manner independent of a device's technical specifics. Continued consumer adoption of cloud-dependent devices presents new challenges and opportunities for the providers of server computers, as well. The industry must work to find new ways to deliver this ever increasing need to store and access the data that defines the modern computing experience in vast data centers in the most energy and space efficient way possible. Our industry continues to evolve, and the companies who will win will be the ones who embrace the changes being driven by the increasing proliferation of cloud-based computing. AMD is one of these companies, and we are wellpositioned to leverage our unique IP to capitalize in the growth markets we have targeted. In 2014, we expect to realize the following indicators of continued progress: Consistent execution and increased revenue year-over-year. Net income profitability for the year. Non-GAAP operating expenses in the range of approximately $420 million to $450 million per quarter. Remaining at the optimal cash balance target of $1 billion at the end of the year. Our focus is on developing winning, leadership products, and becoming a stronger company with a more predictable, profitable and balanced business. I am confident we will deliver. We are midway through our multi-year turnaround strategy and are motivated by the progress we have made. We remain on track to generate approximately 50 percent of our revenue from high growth markets by the end of 2015. This is possible thanks to our most important competitive advantage - our people. We are building strong leaders aligned with the AMD Way of ownership and commitment, customer focus and innovation leadership. Together we are determined to win, and to do what it takes to continue to improve our performance. In short, AMD is a different company today. We are stronger, building on a more stable business foundation. Our financial performance is improved. Our technology and capabilities are differentiated, creating a variety of opportunities for us to grow more strategic customer relationships with the world's top technology brands. We will continue taking steps to transform into a more predictable and balanced business, by driving a richer product mix and focusing on the parts of the market where our unique IP gives us a competitive advantage. Sincerely, Rory P. Read President and Chief Executive Officer AMD March, 2014 1 2 3 The average power for the AMD GX-210JA SOC is approximately 3 watts, determined by extrapolating the average of the results of the measured average power of the GX-210HA 9W SOC running the following benchmarks: 3DMark 11, AMD Sys Stress Test CPU, AMD Sys Stress Test CPU & GPU, AMD Sys Stress Test GPU, Winbench 99, CoreMark, Game: Meat Boy, PCMark 7, POV-Ray, Sandra 2011, Game: Street Fighter. Testing was performed on an AMD E1-2100 (Rev A1) that is equivalent to the AMD GX-210HA SOC. System configuration: AMD E1-2100 @ 70C, \"Larne\" development platform, 4GB RAM, Windows 7 Ultimate. Please see AMD Publication ID 53395A for more information. EMB-48 Based on AMD's small core Opteron processor Model X1150 vs. Intel Atom Model S1260, Intel's highest performance small core processor. Highest density based on cores/rack. Since Opteron X-Series has double the number of cores of Intel Atom S1200 series, it has the double the density among small core x86 processors. Most power efficient small core x86 processor as measured by SPECint_rate_base2006 estimates divided by TDP. In tests by AMD as of 28 February, 2013, the AMD Radeon HD 7990 showed higher average performance than the NVIDIA GeForce GTX 690 in the 3DMark Fire Strike Extreme (FS6407 vs. FS5316) and Crysis 3 (1080p & 1600p at all quality presets). System configuration: Intel Core i7-3960X (3.30 GHz), MSI X79A-GD65, 16GB DDR3-1600 and Windows 8 x64. AMD Radeon HD 7990 evaluated with AMD Catalyst 13.2 Beta 6. NVIDIA GeForce GTX 690 evaluated with NVIDIA ForceWare 310.90 WHQL. GRDT-32 CAUTIONARY STATEMENT The forward-looking statements contained herein are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements contained herein involve risks and uncertainties that could cause actual results to differ materially from current expectations. We urge investors to review in detail the risks and uncertainties in our Securities and Exchange Commission filings, including but not limited to the Annual Report on Form 10-K for the year ended December 28, 2013. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 28, 2013 OR ' TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to Commission File Number 001-07882 ADVANCED MICRO DEVICES, INC. (Exact name of registrant as specified in its charter) Delaware 94-1692300 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) One AMD Place, Sunnyvale, California 94088 (Address of principal executive offices) (Zip Code) (408) 749-4000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: (Title of each class) (Name of each exchange on which registered) Common Stock per share $0.01 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No ' Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ' No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ' Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files): Yes No ' Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of \"large accelerated filer,\" \"accelerated filer\" and \"smaller reporting company\" in Rule 12b-2 of the Exchange Act (check one): Large accelerated filer Accelerated filer ' Non-accelerated filer ' (Do not check if a smaller reporting company) Smaller reporting company ' Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ' No As of June 29, 2013, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was approximately $2.5 billion based on the reported closing sale price of $4.08 per share as reported on the New York Stock Exchange on June 28, 2013, which was the last business day of the registrant's most recently completed second fiscal quarter. