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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 

FORM 10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 24, 2022
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
amd-20220924_g1.jpg
ADVANCED MICRO DEVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware94-1692300
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

2485 Augustine Drive
Santa Clara, California 95054
(Address of principal executive offices)

(408) 749-4000
Registrant’s telephone number, including area code

N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
 Name of each exchange on which registered
Common Stock, $0.01 par value
AMD
The Nasdaq Global Select Market
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 (the Exchange Act) 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 every Interactive Data File required to be submitted 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 such files).    Yes ☑    No ¨
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,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes    No ☑
Indicate the number of shares outstanding of the registrant’s common stock, $0.01 par value, as of October 28, 2022: 1,612,356,162


INDEX
 
2

PART I. FINANCIAL INFORMATION
 
ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Advanced Micro Devices, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
 Three Months EndedNine Months Ended
 September 24,
2022
September 25,
2021
September 24,
2022
September 25,
2021
 (In millions, except per share amounts)
Net revenue$5,565 $4,313 $18,002 $11,608 
Cost of sales2,799 2,227 8,797 6,105 
Amortization of acquisition-related intangibles412  1,005  
Total cost of sales3,211 2,227 9,802 6,105 
Gross profit2,354 2,086 8,200 5,503 
Research and development1,279 765 3,639 2,034 
Marketing, general and administrative557 376 1,746 1,036 
Amortization of acquisition-related intangibles590  1,499  
Licensing gain(8)(3)(97)(8)
Operating income (loss)(64)948 1,413 2,441 
Interest expense(31)(7)(69)(26)
Other income (expense), net22 62 (24)51 
Income (loss) before income taxes and equity income (73)1,003 1,320 2,466 
Income tax provision (benefit)(135)82 32 284 
Equity income in investee4 2 11 6 
Net income$66 $923 $1,299 $2,188 
Earnings per share
Basic$0.04 $0.76 $0.84 $1.80 
Diluted$0.04 $0.75 $0.84 $1.78 
Shares used in per share calculation
Basic1,615 1,214 1,542 1,214 
Diluted1,625 1,230 1,555 1,231 
See accompanying notes.
3

Advanced Micro Devices, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 Three Months EndedNine Months Ended
 September 24,
2022
September 25,
2021
September 24,
2022
September 25,
2021
 (In millions)
Net income$66 $923 $1,299 $2,188 
Other comprehensive income (loss), net of tax:
Net change in unrealized gains (losses) on cash flow hedges(55)(7)(85)(17)
Total comprehensive income$11 $916 $1,214 $2,171 
See accompanying notes.
4

Advanced Micro Devices, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
September 24,
2022
December 25,
2021
 (In millions, except par value amounts)
ASSETS
Current assets:
Cash and cash equivalents$3,398 $2,535 
Short-term investments2,193 1,073 
Accounts receivable, net4,336 2,706 
Inventories3,369 1,955 
Receivables from related parties4 2 
Prepaid expenses and other current assets1,120 312 
Total current assets14,420 8,583 
Property and equipment, net1,486 702 
Operating lease right-of-use assets490 367 
Goodwill24,187 289 
Acquisition-related intangibles25,162  
Investment: equity method 80 69 
Deferred tax assets32 931 
Other non-current assets1,954 1,478 
Total assets$67,811 $12,419 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$2,337 $1,321 
Payables to related parties397 85 
Accrued liabilities3,598 2,424 
Current portion of long-term debt, net 312 
Other current liabilities359 98 
Total current liabilities6,691 4,240 
Long-term debt, net of current portion2,466 1 
Long-term operating lease liabilities424 348 
Deferred tax liabilities2,078 12 
Other long-term liabilities1,610 321 
Commitments and Contingencies (See Note 13)
Stockholders’ equity:
Capital stock:
Common stock, par value $0.01; shares authorized: 2,250; shares issued: 1,642 and 1,232; shares outstanding: 1,612 and 1,207
16 12 
Additional paid-in capital57,581 11,069 
Treasury stock, at cost (shares held: 30 and 25)
(2,815)(2,130)
Accumulated deficit(152)(1,451)
Accumulated other comprehensive loss(88)(3)
Total stockholders’ equity 54,542 7,497 
Total liabilities and stockholders’ equity $67,811 $12,419 

