What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-05 compared with 2024-01-31 · 199 added, 258 removed, 928 unchanged (33% of the section changed)

13 unchanged sentences

Amortization of acquisition-related intangibles 1,448 1,869 2,100

Restructuring charges

Licensing gain ( 48 ) ( 34 ) ( 102 )

12 unchanged sentences

Diluted 1,637 1,625 1,571

See accompanying notes to consolidated financial statements.

See accompanying notes to the Consolidated Financial Statements.

Advanced Micro Devices, Inc.

4 unchanged sentences

Net income $ 1,641 $ 854 $ 1,320

Other comprehensive income (loss)

Other comprehensive income (loss), net of tax

Net change in unrealized gains (losses) on cash flow hedges ( 59 ) 31 ( 38 )

Total comprehensive income $ 1,582 $ 885 $ 1,282

See accompanying notes to consolidated financial statements.

See accompanying notes to the Consolidated Financial Statements.

Advanced Micro Devices, Inc.

15 unchanged sentences

equity method 149 99

Deferred tax assets 366 58

Deferred tax assets, net 688 366

Other non-current assets 3,146 2,805

24 unchanged sentences

( 6,106 ) ( 4,514 )

Retained earnings (Accumulated deficit) 723 ( 131 )

Retained earnings 2,364 723

Accumulated other comprehensive loss ( 69 ) ( 10 )

1 unchanged sentence

Total liabilities and stockholders’ equity $ 69,226 $ 67,885

See accompanying notes to consolidated financial statements.

See accompanying notes to the Consolidated Financial Statements.

Advanced Micro Devices, Inc.

25 unchanged sentences

Balance, beginning of period $ 723 $ ( 131 ) $ ( 1,451 )

Cumulative effect of adoption of accounting standard — — ( 8 )

Net income 1,641 854 1,320

Balance, end of period $ 2,364 $ 723 $ ( 131 )

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Balance, beginning of period $ ( 10 ) $ ( 41 ) $ ( 3 )

2 unchanged sentences

Total stockholders' equity $ 57,568 $ 55,892 $ 54,750

See accompanying notes to consolidated financial statements.

See accompanying notes to the Consolidated Financial Statements.

Advanced Micro Devices, Inc.

7 unchanged sentences

Depreciation and amortization 671 642 626

Amortization of acquisition-related intangibles

2,393 2,811 3,548

Stock-based compensation 1,407 1,384 1,081

1 unchanged sentence

Amortization of inventory fair value adjustment — 3 189

Loss on debt redemption, repurchase and conversion — — 7

Loss on sale or disposal of property and equipment 11 16 34

Deferred income taxes ( 1,163 ) ( 1,019 ) ( 1,505 )

(Gains) losses on equity investments, net ( 1 ) 62 ( 56 )

Inventory loss at contract manufacturer 65 — —

Other 12 ( 57 ) 64

2 unchanged sentences

Inventories ( 1,458 ) ( 580 ) ( 1,401 )

Receivables from related parties ( 7 ) ( 13 ) 8

Prepaid expenses and other assets 343 ( 383 ) ( 2,010 )

Payables to related parties ( 100 ) 379 7

Receivables from and payable to related parties, net 108 ( 107 ) 366

Accounts payable ( 109 ) ( 419 ) 931

8 unchanged sentences

Acquisitions, net of cash acquired ( 548 ) ( 131 ) ( 1,544 )

Related party equity method investment ( 17 ) — —

Issuance of loan to related party ( 100 ) — —

Purchases of strategic investments

( 341 ) ( 11 ) ( 5 )

Other 2 — ( 11 )

5 unchanged sentences

Repurchases of common stock ( 862 ) ( 985 ) ( 3,702 )

Common stock repurchases for tax withholding on employee equity plans

( 427 ) ( 406 ) ( 237 )

Stock repurchases for tax withholding on employee equity plans ( 728 ) ( 427 ) ( 406 )

Other ( 1 ) ( 2 ) ( 2 )

1 unchanged sentence

( 2,062 ) ( 1,146 ) ( 3,264 )

Net increase (decrease) in cash and cash equivalents ( 902 ) 2,300 940

Cash and cash equivalents at beginning of year 4,835 2,535 1,595

Cash and cash equivalents at end of year $ 3,933 $ 4,835 $ 2,535

Net increase (decrease) in cash, cash equivalents and restricted cash ( 122 ) ( 902 ) 2,300

Cash, cash equivalents and restricted cash at beginning of year

3,933 4,835 2,535

Cash, cash equivalents and restricted cash at end of year

$ 3,811 $ 3,933 $ 4,835

Advanced Micro Devices, Inc.

13 unchanged sentences

Operating lease right-of-use assets acquired by assuming related liabilities $ 102 $ 273 $ 115

See accompanying notes to consolidated financial statements.

Reconciliation of cash, cash equivalents, and restricted cash

Cash and cash equivalents $ 3,787 $ 3,933 $ 4,835

Restricted cash included in Prepaid expenses and other current assets

Total cash, cash equivalents, and restricted cash $ 3,811 $ 3,933 $ 4,835

See accompanying notes to the Consolidated Financial Statements.

Advanced Micro Devices, Inc.

5 unchanged sentences

and its consolidated subsidiaries.

AMD’s products include x86 microprocessors (CPUs) and graphics processing units (GPUs), as standalone devices or as incorporated into accelerated processing units (APUs), chipsets, data center and professional GPUs, embedded processors, semi-custom System-on-Chip (SoC) products, microprocessor and SoC development services and technology, data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), System on Modules (SOMs), Smart Network Interface Cards (SmartNICs), AI Accelerators and Adaptive SoC products.

AMD’s products include Artificial Intelligence (AI) Accelerators, x86 microprocessors (CPUs) and graphics processing units (GPUs), as standalone devices or as incorporated into accelerated processing units (APUs), chipsets, data center and professional GPUs, embedded processors, semi-custom System-on-Chip (SoC) products, microprocessor and SoC development services and technology, data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), System on Modules (SOMs), Smart Network Interface Cards (SmartNICs), and Adaptive SoC products.

From time to time, the Company may also sell or license portions of its intellectual property (IP) portfolio.

2 unchanged sentences

The Company uses a 52- or 53-week fiscal year ending on the last Saturday in December.

Fiscal 2023, 2022 and 2021 ended on December 30, 2023, December 31, 2022 and December 25, 2021, respectively.

Fiscal 2023 and 2021 each consisted of 52 weeks, while fiscal 2022 consisted of 53 weeks.

Fiscal years 2024, 2023 and 2022 ended on December 28, 2024, December 30, 2023 and December 31, 2022, respectively.

Fiscal years 2024 and 2023 each consisted of 52 weeks, while fiscal year 2022 consisted of 53 weeks.

Principles of Consolidation.

1 unchanged sentence

Upon consolidation, all inter-company accounts and transactions have been eliminated.

Reclassification.

Certain immaterial prior period amounts have been reclassified to conform to current period presentation.

Reclassification and Change in Presentation.

Unbilled receivables of $ 1.1 billion as of December 30, 2023 were reclassified from within Accounts receivable, net to within Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets and in the Statements of Cash Flows to conform to current period presentation.