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 726,115,663 shares of common stock, $0.01 par value per share, as of February 14, 2014. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement for the Annual Meeting of Stockholders, which we expect will be held on or about May 8, 2014 (2014 Proxy Statement) are incorporated into Part III hereof. Advanced Micro Devices, Inc. FORM 10-K For The Fiscal Year Ended December 28, 2013 INDEX PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ITEM 1A. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ITEM 1B. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 ITEM 4. MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . 64 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . 110 ITEM 9A. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 ITEM 9B. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 ITEM 7A. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . 112 ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . 112 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 PRINCIPAL ACCOUNTING FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . 112 PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 ITEM 13. ITEM 14. ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . 113 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 PART I ITEM 1. BUSINESS Cautionary Statement Regarding Forward-Looking Statements The statements in this report include forward-looking statements. These forward-looking statements are based on current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements should not be relied upon as predictions of future events as we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify forward-looking statements by the use of forwardlooking terminology including \"believes,\" \"expects,\" \"may,\" \"will,\" \"should,\" \"seeks,\" \"intends,\" \"plans,\" \"pro forma,\" \"estimates,\" or \"anticipates\" or the negative of these words and phrases or other variations of these words and phrases or comparable terminology. The forward-looking statements relate to, among other things: demand for our products; the growth, change and competitive landscape of the markets in which we participate; our ability to obtain sufficient external financing on favorable terms, or at all; the nature and extent of our future payments to GLOBALFOUNDRIES Inc. (GF) and the materiality of these payments; the materiality of our future purchases from GF; our ability to negotiate a fourth amendment to the WSA with GF; future patent applications; sales patterns of our semi-custom System-on-Chip products for game consoles; expenditures related to environmental compliance and conflict minerals disclosure requirements; PC market conditions; the success of our transformation strategy; our ability to transform our business to attain approximately 50% of revenue from high-growth markets by the end of 2015; the decline of royalty revenue received from third parties as we transition to a semi-custom business model; the level of international sales as compared to total sales; that we will sample our first ARM technology-based AMD Opteron processor for servers in the first quarter of 2014; that our cash, cash equivalents and marketable securities and available external financing will be sufficient to fund our operations including capital expenditures over the next twelve months; our dependence on a small number of customers; our hedging strategy; and the timing of the implementation of certain ENERGYSTAR specifications. Material factors and assumptions that were applied in making these forwardlooking statements include, without limitation, the following: the expected rate of market growth and demand for our products and technologies (and the mix thereof); GF's manufacturing yields and wafer volumes; our expected market share; our expected product costs and average selling price; our overall competitive position and the competitiveness of our current and future products; our ability to introduce new products, consistent with our current roadmap; our ability to make additional investment in research and development and that such opportunities will be available; the expected demand for computers; and the state of credit markets and macroeconomic conditions. Material factors that could cause actual results to differ materially from current expectations include, without limitation, the following: that Intel Corporation's pricing, marketing and rebating programs, product bundling, standard setting, new product introductions or other activities may negatively impact our plans; that we will require additional funding and may be unable to raise sufficient capital on favorable terms, or at all; that customers stop buying our products or materially reduce their operations or demand for our products; that we may be unable to develop, launch and ramp new products and technologies in the volumes that are required by the market at mature yields on a timely basis; that our third-party foundry suppliers will be unable to transition our products to advanced manufacturing process technologies in a timely and effective way or to manufacture our products on a timely basis in sufficient quantities and using competitive process technologies; that we will be unable to obtain sufficient manufacturing capacity or components to meet demand for our products or will not fully utilize our projected manufacturing capacity needs at GF's microprocessor manufacturing facilities; that our requirements for wafers will be less than the fixed number of wafers that we agreed to purchase from GF or GF encounters problems that significantly reduce the number of functional die we receive from each wafer; that we are unable to successfully implement our long-term business strategy; that we inaccurately estimate the quantity or type of products that our customers will want in the future or will ultimately end up purchasing, resulting in excess or obsolete inventory; that we are unable to manage the risks related to the use of our third-party distributors and add-in-board (AIB) partners or