See accompanying notes.
5

Advanced Micro Devices, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

 Nine Months Ended
 September 24,
2022
September 25,
2021
 (In millions)
Cash flows from operating activities:
Net income $1,299 $2,188 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization2,954 289 
Stock-based compensation 766 267 
Amortization of operating lease right-of-use assets63 40 
Amortization of inventory fair value adjustment187  
Loss on debt redemption, repurchase and conversion 7 
Loss on sale or disposal of property and equipment15 19 
Deferred income taxes(1,328)201 
(Gains) losses on equity investments, net57 (52)
Other(9)(2)
Changes in operating assets and liabilities
Accounts receivable, net(1,301)(158)
Inventories(997)(504)
Receivables from related parties(1)5 
Prepaid expenses and other assets(825)(284)
Payables to related parties313 (42)
Accounts payable811 526 
Accrued liabilities and other994 199 
Net cash provided by operating activities2,998 2,699 
Cash flows from investing activities:
Purchases of property and equipment(326)(215)
Purchases of short-term investments
(2,399)(1,901)
Proceeds from maturity of short-term investments
2,864 1,428 
Cash received from acquisition of Xilinx2,366  
Acquisition of Pensando, net of cash acquired(1,558) 
Other(15)2 
Net cash provided by (used in) investing activities932 (686)
Cash flows from financing activities:
Proceeds from debt, net of issuance costs991  
Repayment of debt(312) 
Proceeds from sales of common stock through employee equity plans79 55 
Repurchases of common stock(3,452)(1,004)
Common stock repurchases for tax withholding on employee equity plans
(371)(219)
Other(2) 
Net cash used in financing activities(3,067)(1,168)
Net increase in cash and cash equivalents863 845 
Cash and cash equivalents at beginning of period2,535 1,595 
Cash and cash equivalents at end of period$3,398 $2,440 
6

Advanced Micro Devices, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 24,
2022
September 25,
2021
(In millions)
Supplemental cash flow information:
Cash paid for taxes, net of refunds$584 $23 
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid$122 $74 
Issuance of common stock to settle convertible debt$ $25 
Issuance of common stock and treasury stock for the acquisition of Xilinx$48,514 $ 
Fair value of replacement share-based awards related to acquisition of Xilinx$275 $ 
Transfer of assets for acquisition of property and equipment$13 $37 
Non-cash activities for leases:
Operating lease right-of-use assets acquired by assuming related liabilities$119 $128 

See accompanying notes.
7

Advanced Micro Devices
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
Three Months EndedNine Months Ended
September 24,
2022
September 25,
2021
September 24,
2022
September 25,
2021
(In millions)
Capital stock:
Common stock, par value
Balance, beginning of period$16 $12 $12 $12 
Issuance of common stock as consideration for acquisition  4  
Balance, end of period$16 $12 $16 $12 
Additional paid-in capital
Balance, beginning of period$57,297 $10,795 $11,069 $10,544 
Common stock issued under employee equity plans1 4 79 55 
Stock-based compensation275 99 765 267 
Issuance of common stock to settle convertible debt   25 
Issuance of common stock as consideration for acquisition  45,372  
Fair value of replacement share-based awards related to acquisition  275  
Issuance of common stock warrants8 7 21 14 
Balance, end of period$57,581 $10,905 $57,581 $10,905 
Treasury stock
Balance, beginning of period$(1,893)$(401)$(2,130)$(131)
Repurchases of common stock(617)(750)(3,452)(1,006)
Common stock repurchases for tax withholding on employee equity plans
(305)(205)(371)(219)
Reissuance of treasury stock as consideration for acquisition  3,138  
Balance, end of period$(2,815)$(1,356)$(2,815)$(1,356)
Accumulated deficit:
Balance, beginning of period$(218)$(3,348)$(1,451)$(4,605)
Cumulative effect of adoption of accounting standard   (8)
Net income66 923 1,299 2,188 
Balance, end of period$(152)$(2,425)$(152)$(2,425)
Accumulated other comprehensive income (loss):
Balance, beginning of period$(33)$7 $(3)$17 
    Other comprehensive loss(55)(7)(85)(17)
Balance, end of period$(88)$ $(88)$ 
Total stockholders' equity$54,542 $7,136 $54,542 $7,136 
See accompanying notes.