Use of Estimates.

8 unchanged sentences

Shipping and handling costs associated with product sales are included in cost of sales.

Substantially all the Company’s revenue is derived from product sales, representing a single performance obligation.

Substantially all of the Company’s revenue is derived from product sales.

Customers are generally required to pay for products and services within the Company’s standard contractual terms, which are typically net 30 to 60 days.

2 unchanged sentences

The Company transfers control and recognizes revenue when non-custom products are shipped to customers, which includes original equipment manufacturers (OEM) and distributors, in accordance with the shipping terms of the sale.

Non-custom product arrangements generally comprise a single performance obligation.

Certain OEMs may be entitled to rights of return and rebates under OEM agreements.

61 unchanged sentences

Accounts receivable are primarily comprised of trade receivables presented net of rebates, price protection and an allowance for credit loss.

Accounts receivable also include unbilled receivables, which primarily represent work completed on development services recognized as revenue but not yet invoiced to customers and custom products under non-cancellable purchase orders that have no alternative use to the Company at contract inception, for which revenue has been recognized but not yet invoiced to customers.

All unbilled accounts receivables are expected to be billed and collected within twelve months.

The Company manages its exposure to customer credit risk through credit limits, credit lines, ongoing monitoring procedures and credit approvals.

Furthermore, the Company performs in-depth credit evaluations of all new customers and, at intervals, for existing customers.

From this, the Company may require letters of credit, bank or corporate guarantees or advance payments if deemed necessary.

The Company maintains an allowance for credit loss, consisting of known specific troubled accounts as well as an amount based on overall estimated potential uncollectible accounts receivable based on historical experience and review of their current credit quality.

The Company does not believe the receivable balance from its customers represents a significant credit risk.

While the Company maintains an allowance for customer credit losses, its accounts receivable write-offs have historically not been significant.

Unbilled Receivables

Unbilled receivables are recorded within Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets.

Unbilled receivables primarily represent work completed on development services and on custom products under non-cancellable purchase orders that have no alternative use to the Company at contract inception, recognized as revenue but not yet invoiced to customers.

Available-for-Sale Debt Securities.

The Company classifies its investments in debt securities at the date of acquisition as available-for-sale.

Available-for-sale debt securities are reported at fair value with the related unrealized gains and losses included, net of tax, in accumulated other comprehensive income (loss), a component of stockholders’ equity.

If an available-for-sale debt security’s fair value is less than its amortized cost basis, then the Company evaluates whether the decline is the result of a credit loss, in which case an impairment is recorded through an allowance for credit losses.

Unrealized gains and losses not attributable to credit losses are included, net of tax, in accumulated other comprehensive income (loss), a component of stockholders’ equity.

The Company classifies and accounts for its short-term investments in debt securities as available-for-sale as the Company may sell these securities at any time for use in its current operations or for other purposes.

As a result, the Company classifies its short-term investments, including securities with stated maturities beyond twelve months, within current assets in the Consolidated Balance Sheets.

Non-marketable Equity Securities.

The Company’s investments in non-marketable securities of privately-held companies are accounted for under the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and are periodically assessed for impairment when events or circumstances indicate that a decline in value may have occurred.

Investments in marketable debt securities are available for use in current operations, including those with maturity dates beyond one year, and are classified within current assets on the Consolidated Balance Sheets.

Available-for-sale debt securities are recorded at fair value, with the change in unrealized gains and losses, net of tax, reported as a separate component on the Consolidated Statements of Comprehensive Income until realized.

Fair value is determined based on quoted market rates when observable or utilizing data points that are observable.

Securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of the excess, if any, is caused by expected credit losses.

Expected credit losses on securities are recognized in other income (expense) on the Consolidated Statements of Operations, and any remaining unrealized losses, net of tax, are included in Accumulated other comprehensive income (loss), in Consolidated Statements of Stockholders’ Equity.

The Company uses the first-in, first-out method as basis of the cost of securities sold.

Strategic Non-marketable Equity Securities.

The Company’s investments in non-marketable securities of privately-held companies are held for long-term strategic purposes and are accounted for under the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and are periodically assessed for impairment when events or circumstances indicate that a decline in value may have occurred.

The Company's periodic assessment of impairment is made by considering available evidence, including the investee’s general market and industry conditions and product development status.

14 unchanged sentences

Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of two to 15 years for equipment, 34 to 44 years for buildings, and leasehold improvements are measured by the shorter of the remaining terms of the leases or the estimated useful economic lives of the improvements.

Operating and finance leases are recorded as right-of-use (ROU) assets and lease liabilities on the Company’s balance sheet.

Operating and finance leases are recorded as right-of-use (ROU) assets and lease liabilities on the Company’s Consolidated Balance Sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

19 unchanged sentences

Any excess of cash paid over the estimated fair value of the advertising benefit received is recorded as a reduction of revenue.

Total marketing and advertising expenses for 2023, 2022 and 2021 were approximately $ 695 million, $ 683 million and $ 578 million, respectively.

Total marketing and advertising expenses for 2024, 2023 and 2022 were approximately $ 1.2 billion, $ 695 million and $ 683 million, respectively.

Stock-Based Compensation

16 unchanged sentences

In addition, the Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that they will be sustained, based on the technical merits of the positions, on examination by the jurisdictional tax authority.

Interest and penalties related to income taxes are recorded in the Income tax provision (benefit) line in the Consolidated Statements of Operations.

Interest and penalties related to income taxes are recorded within the Income tax provision (benefit) line in the Company’s Consolidated Statements of Operations.

The Company is subject to the Global Intangible Low Taxed Income (GILTI) tax in the U.S.

and recognizes deferred taxes for temporary basis differences that are expected to reverse as GILTI tax in future years.

Recently Issued Accounting Standard Updates Not Yet adopted

Recently Issued Accounting Standard Updates Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-07 Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures to enhance disclosures about significant segment expenses.

This ASU is effective for the Company’s fiscal year 2024 and interim periods in fiscal year 2025.

Early adoption is permitted.

The Company is currently evaluating segment expense disclosures related to its annual report for fiscal year 2024.

The Company adopted this standard in the fourth quarter of 2024.

See Note 4 - Segment Reporting for further information.

Recently Issued Accounting Standard Updates Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures that requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.

2 unchanged sentences

The Company is currently evaluating income tax disclosures related to its annual report for fiscal year 2025.

In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

The new guidance is intended to provide investors enhanced disclosures and requires public companies to disaggregate key expense types.

The update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The disclosure updates are required to be applied prospectively with the option for retrospective application.

The Company is currently evaluating the impact of this new standard on its Consolidated Financial Statements.

Although there are several other new accounting pronouncements issued by the FASB, the Company does not believe any of these accounting pronouncements had or will have a material impact on its Consolidated Financial Statements .

NOTE 3 – Supplemental Financial Statement Information

Accounts Receivable, net

As of December 30, 2023 and December 31, 2022, Accounts receivable, net included unbilled accounts receivable of $ 1.1 billion.

Unbilled accounts receivables primarily represent work completed for development services and on custom products for which revenue has been recognized but not yet invoiced.

All unbilled accounts receivable are expected to be billed and collected within 12 months.