offer the appropriate incentives to focus them on the sale of our products; that we may be unable to maintain the level of investment in research and development that is required to remain competitive; that there may be unexpected variations in 1 market growth and demand for our products and technologies in light of the product mix that we may have available at any particular time; that global business and economic conditions will not improve or will worsen; that PC market conditions do not improve or will worsen; that demand for computers will be lower than currently expected; and the effect of political or economic instability, domestically or internationally, on our sales or supply chain. For a discussion of the factors that could cause actual results to differ materially from the forward-looking statements, see \"Part I, Item 1ARisk Factors\" and the \"Financial Condition\" section set forth in \"Part II, Item 7Management's Discussion and Analysis of Financial Condition and Results of Operations,\" or MD&A, beginning on page 41 below and such other risks and uncertainties as set forth below in this report or detailed in our other Securities and Exchange Commission (SEC) reports and filings. We assume no obligation to update forward-looking statements. General We are a global semiconductor company with facilities around the world. Within the global semiconductor industry, we offer primarily: Computing Solutionscomprised of x86 microprocessors, as standalone devices or as incorporated as an accelerated processing unit (APU), chipsets, embedded processors and dense servers; and Graphics and Visual Solutionscomprised of graphics processing units (GPUs), including professional graphics, semi-custom System-on-Chip (SOC) products, development services and technology for game consoles. For financial information about geographic areas and for segment information with respect to revenues and operating results, refer to the information set forth in Note 13 of our consolidated financial statements, beginning on page 96 below. Additional Information We were incorporated under the laws of Delaware on May 1, 1969 and became a publicly held company in 1972. Since 1979, our common stock has been listed on the New York Stock Exchange under the symbol \"AMD.\" Our mailing address and executive offices are located at One AMD Place, Sunnyvale, California 94088, and our telephone number is (408) 749-4000. References in this Annual Report on Form 10-K to \"AMD,\" \"we,\" \"us,\" \"management,\" \"our\" or the \"Company\" mean Advanced Micro Devices, Inc. and our consolidated subsidiaries. AMD, the AMD Arrow logo, ATI, the ATI logo, AMD Athlon, AMD Opteron, AMD Phenom, AMD Sempron, AMD Turion, FirePro, CrossFire, Radeon, Geode, SeaMicro and combinations thereof are trademarks of Advanced Micro Devices, Inc. Microsoft, Windows, Xbox360 and Xbox One are registered trademarks of Microsoft Corporation in the United States and/or other jurisdictions. PlayStation is a registered trademark of Sony Computer Entertainment, Inc. Wii and Wii U are registered trademarks of Nintendo of America, Inc. Other names are for informational purposes only and are used to identify companies and products and may be trademarks of their respective owners. Web Site Access to Company Reports and Corporate Governance Documents On the Investor Relations pages of our Web site, www.amd.com, we post links to our filings with the Securities and Exchange Commission (SEC), our Principles of Corporate Governance, our Code of Ethics for our Executive Officers and all other senior finance executives, our \"Worldwide Standards of Business Conduct,\" which applies to our Board of Directors and all of our employees, and the charters of the Audit and Finance, Compensation, Nominating and Corporate Governance and Innovation and Technology committees of our Board 2 of Directors. Our filings with the SEC are posted as soon as reasonably practical after they are electronically filed with, or furnished to, the SEC. You can also obtain copies of these documents by writing to us at: Secretary, AMD, 7171 Southwest Parkway, M/S 100, Austin, Texas 78735, or emailing us at: Corporate.Secretary@amd.com. All of these documents and filings are available free of charge. If we make substantive amendments to our Code of Ethics or grant any waiver, including any implicit waiver, to our principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions, we intend to disclose the nature of such amendment or waiver on our Web site or in a Current Report on Form 8-K in accordance with applicable rules and regulations. The information contained on our Web site is not incorporated by reference in, or considered to be a part of, this report. Our Industry Semiconductors are components used in a variety of electronic products and systems. An integrated circuit, or IC, is a semiconductor device that consists of many interconnected transistors on a single chip. Since the invention of the transistor in 1948, improvements in IC process and design technologies have led to the development of smaller, more complex and more reliable ICs at a lower cost per function. Computing Solutions The x86 Microprocessor Market Central Processing Unit (CPU) A microprocessor is an IC that serves as the CPU of a computer. It generally consists of hundreds of millions of transistors that process data and control other devices in the system, acting as the brain of the computer. The performance of a microprocessor is a critical factor impacting the performance of a computer and numerous other electronic systems. The principal elements used to measure CPU performance are work-percycle (or how many instructions are executed per cycle), clock speed (representing the rate at which a CPU's internal logic operates, measured in units of gigahertz, or billions of cycles per second) and power consumption. Other factors impacting microprocessor performance include the number of cores in a microprocessor, the bit rating of the microprocessor, memory size and