2024 December 30,

4 unchanged sentences

Total inventories $ 5,734 $ 4,351

Prepaid Expenses and Other Current Assets

2024 December 30,

(In millions)

Unbilled receivables

$ 628 $ 1,053

Total prepaid expenses and other current assets

$ 1,878 $ 2,312

Property and Equipment, net

13 unchanged sentences

Accrued compensation and benefits 1,174 884

Customer program liabilities 544 859

Customer-related liabilities

Other accrued and current liabilities 674 583

5 unchanged sentences

NOTE 4 – Segment Reporting

Management, including the Chief Operating Decision Maker (CODM), who is the Company’s Chief Executive Officer, reviews and assesses operating performance using segment net revenue and operating income (loss).

These performance measures include the allocation of expenses to the reportable segments based on management’s judgment.

The CODM is regularly provided segment operating income to assess relative segment performance.

The Company’s four reportable segments are:

• the Data Center segment, which primarily includes server microprocessors (CPUs), graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), Smart Network Interface Cards (SmartNICs), Artificial Intelligence (AI) accelerators and Adaptive System-on-Chip (SoC) products for data centers;

• the Client segment, which primarily includes CPUs, APUs, and chipsets for desktop, notebook and handheld personal computers;

• the Data Center segment, which primarily includes Artificial Intelligence (AI) accelerators, server microprocessors (CPUs), graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), Smart Network Interface Cards (SmartNICs) and Adaptive System-on-Chip (SoC) products for data centers;

• the Client segment, which primarily includes CPUs, APUs, and chipsets for desktops and notebooks;

• the Gaming segment, which primarily includes discrete GPUs, and semi-custom SoC products and development services;

3 unchanged sentences

This category primarily includes certain expenses and credits that are not allocated to any of the reportable segments because the CODM does not consider these expenses and credits in evaluating the performance of the reportable segments.

This category primarily includes amortization of acquisition-related intangibles, employee stock-based compensation expense, acquisition-related and other costs, and licensing gain.

Acquisition-related and other costs primarily include transaction costs, purchase price adjustments for inventory, certain compensation charges, contract termination and workforce rebalancing charges.

This category primarily includes amortization of acquisition-related intangibles, employee stock-based compensation, acquisition-related and other costs, restructuring charges and licensing gain.

Acquisition-related and other costs primarily include transaction costs, purchase price fair value adjustments for inventory, certain compensation charges, contract termination costs and workforce rebalancing charges.

The following table provides a summary of net revenue and operating income (loss) by segment for 2024, 2023 and 2022.

7 unchanged sentences

Total net revenue $ 25,785 $ 22,680 $ 23,601

Cost of sales and operating expenses:

$ 9,097 $ 5,229 $ 4,195

6,157 4,697 5,011

2,305 5,241 5,852

2,136 2,693 2,300

4,190 4,419 4,979

Total cost of sales and operating expenses

$ 23,885 $ 22,279 $ 22,337

Operating income (loss):

6 unchanged sentences

$ 1,900 $ 401 $ 1,264

Segment cost of sales and operating expenses primarily include material, external manufacturing, labor and marketing and advertising costs, and exclude expenses and credits that are recorded within the All Other category.

The following table provides items included in All Other category:

3 unchanged sentences

Operating loss:

Amortization of acquisition-related intangibles $ 2,394 $ 2,811 $ 3,548

Stock-based compensation expense 1,407 1,384 1,081

Acquisition-related and other costs 186 258 452

Amortization of acquisition-related intangibles 2,811 3,548 —

Restructuring charges 186 — —

Inventory loss at contract manufacturer 65 — —

Licensing gain ( 48 ) ( 34 ) ( 102 )

6 unchanged sentences

United States 8,693 7,837 8,049

Japan 4,629 4,177 2,381

China (including Hong Kong) 6,231 3,417 5,207

Singapore 3,614 2,231 1,380

Europe 2,030 1,773 1,249

Taiwan 3,301 1,841 2,369

Other countries 695 646 572

Japan 1,767 4,629 4,177

Europe 1,625 2,030 1,773

Other regions 554 695 646

Total sales to external customers $ 25,785 $ 22,680 $ 23,601

The following table summarizes sales to major customers that accounted for at least 10% of the Company’s consolidated net revenue for the respective years:

The following table summarizes sales to a major customer that accounted for at least 10% of the Company’s consolidated net revenue for the respective years:

2024 December 30,

1 unchanged sentence

Customer A Gaming * 18 % 16 %

Customer B Client * * 11 %

Less than 10%

4 unchanged sentences

Singapore 140 144

Canada 104 84

Ireland 46 46

China (including Hong Kong) 38 42

Other countries 62 44

2 unchanged sentences

Fiscal Year 2024 Acquisitions

Silo AI Acquisition

On August 9, 2024, the Company completed the acquisition of Silo AI Oy (Silo AI), an AI lab based in Finland in an all-cash transaction of $665 million.

Net of closing adjustments, transaction costs and deferred cash compensation, the purchase consideration of $ 553 million was allocated to $ 19 million of identifiable intangible assets, $ 43 million of net liabilities assumed, and $ 577 million to goodwill.

Goodwill was attributed to Silo AI’s workforce who will help the Company accelerate the deployment and development of AI models and software solutions on AMD hardware.

Silo AI financial results, which were not material, were included in the Company's Statement of Operations from the date of acquisition primarily within the Data Center segment.

Pending Acquisition of ZT Systems

On August 17, 2024, the Company entered into an agreement (the Agreement) to acquire ZT Group Int’l, Inc.

(ZT Systems), a provider of AI and general purpose compute infrastructure for hyperscale computing companies, in a cash and stock transaction valued at approximately $4.9 billion (the Acquisition).

The aggregate closing consideration payable by the Company consists of 8,335,852 shares of the Company’s common stock and $ 3.4 billion in cash.

Contingent consideration of up to 740,964 shares of the Company’s common stock and up to $ 300 million of cash is payable by the Company to the extent certain conditions are met.

The Agreement provides that if the Acquisition is not completed by August 17, 2025, subject to two automatic extensions until February 17, 2026, the Company will pay a termination fee of $ 300 million.

The Acquisition is expected to close in the first half of 2025, subject to certain regulatory approvals and other customary closing conditions.

The Company intends to seek a strategic partner to acquire ZT Systems' manufacturing business.

Fiscal Year 2023 Acquisitions

During the year ended December 30, 2023, the Company completed business acquisitions for a total consideration of $ 134 million that resulted in the recognition of $ 49 million of identifiable net assets and $ 85 million of goodwill.

2 unchanged sentences

Pensando Acquisition

On May 26, 2022 (Pensando Acquisition Date), the Company completed the acquisition of all issued and outstanding shares of Pensando, a leader in next-generation distributed computing, for a transaction valued at approximately $ 1.9 billion.

On May 26, 2022, the Company completed the acquisition of all issued and outstanding shares of Pensando, a leader in next-generation distributed computing, for a transaction valued at approximately $ 1.9 billion.

The recorded purchase consideration of $ 1.7 billion is net of deferred cash compensation requiring future services and other customary closing adjustments.

The acquisition of Pensando and its leading distributed services platform expands the Company’s ability to offer leadership solutions for cloud, enterprise, and edge customers.