data access speed. Developments in circuit design and manufacturing process technologies have resulted in significant advances in microprocessor performance. Currently, microprocessors are designed to process 32 bits or 64 bits of information at one time. The bit rating of a microprocessor generally denotes the largest size of numerical data that a microprocessor can handle. Microprocessors with 64-bit processing capabilities enable systems to have greater performance by allowing software applications and operating systems to access more memory. Moreover, as businesses and consumers require greater performance from their computer systems due to the growth of digital data and increasingly sophisticated software applications, semiconductor companies are designing and developing multi-core microprocessors, where multiple processor cores are placed on a single die or in a single processor. Multi-core microprocessors offer enhanced overall system performance and efficiency because computing tasks can be spread across two or more processing cores each of which can execute a task at full speed. Multiple processor cores packaged together can increase performance of a computer system without greatly increasing the total amount of power consumed and the total amount of heat emitted. This type of \"symmetrical multiprocessing\" is effective in multi-tasking environments where multiple cores can enable operating systems to prioritize and manage tasks from multiple software applications simultaneously and also for \"multi-threaded\" software applications where multiple cores can process different parts of the software program, or \"threads,\" simultaneously thereby enhancing performance of the application. Businesses and consumers also require computer systems with improved power management technology, which allows them to reduce the power consumption of their computer systems thereby reducing the total cost of ownership. 3 Accelerated Processing Unit (APU) While general purpose computer architectures based on the x86 architecture are sufficient for many customers, we believe that an architecture that optimizes the use of a CPU and GPU for a given workload can provide a substantial improvement in user experience, performance and energy efficiency. As the volume of digital media increases, we believe end users can benefit from an accelerated computing architecture. An accelerated computing architecture enables \"offloading\" of selected tasks, thereby optimizing the use of multiple computational units such as the CPU and GPU, depending on the application or workload. For example, serial workloads are better suited for CPUs, while highly parallel tasks may be better performed by a GPU. Our AMD APU combines our CPU and GPU onto a single piece of silicon. We believe that high performance computing workloads, workloads that are visual in nature and even traditional applications such as photo and video editing or other multi-media applications can benefit from our accelerated computing architecture. Microprocessor Products We currently design, develop and sell microprocessor products for desktop PCs, notebooks, tablets, hybrids, servers and embedded products. Our microprocessors and chipsets are incorporated into computing platforms that also include GPUs and core software to enable and advance the computing components. A platform is a collection of technologies that are designed to work together to provide a more complete computing solution. We believe that integrated, balanced platforms consisting of microprocessors, chipsets and GPUs that work together at the system level bring end users improved system stability, increased performance and enhanced power efficiency. Furthermore, by combining all of these elements onto a single piece of silicon as an APU or an SOC, we believe system performance and power efficiency is further improved. An SOC is a type of IC with a CPU, GPU and other components, such as a memory controller and peripheral management, comprising a complete computing system on a single chip. In addition to the enhancements at the end-user level, we believe our customers also benefit from an all-AMD platform, as we are able to provide them with a single point of contact for the key platform components and enable them to bring the platforms to market faster in a variety of client and server system form factors. Our CPUs and APUs are currently manufactured primarily using 65 nanometer (nm), 45nm, 40nm, 32nm and 28nm process technologies. We currently base our microprocessors and chipsets on the x86 instruction set architecture and AMD's Direct Connect Architecture, which connects an on-chip memory controller and input/ output, or I/O, channels directly to one or more microprocessor cores. We typically integrate two or more processor cores onto a single die, and each core has its own dedicated cache, which is memory that is located on the semiconductor die, permitting quicker access to frequently used data and instructions. Some of our microprocessors have additional levels of cache such as L2, or second-level cache, and L3, or third-level cache, to enable faster data access and higher performance. Energy efficiency and power consumption continue to be key design principles for our products. We focus on continually improving power management technology, or \"performance-per-watt.\" To that end, we offer CPUs, APUs and chipsets with features that we have designed to reduce system-level energy consumption, with multiple low power states which utilize lower clock speeds and voltages that reduce processor power consumption during both active and idle times. We design our CPUs and APUs to be compatible with operating system software such as the Microsoft Windows family of operating systems, Linux, NetWare, Solaris and UNIX. Our AMD family of APUs represents a new approach to processor design and software development, delivering serial, parallel and visual compute capabilities for high definition (HD) video, 3D and data-intensive workloads in the APU. APUs combine high-performance serial and parallel processing cores with other specialpurpose hardware accelerators. We design our APUs for improved visual computing, security, performance-perwatt and smaller device form factors. Having the CPU and GPU on the same chip reduces the system power and bill-of-materials, speeds the flow of data between the CPU and GPU through shared memory and allows the GPU to function as both a graphics engine and an application accelerator in highly efficient computing platforms. 4 Building on the integration of our CPU and GPU onto a single piece of silicon, we are focused on evolving our accelerated computing architecture so that software programmers develop applications to more fully utilize the full serial and parallel compute capabilities of our APUs. Heterogeneous Systems Architecture (HSA) describes an industry standard that is an overarching design for having combinations of CPU and GPU processor cores operate as a unified engine. We are a founding member of the HSA Foundation, a non-profit organization established to define and promote this open standards-based approach to heterogeneous computing. Desktop. Our APUs for desktop PC platforms consist primarily of the AMD A-Series and AMD E-Series APUs. We also offer AMD FX CPUs for the enthusiast market. We designed the desktop AMD A-Series APU, codenamed \"Trinity,\" for mainstream desktop platforms, and it is available primarily in quad- and dual-core versions with a variety of discrete-level graphics configurations. In June 2013, we announced the 2013 Elite ASeries APU, codenamed \"Richland,\" which offers improved performance and power efficiency compared to prior AMD APUs. In January 2014, we began shipping the AMD A10-7850K and A10-7700K, codenamed \"Kaveri,\" for desktops. \"Kaveri\" is the world's first APU to include HSA features, AMD TrueAudio technology for improved fidelity and immersive audio, and performing gaming experience of AMD's Mantle application programming interface, or API. Mantle allows game developers to more easily take advantage of the full capability of our graphic core next architecture. The latest generation of AMD FX CPUs are based on the \"Piledriver\" x86 multi-core architecture, are designed for multitasking, high resolution gaming and HD media processing and come in eight-, six- and quad-core versions. Notebook, Tablet, Hybrid. Consumers continue to demand thinner and lighter mobile platforms with better entertainment performance and longer battery life. In response to this demand, we continue to invest in designing and developing high performing and low power notebook platforms. Our notebook processors consist primarily of performance AMD A-Series APUs, and AMD E-Series APUs. We designed the AMD A-Series APU, codenamed \"Trinity,\" for mainstream and ultrathin notebooks, and we designed our AMD E-Series APUs for mainstream notebooks. Our APUs for notebook platforms combine discrete-level AMD Radeon graphics, dedicated HD video processing and multi-core CPU processors on a single die which are designed for maximum performance and power efficiency. In March 2013, we launched our next generation 2013 AMD Elite Performance A-Series APUs, codenamed \"Richland,\" designed to deliver innovative user experiences such as facial log-in and gesture recognition for premium ultrathin, traditional and performance notebooks. In May 2013, we launched our next generation 2013 AMD Mainstream quad-core x86 SOC, codenamed \"Kabini,\" designed for entry-level and small-form factor touch notebooks, and the 2013 AMD Elite Mobility SOC, codenamed \"Temash,\" our first 28nm, quad-core x86 SOC designed for small form-factor notebooks, tablets and hybrids 13 inches and below. We introduced the AMD Elite Quad-Core A4-1350 APU for tablets, hybrids and small-screen touch notebooks in September 2013. Server. A server is a system that performs services for connected customers as part of a client-server architecture. Servers are designed to run an application or applications often for extended periods of time with minimal human intervention. Examples of servers include web servers, e-mail servers and print servers. These servers can run a variety of applications, including business intelligence, enterprise resource planning, customer relationship management and advanced scientific or engineering models to solve advanced computational problems in disciplines ranging from financial modeling to weather forecasting to oil and gas exploration. Servers are also used in cloud computing, which is a computing model where data, applications and services are delivered over the internet or an intranet. Our microprocessors for server platforms consist of our AMD Opteron 6000, 4000, 3000 CPU and X1150/X2150 APU series platform processors. In addition, to offering microprocessors for servers, we offer dense server systems, designed to reduce power consumption and improve space efficiency for data centers. Our dense server products include the SeaMicro SM15000 server, as well as AMD's SeaMicro Freedom Fabric Storage series of storage enclosures. Our fabric technology, the SeaMicro Freedom supercompute fabric, interconnects hundreds of card-sized motherboards and reduces the need for data networking equipment and eliminates hundreds of cables, simplifying data center operations. We designed this fabric to reduce sever system 5 power consumption while providing lower latency and higher bandwidth interconnections. In May 2013, we launched our Opteron X Series processors, a new family of high density, low power servers. Also in January 2014, we announced that we would sample AMD Opteron A-Series processor, codenamed \"Seattle,\" in the first quarter of 2014, our first 64-bit ARM-based server CPU using 28nm process technology. Embedded Processor Products Our embedded products address customer needs in PC-adjacent markets. Typically, our embedded products are used in applications that require high to moderate levels of performance, where key features include