The purchase consideration was allocated as follows:

(In millions)

Cash and cash equivalents $ 111

Accounts receivable 31

Prepaid expenses and other current assets 43

Property and equipment 11

Deferred tax assets 22

Acquisition-related intangibles 349

Total Assets 633

Accounts payable 15

Accrued and other liabilities 61

Total Liabilities 76

Fair value of net assets acquired 557

Goodwill 1,098

Total purchase consideration $ 1,655

The Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management.

Goodwill arising from the Pensando acquisition was assigned to the Company’s Data Center segment.

Goodwill was primarily attributed to expanded market opportunities expected to be achieved from the integration of Pensando.

Goodwill is not expected to be deductible for income tax purposes.

Following are details of the purchase consideration allocated to acquired intangible assets:

Fair Value Weighted-average estimated useful life

(In millions) (In years)

Developed technology (1)

Customer relationships (2)

Customer backlog (3)

Product trademarks (4)

Identified intangible assets subject to amortization 129

In-process research and development (IPR&D) not subject to amortization (5)

Total identified intangible assets acquired $ 349

The fair value of developed technology was determined using the income approach, specifically the multi-period excess earnings method.

Customer relationships represent the fair value of existing contractual relationships and customer loyalty determined based on existing relationships using the income approach, specifically the with and without method.

Customer backlog represents the fair value of non-cancellable customer contract orders using the income approach, specifically the multi-period excess earnings method.

Product trademarks primarily relate to the Pensando product-related trademarks, and the fair value was determined by applying the income approach, specifically the relief from royalty method.

The fair value of IPR&D was determined using the income approach, specifically the multi-period excess earnings method.

The fair value of the identified intangible assets subject to amortization are amortized over the assets’ estimated useful lives based on the pattern in which the economic benefits are expected to be received to cost of sales and operating expenses.

IPR&D consists of projects that have not yet reached technological feasibility as of the acquisition date.

Accordingly, the Company recorded an indefinite-lived intangible asset of $ 220 million for the fair value of these projects, which will initially not be amortized.

Instead, these projects will be tested for impairment annually and whenever events or changes in circumstances indicate that these projects may be impaired.

Once the project reaches technological feasibility, the Company will begin to amortize the intangible assets over their estimated useful lives.

From the Pensando Acquisition Date to December 30, 2023, the Consolidated Statements of Operations include immaterial revenue and operating results attributable to Pensando, which are reported under the Data Center segment.

In 2023 and 2022, Pensando acquisition-related costs of $ 190 million and $ 102 million was recorded under Cost of sales, Research and development, and Marketing, general and administrative expenses on the Company’s Consolidated Statements of Operations.

The purchase consideration was allocated to $ 349 million of intangible assets, $ 208 million of identifiable net assets, and $ 1.1 billion of goodwill.

From the acquisition date to December 30, 2022, the Consolidated Statements of Operations include immaterial revenue and operating results attributable to Pensando, which are reported under the Data Center segment.

In 2023 and 2022, Pensando acquisition-related costs of $ 190 million and $ 102 million were recorded under Cost of sales, Research and development, and Marketing, general and administrative expenses on the Company’s Consolidated Statements of Operations.

Pensando acquisition-related costs were immaterial in 2024.

Acquisition-related costs are primarily comprised of direct transaction costs, fair value adjustments for acquired inventory and certain compensation charges.

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On February 14, 2022 (Xilinx Acquisition Date), the Company completed the acquisition of all issued and outstanding shares of Xilinx, a leading provider of adaptive computing solutions, for a total purchase consideration of $ 48.8 billion ($ 46.4 billion, net of cash acquired of $ 2.4 billion).

The acquisition of Xilinx expands the Company’s product portfolio to include adaptable hardware platforms that enable hardware acceleration and rapid innovation across a variety of technologies.

With the acquisition of Xilinx, the Company now offers FPGAs, Adaptive SoC products and ACAP products.

The purchase consideration consisted of $ 48.5 billion of fair value of 429 million shares of the Company’s common stock issued to Xilinx stockholders and $ 275 million of fair value of replacement equity awards attributable to services rendered pre-combination.

As the transaction closed prior to the opening of markets on the Xilinx Acquisition Date, the fair value of the common stock issued to Xilinx stockholders was based on the closing price of the Company’s common stock on February 11, 2022 of $ 113.18 per share.

The financial results of Xilinx are included in the Company’s consolidated financial statements from the Xilinx Acquisition Date to December 30, 2023 and are reported under the Embedded and Data Center segments.

The purchase consideration was allocated as follows:

(In millions)

Cash and cash equivalents $ 2,366

Short-term investments 1,582

Accounts receivable 299

Inventories 539

Prepaid expenses and other current assets 61

Property and equipment 692

Operating lease right-of-use assets 61

Acquisition-related intangibles 27,308

Deferred tax assets 15

Other non-current assets 418

Total Assets 33,341

Accounts payable 116

Accrued liabilities 634

Other current liabilities 185

Long-term debt 1,474

Long-term operating lease liabilities 45

Deferred tax liabilities 4,346

Other long-term liabilities 532

Total Liabilities 7,332

Fair value of net assets acquired 26,009

Goodwill 22,784

Total purchase consideration $ 48,793

Goodwill arising from the acquisition of Xilinx was assigned to the Embedded and Data Center segments.

Goodwill was primarily attributed to increased synergies expected to be achieved from the integration of Xilinx.

Goodwill is not expected to be deductible for income tax purposes.

Following are details of the purchase consideration allocated to acquired intangible assets:

Fair Value Weighted-average estimated useful life

(In millions) (In years)

Developed technology (1)

$ 12,295 16 years

Customer relationships (2)

12,290 14 years

Customer backlog (3)

Corporate trade name (4)

Product trademarks (4)

Identified intangible assets subject to amortization 26,338

In-process research and development (IPR&D) not subject to amortization (5)

Total identified intangible assets acquired $ 27,308

The fair value of developed technology was determined using the income approach, specifically, the multi-period excess earnings method.

Customer backlog represents the fair value of non-cancellable customer contract orders using the income approach, specifically the multi-period excess earnings method.

Corporate trade name and product trademarks primarily relate to the Xilinx brand and product-related trademarks, respectively, and the fair values were determined by applying the income approach, specifically the relief from royalty method.

The fair value of IPR&D was determined using the income approach, specifically the multi-period excess earnings method.

IPR&D consists of projects that have not yet reached technological feasibility as of the acquisition date.

Accordingly, the Company recorded an indefinite-lived intangible asset of $ 970 million for the fair value of these projects, which were initially not amortized.

In the fourth quarter of 2023, these IPR&D assets reached technological feasibility and were reclassified as developed technology, and began amortization over their estimated useful lives of 15 years.

The Company also assumed unvested restricted stock units with estimated fair value o f $ 1.2 billion, of which $ 275 million was included as a component of the purchase co nsideration and $ 951 million will be recognized as expense subsequent to the acquisition.

The purchase consideration was allocated to $ 27.3 billion of intangible assets, $ 1.3 billion of identifiable net liabilities, and $ 22.8 billion of goodwill.