low cost, mobility, low power and small form factor. High performance graphics are increasingly important in many embedded systems. Customers of our embedded products include vendors in industrial control and automation, digital signage, point of sale/self-service kiosks, medical imaging, set-top box and casino gaming machines as well as enterprise class telecommunications, networking, security, storage systems and thin-clients, or computers that serve as an access device on a network. The embedded market has moved from developing proprietary, custom designs to leveraging the industrystandard x86 instruction set architecture as a way to reduce costs and speed time to market. Customer requirements for these systems include very low power for small enclosures and 24x7 operation, support for Linux, Windows and other operating systems and high-performance for increasingly sophisticated applications. Other requirements include advanced specifications for industrial temperatures, shock, vibration and reliability. Our embedded platforms include options from the AMD Embedded Geode LX family and AMD Opteron Processor family. In July 2013, we extended our embedded SOC product portfolio with the launch of a new low power AMD G-Series SOC for fanless designs. A fanless design is one that, instead of using a fan for cooling, relies on other means, such as convection cooling, to transport heat away from certain components. In August 2013, we launched the AMD Embedded R-Series high performance computing platform for high-end digital gaming and signage. Chipset Market and Products A chipset is the set of components that manages data flow between a processor or processors, memory and peripherals, such as the keyboard, mouse, monitor, hard drive and CD or DVD drive. Chipsets perform essential logic functions, and balance the performance of the system and aid in removing bottlenecks. Chipsets often include graphics, audio, video and other capabilities. All desktop PCs, notebooks and servers that are not powered by an SOC have a chipset. In many PCs, the chipset includes a GPU. A GPU within the chipset solution is commonly known as an integrated graphics processor (IGP), and such a chipset may be called an IGP chipset. A discrete GPU is usually required in non-APU based systems that do not have an IGP. By not necessitating a discrete GPU, IGP chipsets can offer a lower cost solution and reduced power consumption and enable smaller system form factors. With our APU architecture, the GPU is included in the APU. For systems that are not powered by an SOC, an AMD Controller Hub chip performs the input and output functions of the chipset. We believe that either the use of an SOC or the combination of an APU and the AMD Controller Hub will eventually replace our market for IGP chipsets. Our portfolio of chipset products includes chipsets with and without IGPs for desktop PCs and servers, and AMD Controller Hub-based chipsets for our APUs. We offer AMD M880G and M780G chipsets for notebooks, and we offer AMD 9-Series, 8-Series, 7-Series Discrete and AMD 7-Series Integrated chipsets for desktop PCs. We also offer AMD 785E, SR5690, 780E and M690T chipsets for our embedded products. 6 Graphics and Visual Solutions Graphics and Visual Solutions Market A graphics and visual solution can be in the form of an APU, GPU, IGP, SOC or a combination of a GPU with one of the other foregoing products working in tandem. The semiconductor graphics market addresses the need for visual or parallel processing in various computing and entertainment platforms such as desktop PCs, notebooks, tablets and workstations. APUs deliver visual and parallel processing functionality for value and mainstream PCs, while discrete GPUs are specifically architected for higher performance graphics processing. A dedicated GPU and CPU (whether in an APU or as two separate pieces of silicon) work in tandem to increase overall speed and performance of the system. Users of these graphics products value a rich visual experience to enable a more compelling and immersive experience. Moreover, for many consumers, the PC is evolving from a traditional data processing and communications device to an entertainment platform. Visual realism and graphical display capabilities are key elements of product differentiation among various product platforms. This has led to the increasing creation and use of processing intensive multimedia content for PCs and to manufacturers designing PCs for playing games, displaying photos and capturing TV and other multimedia content, viewing online videos, photo editing and managing digital content. In turn, the trend has continued to contribute to the development of higher performance graphics solutions. For many consumers, the PC is evolving from a traditional data processing and communications device to an entertainment platform. Visual realism and graphical display capabilities are key elements of product differentiation among various product platforms. This has led to the increasing creation and use of processing intensive multimedia content for PCs and to manufacturers designing PCs for playing games, displaying photos and capturing TV and other multimedia content, viewing online videos, editing photos and managing digital content. In turn, the trend has contributed to the development of higher performance graphics solutions. Heavy computational workloads have traditionally been processed on a CPU, but we believe that the industry is shifting to a new computing paradigm that increasingly relies more on the GPU or a combination of GPU and CPU. AMD Accelerated Parallel Processing or GPGPU (General Purpose GPU) refers to a set of advanced hardware and software technologies that enable AMD GPUs, working in concert with the computer system's CPUs, to accelerate applications beyond traditional graphics and video processing by allowing CPUs and GPUs to process information cooperatively. Heterogeneous computing, which refers to computer systems that use more than one kind of processor, enables PCs and servers to run computationally-intensive tasks more efficiently, which we believe provides a superior application experience to the end user. Graphics and Visual Solutions Products Our customers generally use our graphics and visual solutions to increase the speed of rendering images and to improve image resolution and color definition. We develop our products for use in desktop PCs, notebooks, tablets, professional workstations, servers and gaming consoles. In addition, our semi-custom products are tailored, high-performance customer-specific solutions based on AMD's CPU, GPU and APU technology. We work closely together with our customers to define solutions with a selectable level of GPU performance to precisely match the requirements of the device or application. Approaches range from complex, full-custom SOCs to more modest adaptations and integrations of existing parts. With each of our graphics products, we have available drivers and supporting software packages that enable the effective use of these products under a variety of operating systems and applications. In addition, our recent generation graphics products have Linux driver support. Game Consoles. We have leveraged our core graphics and visual processing technologies developed for the PC market by providing graphic and visual solutions to game console manufacturers. In this market, 7 semiconductor graphics suppliers work alongside game console manufacturers to enhance the visual experience for users of sophisticated video games. We leverage our core visual processing technology into the game console market by licensing our graphic technology in game consoles such as the Microsoft Xbox 360 and Nintendo Wii and Wii U. During the first quarter of 2013, Sony announced that it would use a semi-custom APU based on our \"Jaguar\" central processing unit core and next-generation Radeon graphics in its Sony PlayStation4 game console system. During the second quarter of 2013, Microsoft announced that the Xbox One, its next-generation gaming console, would feature an AMD semi-custom SOC product. The PlayStation4 and Xbox One were both launched in the fourth quarter of 2013, powered by AMD semi-custom SOC products. Discrete Desktop Graphics. We offer discrete graphic and visual solutions for gaming, multimedia, editing photos and videos as well as other graphic-intensive applications. Our discrete GPUs for desktop PCs include the AMD Radeon HD 8000 series, AMD Radeon 7000 series, AMD Radeon HD 6000 series and ATI Radeon HD 5000 series. In September 2013, we announced our AMD Radeon R7 and R9 series graphics cards designed for enthusiast gamers. Many models of our R7 graphic cards and all models of our R9 graphic card series support our Mantle and AMD True Audio technology. Discrete Notebook Graphics. When selecting a graphics solution, key considerations for notebook manufacturers are graphics performance, visual experience, power efficiency, dedicated memory support and ease of design integration. Our discrete GPUs for notebooks include the AMD Radeon HD 7000M series, AMD Radeon HD 6000M series and ATI Mobility Radeon HD 5000 series. In May 2013, we announced our AMD Radeon HD 8000M Series graphics processors, a discrete graphics processor series for performance gaming. In October 2013, we launched our AMD Radeon R7, R9 and R5 M200 series mobile discrete graphics processors series based on our Graphics Core Next architecture for consumer GPUs. Professional Graphics. Our AMD FirePro family of professional graphics products consists of 3D and 2D multi-view graphics cards and GPUs that we designed for integration in mobile and desktop workstations, as well as business PCs. We designed our AMD FirePro 3D graphics cards for demanding applications such as those found in the computer aided design (CAD) and digital content creation (DCC) markets, with drivers specifically tuned for maximum performance, stability and reliability across a wide range of software packages. We designed our AMD FirePro 2D graphics cards with dual and quad display outputs for financial and corporate environments. We also provide graphics and visual products for the server market where we leverage our graphics and visual expertise and align our offerings to provide the stability, video quality and bus architectures desired by our customers. Through our AMD CrossFire Pro technology, we enable CAD and DCC professionals to connect two identical AMD FirePro 3D graphics cards with a flex cable connection that can enhance performance of geometry-limited applications. In February 2013, we launched AMD FirePro R5000 remote workstation-class graphics card, designed to power remote 3D-graphics workflows and full computing experiences over IP networks for data center environments. In March 2013, we launched AMD Radeon Sky series graphic cards designed to enable cloud gaming service companies to stream PC and console-quality gaming experiences to various devices. Marketing and Sales We sell our products through our direct sales force and through independent distributors and sales representatives in both domestic and international markets. Our sales arrangements generally operate on the basis of product forecasts provided by the particular customer, but do not typically include any commitment or requirement for minimum product purchases. We primarily use purchase orders, sales order acknowledgments and contractual agreements as evidence of our sales arrangements. Our agreements typically contain standard terms and conditions covering matters such as payment terms, warranties and indemnities for issues specific to our products. 