The Consolidated Statements of Operations include the following revenue and operating income attributable to Xilinx in 2022:

2 unchanged sentences

Operating income $ 2,247

Operating income attributable to Xilinx recorded under the Embedded and Data Center segments does not include $4.2 billion of amortization of acquisition-related intangibles, employee stock-based compensation expense and acquisition-related costs, which are recorded under the “All Other” segment.

In 2023 and 2022, Xilinx acquisition-related costs of $ 26 million and $ 350 million were recorded under Cost of sales, Research and development, and Marketing, general and administrative expenses on the C ompany’s Consolidated Statements of Operations.

In 2022, operating income attributable to Xilinx recorded under the Embedded and Data Center segments does not include $4.2 billion of amortization of acquisition-related intangibles, employee stock-based compensation expense and acquisition-related costs, which are recorded under the “All Other” segment.

Xilinx acquisition-related costs in 2024 were immaterial.

Acquisition-related costs are primarily comprised of direct transaction costs, fair value adjustments for acquired inventory and certain compensation charges.

Supplemental Unaudited Pro Forma Information

Following are the supplemental consolidated financial results of the Company, Xilinx and Pensando on an unaudited pro forma basis, as if the acquisitions had been consummated as of the beginning of the fiscal year 2021 (i.e., December 27, 2020).

2022 December 25,

(in millions)

1 unchanged sentence

Net income $ 2,311

The Company’s fiscal year ends on the last Saturday in December of each year, Xilinx’s fiscal year ended on the Saturday nearest March 31 of each year and Pensando’s fiscal year ended on January 31 of each year.

The unaudited pro forma information above is presented on the basis of the Company’s fiscal year and combines the historical results of the fiscal periods of the Company with the following historical results of Xilinx and Pensando:

the twelve months ended December 31, 2022 includes Xilinx results for the twelve-month period beginning January 2, 2022 through December 31, 2022 and Pensando results for the twelve-month period beginning January 1, 2022 through December 31, 2022;

and the twelve months ended December 25, 2021 includes Xilinx results for the twelve months ended January 1, 2022 and Pensando results for the twelve months ended December 31, 2021.

The unaudited pro forma financial information presented is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the Xilinx and Pensando acquisitions were completed at the beginning of fiscal year 2021 and are not indicative of the future operating results of the combined company.

The pro forma results include adjustments related to purchase accounting, primarily amortization of acquisition-related intangible assets, fixed asset depreciation expense and expense from assumed stock-based compensation awards.

The pro forma results also include amortization expense of acquired Xilinx inventory fair value step-up of $ 184 million in fiscal year 2021 and no Xilinx inventory fair value step-up expense in fiscal year 2022.

NOTE 6 – Acquisition-related Intangible Assets and Goodwill

Acquisition-related Intangible Assets

Acquisition-related intangibles as of December 30, 2023 and December 31, 2022 were as follows:

The following table summarizes Acquisition-related Intangible Assets:

December 28, 2024 December 30, 2023

6 unchanged sentences

Product trademarks 914 ( 225 ) 689 914 ( 147 ) 767

Identified intangible assets subject to amortization 27,502 ( 6,359 ) 21,143 26,472 ( 3,548 ) 22,924

IPR&D not subject to amortization 220 — 220 1,194 — 1,194

Intangible assets subject to amortization

27,520 ( 8,752 ) 18,768 27,502 ( 6,359 ) 21,143

In-process Research and Development (IPR&D) not subject to amortization 162 — 162 220 — 220

Total acquisition-related intangible assets $ 27,682 $ ( 8,752 ) $ 18,930 $ 27,722 $ ( 6,359 ) $ 21,363

Acquisition-related intangible amortization expense was $ 2.4 billion and $ 2.8 billion in fiscal year 2024 and 2023, respectively.

In the fourth quarter of 2023, $970 million of IPR&D intangible assets acquired from Xilinx reached technological feasibility and were reclassified as developed technology, and began amortization over their estimated useful lives.

During the fourth quarter of fiscal year 2024, the Company determined that the fair value of certain IPR&D recorded within the Data Center segment was not recoverable resulting from actions related to the 2024 Restructuring Plan, and recorded an impairment charge of $ 58 million within Restructuring charges in the Company’s Consolidated Statement of Operations.

Based on the carrying value of acquisition-related intangibles recorded as of December 28, 2024, and assuming no subsequent impairment of the underlying assets, the estimated annual amortization expense for acquisition-related intangibles is expected to be as follows:

2 unchanged sentences

Total $ 18,768

The carrying amount of goodwill as of December 30, 2023 and December 31, 2022 was $ 24.3 billion and $ 24.2 billion, respectively, and was assigned to reporting units within the following reportable segments:

December 25, 2021 Acquisitions Adjustments and Reassignment due to segment change*

December 31, 2022 Acquisitions December 30,

The following table summarizes changes in the carrying amount of Goodwill:

December 31, 2022 Acquisitions December 30, 2023 Acquisitions December 28,

(In millions) (In millions)

Reportable segments before segment change:

Enterprise, Embedded and Semi-Custom $ 289 $ — $ ( 289 ) $ — $ — $ —

Xilinx — 22,794 ( 22,794 ) — — —

Reportable segments after segment change:

Data Center $ 2,884 $ 58 $ 2,942 $ 461 $ 3,403

3 unchanged sentences

Total $ 24,177 $ 85 $ 24,262 $ 577 $ 24,839

*In the second quarter of fiscal year 2022, the Company reassigned goodwill balances among the updated reportable segments to reflect changes in its segment reporting structure.

During the fourth quarter of fiscal years 2024 and 2023, the Company conducted its annual qualitative impairment tests of goodwill and concluded that there was no goodwill impairment with respect to its reporting units.

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The purchases from and resales to the ATMP JV of inventory under the Company’s inventory management program are reported within purchases and resales with the ATMP JV and do not impact the Company’s Consolidated Statement of Operations.

The Company’s purchases from the ATMP JV during 2023 and 2022 both amounted to $ 1.7 billion.

The Company’s purchases from the ATMP JV during each of the years 2024 and 2023 amounted to $ 1.7 billion .

As of December 28, 2024 and December 30, 2023, the amounts payable to the ATMP JV were $ 476 million and $ 363 million, respectively, and are included in Payables to related parties on the Company’s Consolidated Balance Sheets.

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As of December 28, 2024 and December 30, 2023, the Company had receivables from ATMP JV of $ 12 million and $ 9 million, respectively , included in Receivables from related parties on the Company’s Consolidated Balance Sheets.

On October 9, 2024, the Company entered into a one-year term loan agreement with one of the ATMP JVs for $ 100 million to provide funds for the ATMP JV’s general corporate purposes.

The loan bears interest, payable quarterly, at the three months term Secured Overnight Financing Rate (SOFR) plus 50 basis points.

The loan is secured by the ATMP JV’s receivable balance due from the Company.

The loan may be extended for further terms of up to twelve months.

The loan is recorded within Receivables from related parties on the Company’s Consolidated Balance Sheets.

During 2024, 2023 and 2022, the Company recorded gains of $ 33 million, $ 16 million and $ 14 million in Equity income in investee on its Consolidated Statement of Operations, respectively.