8 We generally warrant that our products sold to our customers will conform to our approved specifications and be free from defects in material and workmanship under normal use and service for one year. Subject to certain exceptions, we also offer a three-year limited warranty to end users for only those CPU and AMD ASeries APU products that are commonly referred to as \"processors in a box\" and for PC workstation products. We have also offered extended limited warranties to certain customers of \"tray\" microprocessor products and/or workstation graphics products who have written agreements with us and target their computer systems at the commercial and/or embedded markets. We market and sell our products under the AMD trademark. Our desktop PC product brands for microprocessors are AMD A-Series, AMD E-Series, AMD FX, AMD Athlon and AMD Sempron. Our notebook and tablet brands for microprocessors are AMD A-Series A, AMD E-Series, AMD C-Series, AMD Z-Series, AMD Phenom, AMD Athlon, AMD Turion and AMD Sempron. Our server brand for microprocessors is AMD Opteron. We sell dense server systems products under the SeaMicro brand, including the SM15000 series and Freedom Fabric Storage series for storage systems. We also sell low-power versions of our AMD Opteron, AMD Athlon and AMD Sempron, as well as AMD Geode, AMD R-Series and G-Series processors as embedded processor solutions. Our product brand for the consumer graphics market is AMD Radeon. Our product brand for professional graphics products is AMD FirePro. We also market and sell our chipsets under the AMD trademark. We market our products through our direct marketing and co-marketing programs. In addition, we have cooperative advertising and marketing programs with customers and third parties, including market development programs, pursuant to which we may provide product information, training, marketing materials and funds. Under our co-marketing development programs, eligible customers can use market development funds as partial reimbursement for advertisements and marketing programs related to our products and third-party systems integrating our products, subject to meeting defined criteria. Customers Our microprocessor customers consist primarily of original equipment manufacturers, or OEMs, original design manufacturers, or ODMs, system builders and independent distributors in both domestic and international markets. ODMs provide design and/or manufacturing services to branded and unbranded private label resellers, OEMs and system builders. Our graphics products customers include the foregoing as well as add-in-board manufacturers, or AIBs. Customers of our chipset products consist primarily of PC and server OEMs, often through ODMs or other contract manufacturers, who build the OEM motherboards, as well as desktop and server motherboard manufacturers who incorporate chipsets into their channel motherboards. Our sales and marketing teams work closely with our customers to define product features, performance and timing of new products so that the products we are developing meet our customers' needs. We also employ application engineers to assist our customers in designing, testing and qualifying system designs that incorporate our products in order to assist in optimizing product compatibility. We believe that our commitment to customer service and design support improves our customers' time-to-market and fosters relationships that encourage customers to use the next generation of our products. We work closely with our customers to create differentiated products that leverage our CPU, GPU and APU technology. Customers pay us non-recurring engineering fees for design and development services and a purchase price for our semi-custom products. Collectively, our top five customers accounted for approximately 54% of our net revenue during the year ended 2013. In 2013, Hewlett-Packard Company, Microsoft Corporation and Sony Corporation each accounted for more than 10% of our consolidated net revenues. Sales to Hewlett-Packard consisted primarily of products from our Computing Solutions segment. Sales to Microsoft and Sony consisted primarily of products from our 9 Graphics and Visual Solutions segment. Five customers, including Hewlett-Packard Company, accounted for approximately 58% of the net revenue attributable to our Computing Solutions segment. In addition, five customers, including Hewlett-Packard, Microsoft and Sony, accounted for approximately 70% of the net revenue attributable to our Graphics and Visual Solutions segment. A loss of any of these customers could have a material adverse effect on our business. Original Equipment Manufacturers We focus on three types of OEMs: multi-nationals, selected regional accounts and target market customers. Large multi-nationals and regional accounts are our core OEM customers. Our OEM customers include numerous foreign and domestic manufacturers of servers and workstations, desktops, notebooks and PC motherboards. Third-Party Distributors Our authorized distributors resell to sub-distributors and mid-sized and smaller OEMs and ODMs. Typically, distributors handle a wide variety of products, including those that compete with our products. Distributors typically maintain an inventory of our products. In most instances, our agreements with distributors protect their inventory of our products against price reductions and provide return rights with respect to any product that we have removed from our price book that is not more than 12 months older than the manufacturing code date. In addition, some agreements with our distributors may contain standard stock rotation provisions permitting limited levels of product returns. AIB Manufacturers and System Integrators We strive to establish and broaden our relationships with AIB manufacturers. We offer component-level graphics and chipset products to AIB manufacturers who in turn build and sell board-level products using our technology to system integrators, or SIs, and to retail buyers. Our agreements with AIBs protect their inventory of our products against price reductions. We also sell directly to our SI customers. SIs typically sell from positions of regional or product-based strength in the market. They usually operate on short design cycles and can respond quickly with new technologies. SIs often use discrete graphics solutions as a means to differentiate their