As of December 30, 2023 and December 31, 2022, the carrying value of the Company’s investment in the ATMP JV was approximately $ 99 million and $ 83 million, respectively.

On August 8, 2024, the Company contributed $ 17 million to the ATMP JV, representing additional equity that is in proportion to the Company’s existing 15% equity interest.

As of December 28, 2024 and December 30, 2023, the carrying value of the Company’s investment in the ATMP JV was approximately $ 149 million and $ 99 million, respectively, recorded as Investments:

equity method on the Company’s Consolidated Balance Sheets.

THATIC Joint Ventures

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The Company classifies Licensed IP and royalty income associated with the February 2016 agreement as Licensing gain within operating income.

During 2023 and 2022, the Company recognized $34 million of licensing gain from royalty income and $102 million of licensing gain from a milestone achievement and royalty income under the agreement, respectively.

During 2024 and 2023, the Company recognized $ 48 million and $ 34 million of licensing gain from royalty income under the agreement, respectively.

As of December 28, 2024 and December 30, 2023, the Company had no receivables from the THATIC JV.

7 unchanged sentences

2.950 % Senior Notes Due 2024 (2.950% Notes)

2.125 % Convertible Senior Notes Due 2026 ( 2.125 % Notes)

2.375 % Senior Notes Due 2030 (2.375% Notes)

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Total debt (principal amount) 1,750 2,500

Unamortized debt premium, discount and issuance costs, net ( 32 ) ( 34 )

Unamortized debt discount and issuance costs ( 29 ) ( 32 )

Total debt (net) 1,721 2,468

1 unchanged sentence

Total long-term debt $ 1,721 $ 1,717

Assumed Xilinx Notes

In connection with the acquisition of Xilinx, the Company assumed $ 1.5 billion in aggregate principal of Xilinx’s 2.950% Notes and 2.375% Notes (together, the Assumed Xilinx Notes ) which were recorded at fair value as of the Xilinx Acquisition Date.

Assumed Xilinx Notes due 2024 and 2030

In connection with the acquisition of Xilinx, the Company assumed $ 1.5 billion in aggregate principal of Xilinx’s 2.950% Notes due 2024 and 2.375% Notes due 2030 (together, the Assumed Xilinx Notes ) which were recorded at fair value as of the Xilinx Acquisition Date.

The Assumed Xilinx Notes are general unsecured senior obligations of the Company with semi-annual fixed interest payments due on June 1 and December 1.

The 2.95% Notes with a principal amount of $750 million were repaid in June 2024.

3.924% Senior Notes Due 2032 and 4.393% Senior Notes Due 2052

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(Principal only)

Year (In millions)

(In millions)

2030 and thereafter

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The commercial paper will be sold at a discount from par or, alternatively, will be sold at par and bear interest at rates that will vary based on market conditions at the time of issuance.

During 2023 and 2022, the Company did not issue any commercial paper under the program and as of December 30, 2023, the Company had no commercial paper outstanding.

During 2024 and 2023, the Company did not issue any commercial paper under the program and as of December 28, 2024 and December 30, 2023, the Company had no commercial paper outstanding.

NOTE 9 – Financial Instruments

1 unchanged sentence

December 28, 2024 December 30, 2023

(In millions) Level 1 Level 2 Total Level 1 Level 2 Total

(In millions) Level 1 Level 2 Level 3

Total Level 1 Level 2 Total

Cash equivalents

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Time deposits and certificates of deposits — 1 — 1 — 1 1

Equity investments — — — 8 — 8

Deferred compensation plan investments 133 — 133 90 — 90

Deferred compensation plan and other investments 197 — 25 222 133 — 133

Total assets measured at fair value $ 2,155 $ 2,043 $ 25 $ 4,223 $ 3,563 $ 1,725 $ 5,288

The Company did not have any financial instruments measured at fair value on a recurring basis within Level 3 fair value measurements as of December 30, 2023 or December 31, 2022.

Deferred compensation plan investments are primarily mutual fund investments held in a Rabbi trust established to maintain the Company’s executive deferred compensation plan.

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Financial Instruments Measured at Fair Value on a Non-Recurring Basis

As of December 30, 2023 and December 31, 2022, the Company had non-marketable securities in privately-held companies of $ 155 million and $ 137 million, respectively.

As of December 28, 2024 and December 30, 2023, the Company had non-marketable securities in privately-held companies of $ 468 million and $ 155 million, respectively, which are recorded at estimated fair value based on Level 3 inputs.

Financial Instruments Not Recorded at Fair Value

14 unchanged sentences

As of December 28, 2024 and December 30, 2023, the notional value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges was $ 2.2 billion and $ 2.4 billion, respectively.

The fair value of these contracts was recorded as an asset of $ 6 million as of December 30, 2023 and as a liability of $ 27 million as of December 31, 2022.

The fair value of these contracts as of December 28, 2024 is recorded within Prepaid expenses and other current assets, Accrued liabilities and Other long-term liabilities of $ 6 million, $ 60 million and $ 11 million, respectively.

As of December 30, 2023, the fair value of these contracts was recorded within Prepaid expenses and other current assets and Accrued liabilities of $ 24 million and $ 18 million, respectively.

Foreign Currency Forward Contracts Not Designated as Accounting Hedges

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The fair value of these contracts was not material as of December 28, 2024 and December 30, 2023.

The cash flows associated with derivative instruments as cash flow hedging instruments are classified in the same category in the Consolidated Statement of Cash Flows as the cash flows of the related items.

The cash flows associated with derivative instruments as cash flow hedging instruments are classified in the same category within the Consolidated Statement of Cash Flows as the cash flows of the related items.

NOTE 10 – Concentrations of Credit Risk

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The Company believes that concentrations of credit risk with respect to trade receivables are limited because a large number of geographically diverse customers make up the Company’s customer base, thus diluting the trade credit risk.

One customer accounted for approximately 13 % and 18 % of the total consolidated accounts receivable balance as of December 30, 2023 and December 31, 2022, respectively.

However, the Company does not believe the receivable balance from this customer represents a significant credit risk based on past collection experience and review of their current credit quality.

One customer accounted for approximately 24 % and another customer accounted for 16 % of the total consolidated accounts receivable balance as of December 28, 2024 and December 30, 2023, respectively.

However, the Company does not believe the receivable balance from these customers represents a significant credit risk based on past collection experience and review of their current credit quality.

The Company is exposed to credit losses from nonperformance by counterparties on foreign currency hedge contracts.

9 unchanged sentences

Basic weighted-average shares 1,620 1,614 1,561

Effect of potentially dilutive shares from employee equity plans and warrants

Effect of potentially dilutive shares from employee equity plans

Diluted weighted-average shares 1,637 1,625 1,571

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Issuance of common stock upon warrant exercise — 1 —

Issuance of common stock to settle convertible debt — — 3

Balance, end of period 1,622 1,616 1,612

27 unchanged sentences

Valuation and Expense

Stock-based compensation expense was allocated in the consolidated statements of operations as follows:

Stock-based compensation expense was allocated in the Company’s Consolidated Statements of Operations as follows:

December 28, 2024 December 30, 2023 December 31, 2022

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Expected volatility 54.34 % 52.36 % - 52.42 %

51.28 % 51.77 %

Risk-free interest rate 3.80 % 3.93 % - 4.11 %

3.00 % 0.69 %

Expected dividends — % — % — %

12 unchanged sentences

Granted — $ 134.27

Canceled — $ 98.54

Forfeited — $ 102.71

Exercised ( 1 ) $ 22.17

13 unchanged sentences

Unvested shares as of December 28, 2024 30 $ 116.77

The total fair value of time-based RSUs vested during 2023, 2022 and 2021 was $ 1.1 billion, $ 889 million and $ 678 million, respectively.

The total fair value of time-based RSUs vested during 2024, 2023 and 2022 was $ 2.0 billion, $ 1.1 billion and $ 889 million, respectively.

As of December 28, 2024, the Company had $ 2.6 billion of total unrecognized compensation expense related to time-based RSUs, which will be recognized over the weighted-average period of 2.63 years.

3 unchanged sentences

51.12 % - 56.22 %

50.65 % - 53.51 %

Risk-free interest rate 3.82 % - 4.41 %

4.30 % - 4.36 %

1.14 %- 3.17 %

Expected dividends — % — % — %

29 unchanged sentences

The expected term of the ESPP represents the six-month offering period.

During 2023, 4 million shares of common stock were purchased under the ESPP at a purchase price of $ 67.13 resulting in aggregate cash proceeds of $ 240 million.

During 2024, 2 million shares of common stock were purchased under the ESPP at an average purchase price of $ 111 resulting in aggregate cash proceeds of $ 265 million.

As of December 28, 2024, the Company had $ 43 million of total unrecognized compensation expense related to the ESPP, which will be recognized over the weighted-average period of 0.37 years.

Xilinx Replacement Awards

In connection with the acquisition of Xilinx, the Company issued equity awards as replacement for assumed equity awards to Xilinx employees.

The replacement awards include restricted stock units of approximately 12 million shares with a weighted average fair value of $103.35 per share and have terms that are substantially the same as the assumed Xilinx awards.

The fair value of replacement awards related to services rendered up to the Xilinx Acquisition Date was recognized as a component of the total purchase consideration while the remaining fair value of replacement awards attributable to post-combination services is being recognized as stock-based compensation expense over the remaining post-acquisition vesting period.

NOTE 13 – Retirement Benefit Plans

3 unchanged sentences

The Company’s contributions to the 401(k) plan for 2024, 2023 and 2022 were approximately $ 78 million, $ 70 million and $ 47 million, respectively.

NOTE 14 – Restructuring Charges

In the fourth quarter of 2024, the Company implemented a restructuring plan (the 2024 Restructuring Plan) focused on driving efficiencies and aligning resources with the Company’s largest growth opportunities in the AI and enterprise markets.

The 2024 Restructuring Plan will primarily reduce global workforce by approximately 4% of headcount.

Restructuring charges are included within the All Other category presented in Note 4 – Segment Reporting.

Significant asset impairment charges are discussed in Note 6 - Acquisition-related Intangible Assets and Goodwill.

The Company expects actions associated with the 2024 Restructuring Plan to be substantially completed by the end of the first quarter of fiscal year 2025.

As of December 28, 2024, $ 89 million of accrued restructuring charges are recorded within Accrued liabilities of the Company’s Consolidated Balance Sheets.

The following table summarizes activities and components of liabilities related to the 2024 Restructuring Plan:

Employee severance and benefits

Asset impairment

(in millions)

Liability as of December 30, 2023

Current period costs

Cash payments

( 24 ) — ( 24 )

Non-cash charges

— ( 73 ) ( 73 )

Liability as of December 28, 2024

$ 89 $ — $ 89

NOTE 15 – Income Taxes

20 unchanged sentences

Statutory federal income tax expense at 21% $ 425 $ 107 $ 252

GILTI and other foreign inclusion ( 138 ) ( 96 ) —

Foreign-Derived Intangible Income (FDII) deduction ( 185 ) ( 261 ) ( 147 )

Research credits ( 169 ) ( 241 ) ( 78 )

Interest and penalty

Tax effect from intercompany integration transaction 373 — —

Foreign rate detriment (benefit)

153 ( 11 ) 195

Interest and penalty

State income taxes, net of federal benefit

22 ( 2 ) ( 3 )

Foreign-Derived Intangible Income (FDII) deduction ( 275 ) ( 185 ) ( 261 )

Research credits ( 232 ) ( 169 ) ( 241 )

GILTI and other foreign inclusion ( 133 ) ( 138 ) ( 96 )

Stock-based and non-deductible compensation ( 101 ) ( 17 ) ( 6 )

1 unchanged sentence

Income tax provision (benefit) $ 381 $ ( 346 ) $ ( 122 )

The Company recorded an income tax benefit of $ 346 million and $ 122 million in 2023 and 2022, respectively, representing effective tax rates of ( 68 %) and ( 10 %), respectively.

The increase in income tax benefit in 2023 was primarily due to the lower pre-tax income coupled with a $ 185 million FDII tax benefit and $ 169 million of research and development (R&D) tax credits.

The Company recorded an income tax provision of $ 381 million and an income tax benefit of $ 346 million in 2024 and 2023, respectively, representing effective tax rates of 19 % and ( 68 )%, respectively.

The increase in income tax provision in 2024 was primarily due to higher pre-tax income and a $373 million tax effect from an intercompany integration transaction.

Beginning in 2022, provisions in the U.S.

9 unchanged sentences

Deferred tax assets:

Capitalized R&D $ 2,892 $ 1,753

Net operating loss carryovers 962 992

Accruals and reserves not currently deductible 829 574

Employee benefits not currently deductible 302 214

Federal and state tax credit carryovers 679 660

Foreign R&D and investment tax credits 579 597

Foreign tax credits

Employee benefits not currently deductible 334 302

Lease liability 182 181

Capitalized R&D 1,753 943

Foreign tax credits

Total deferred tax assets 6,645 5,226

3 unchanged sentences

Acquired intangibles ( 3,614 ) ( 3,104 )

Right-of-use assets ( 175 ) ( 151 )

GILTI ( 222 ) ( 524 )

Right-of-use assets ( 182 ) ( 175 )

Other ( 152 ) ( 135 )

1 unchanged sentence

Net deferred tax assets (liabilities) $ 339 $ ( 836 )

As a result of the R&D capitalization tax law that became effective in 2022, the capitalization of R&D expense amounts resulted in increased taxable income in 2023 and 2022.

The capitalized R&D will be amortized and become deductible in future periods.

Therefore, the Company has recorded a deferred tax asset for the capitalized R&D expenditures.

As a result of the acquisition of Xilinx in 2022, the Company recorded $4.3 billion of net deferred tax liabilities primarily on the excess of book basis over the tax basis of the acquired intangible assets, including $857 million of GILTI net deferred tax liability.

During 2024, the Company executed an intercompany integration transaction and remeasured associated deferred taxes, resulting in increases to the deferred tax liability for acquisition-related intangibles and the deferred tax asset for Capitalized R&D, partially offset by a decrease in the deferred tax liability for GILTI.

The movement in the deferred tax valuation allowance was as follows:

4 unchanged sentences

Acquisition-related 3 5 231

Net recoveries +

Balance at end of year $ 2,136 $ 2,124 $ 2,078

+ The net recoveries in 2021 were primarily related to net originating deferred tax assets and newly generated tax credits.

Through the end of fiscal year 2024, the Company continued to maintain a valuation allowance of approximately $2.1 billion for certain federal, state, and foreign tax attributes.

7 unchanged sentences

State NOLs will expire at various dates through 2043.

The difference between the amount of federal NOLs which are recorded on the Company’s balance sheet as deferred tax assets and their related valuation allowance, and the amounts reported on the Company’s tax returns are the result of uncertain tax positions the Company has taken during the current year and for which an income tax reserve has been recorded.

The difference between the amount of federal NOLs which are recorded on the Company’s Consolidated Balance Sheets as deferred tax assets and their related valuation allowance, and the amounts reported on the Company’s tax returns are the result of uncertain tax positions the Company has taken for which an income tax reserve has been recorded.

The federal tax credits of $ 12 million will expire at various dates between 2037 and 2042.

1 unchanged sentence

The Company also has $ 620 million of credit carryforward in Canada that will expire between 2028 and 2044.

In 2022, the Company also recorded $142 million of current tax payable as of the Xilinx acquisition date.

Additionally, the Company assumed $203 million of long-term liabilities for uncertain tax positions, including $12 million of interest, as well as $321 million of long-term liabilities for transition tax payable over three years.

Included in the assumed liabilities for uncertain tax positions is a tax position with respect to whether stock-based compensation from Xilinx’s cost sharing arrangement should be shared among cost share participants.

The Company has concluded that the law was unsettled and believes the current uncertain tax position liability is sufficient and will continue to monitor developments in relevant tax court cases.

A reconciliation of the Company's gross unrecognized tax benefits was as follows:

8 unchanged sentences

Balance at end of year $ 1,498 $ 1,463 $ 1,361

The amount of unrecognized tax benefits that would impact the effective tax rate if recognized was $ 1.3 billion, $ 1.2 billion and $ 215 million as of December 30, 2023, December 31, 2022 and December 25, 2021, respectively.

The amount of unrecognized tax benefits that would impact the effective tax rate if recognized was $ 1.3 billion, $ 1.3 billion and $ 1.2 billion as of December 28, 2024, December 30, 2023 and December 31, 2022, respectively.

The Company had $ 298 million, $ 142 million and $ 81 million of accrued penalties and interest related to unrecognized tax benefits as of December 28, 2024, December 30, 2023 and December 31, 2022, respectively.

As of December 30, 2023 and December 31, 2022, the Company had long-term income tax liabilities related to unrecognized tax benefits of $ 1.4 billion and $ 1.3 billion, respectively, recorded under Other long-term liabilities in the Consolidated Balance Sheets.

As of December 28, 2024 and December 30, 2023, the Company had long-term income tax liabilities related to unrecognized tax benefits of $ 1.4 billion, recorded under Other long-term liabilities in the Company’s Consolidated Balance Sheets.

The Company is subject to taxation in the U.S.

16 unchanged sentences

Interest income $ 182 $ 206 $ 65

Loss on debt redemption, repurchase and conversion — — ( 7 )

Gains (losses) on equity investments, net 2 ( 1 ) ( 62 )

6 unchanged sentences

For 2024, 2023 and 2022, the Company recorded $ 147 million, $ 127 million and $ 118 million, respectively, of operating lease expense, including short-term lease expense.

For 2023 and 2022, the Company recorded $ 46 million and $ 40 million, respectively, of variable lease expense, which primarily included operating expenses and property taxes associated with the usage of facilities under the operating leases.

For 2023 and 2022, cash paid for operating leases included in operating cash flows was $ 147 million and $ 108 million, respectively.

For 2024, 2023, and 2022, the Company recorded $ 83 million, $ 46 million, and $ 40 million respectively, of variable lease expense, which primarily included operating expenses and property taxes associated with the usage of facilities under the operating leases.

For 2024, 2023, and 2022 cash paid for operating leases included in operating cash flows was $ 155 million $ 147 million and $ 108 million, respectively.

The Company’s finance and short-term leases are immaterial to the Company’s consolidated financial statements.

Supplemental information related to leases is as follows:

December 28, 2024

Weighted-average remaining lease term in years – operating leases 7.28

18 unchanged sentences

The Company generally warrants that its products sold to its customers will conform to its approved specifications and be free from defects in material and workmanship under normal use and conditions for one year.

The Company may also offer one to three-year limited warranties based on product type and negotiated warranty terms with certain customers.

The Company may also offer, in general, one to three-year limited warranties based on product type and negotiated warranty terms with certain customers.

The Company accrues warranty costs to Cost of sales at the time of sale of warranted products.

16 unchanged sentences

With respect to these matters, based on management’s current knowledge, the Company believes that the amount or range of reasonably possible loss, if any, will not, either individually or in the aggregate, have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

Environmental Matters

The Company is named as a responsible party on Superfund clean-up orders for three sites in Sunnyvale, California that are on the National Priorities List.

Since 1981, the Company has discovered hazardous material releases to the groundwater from former underground tanks and proceeded to investigate and conduct remediation at these three sites.

The chemicals released into the groundwater were commonly used in the semiconductor industry in the United States in the wafer fabrication process prior to 1979.

In 1991, the Company received Final Site Clean-up Requirements Orders from the California Regional Water Quality Control Board relating to the three sites.

The Company has entered into settlement agreements with other responsible parties on two of the orders.

During the term of such agreements, other parties have agreed to assume most of the foreseeable costs as well as the primary role in conducting remediation activities under the orders.

The Company remains responsible for additional costs beyond the scope of the agreements as well as all remaining costs in the event that the other parties do not fulfill their obligations under the settlement agreements.

To address anticipated future remediation costs under the orders, the Company has computed and recorded an estimated environmental liability of approximately $ 4.8 million and has not recorded any potential insurance recoveries in determining the estimated costs of the cleanup.

The progress of future remediation efforts cannot be predicted with certainty and these costs may change.

The Company believes that any amount in addition to what has already been accrued would not be material.

Report of Independent Registered Public Accounting Firm

5 unchanged sentences

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 30, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated January 31, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 28, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 5, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

22 unchanged sentences

We compared the quantities and carrying value of on-hand inventories to related unit sales, both historical and forecasted, and evaluated the appropriateness and adequacy of management’s adjustments to such sales forecasts by analyzing potential technological changes in line with product life cycles.

We also assessed the accuracy of forecasts underlying management's estimates by comparing management’s historical forecasts to actual results, evaluated industry and market factors and performed sensitivity analyses over the forecasted demand used by management to determine necessary changes in the inventory excess and obsolescence reserves.

/s/ Ernst & Young LLP

1 unchanged sentence

San Jose, California

January 31, 2024

February 5, 2025

Report of Independent Registered Public Accounting Firm

4 unchanged sentences

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 28, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 30, 2023 and December 31, 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 30, 2023, and the related notes and our report dated January 31, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 28, 2024 and December 30, 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 28, 2024, and the related notes and our report dated February 5, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

16 unchanged sentences

San Jose, California

January 31, 2024

February 5, 2025

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data