8

Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1 – The Company
Advanced Micro Devices, Inc. is a global semiconductor company. References herein to AMD or the Company mean Advanced Micro Devices, Inc. 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), adaptive SoC products, and Adaptive Compute Acceleration Platform (ACAP) products. From time to time, the Company may also sell or license portions of its intellectual property (IP) portfolio.
On February 14, 2022 (the Xilinx Acquisition Date), the Company completed the acquisition of Xilinx, Inc. (Xilinx). On May 26, 2022 (the Pensando Acquisition Date), the Company completed the acquisition of Pensando Systems, Inc. (Pensando). See Note 5 - Business Combinations for additional information on these acquisitions.
NOTE 2 – Basis of Presentation and Significant Accounting Policies
Basis of Presentation. The accompanying unaudited condensed consolidated financial statements of AMD have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The results of operations for the three and nine months ended September 24, 2022 shown in this report are not necessarily indicative of results to be expected for the full year ending December 31, 2022 or any other future period. In the opinion of the Company’s management, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s results of operations, financial position, cash flows and stockholders’ equity. All such adjustments are of a normal, recurring nature. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2021. Certain prior period amounts have been reclassified to conform to the current period presentation.
The Company uses a 52- or 53-week fiscal year ending on the last Saturday in December. The three and nine months ended September 24, 2022 and September 25, 2021 each consisted of 13 and 39 weeks, respectively.
Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results are likely to differ from those estimates, and such differences may be material to the financial statements. Areas where management uses judgment include, but are not limited to, revenue allowances, inventory valuation and related carrying value adjustments, valuation and assessing potential impairment, if any, of goodwill and intangible assets, business combination accounting and deferred income tax assets.
Significant Accounting Policies. Except for the addition of business combinations, impairment of long-lived and intangible assets, and Global Intangible Low-Taxed Income (GILTI) accounting policies to the Company’s significant accounting policies, there have been no material changes to the Company’s significant accounting policies in Note 2 - Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2021.
9

Business Combinations. The Company is required to use the acquisition method of accounting for business combinations. The acquisition method of accounting requires the Company to allocate the purchase consideration to the assets acquired and liabilities assumed from the acquiree based on their respective fair values as of the acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future revenue growth and margins, future changes in technology, expected cost and time to develop in-process research and development and discount rates. Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability. These estimates are inherently uncertain and, therefore, actual results may differ from the estimates made. As a result, during the measurement period of up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of the purchase price of an acquisition, whichever comes first, any subsequent adjustments are recorded in the Consolidated Statements of Operations.
Impairment of Long-Lived and Intangible Assets. Long-lived and intangible assets to be held and used are reviewed for impairment if indicators of potential impairment exist and at least annually for indefinite-lived intangible assets. Impairment indicators are reviewed on a quarterly basis. Assets are grouped and evaluated for impairment at the lowest level of identifiable cash flows.
When indicators of impairment exist and assets are held for use, the Company estimates future undiscounted cash flows attributable to the related asset groups. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the asset group or based on appraisals. Factors affecting impairment of assets held for use include the ability of the specific assets to generate separately identifiable positive cash flows.
When assets are removed from operations and held for sale, the Company estimates impairment losses as the excess of the carrying value of the assets over their fair value. Market conditions are among the factors affecting impairment of assets held for sale. Changes in any of these factors could necessitate impairment recognition in future periods for assets held for use or assets held for sale.
Global Intangible Low-Taxed Income (GILTI). In 2022, the Company elected to change its method of accounting for the United States GILTI tax from recording the tax impact in the period it is incurred to recognizing deferred taxes for temporary tax basis differences expected to reverse as GILTI tax in future years. The change is considered preferable based on the Company’s facts and circumstances as it provides better and more timely information of expected future income tax liabilities arising from temporary tax differences primarily associated with the Xilinx acquisition. As a result of the acquisition, the Company recorded $27.3 billion of identified intangible assets (refer to Note 5 - Business Combinations), of which $16.9 billion are related to foreign operations which will be amortized to income from operations over the assets’ estimated useful lives, but for which the Company will not receive a tax deduction under GILTI. Recognition of deferred taxes for the future GILTI impact of this amount is considered preferable as it provides better information about potential future tax liabilities of the Company based on current transactions. This accounting policy change resulted in the recording of $863 million of deferred tax liabilities in connection with the Xilinx acquisition as disclosed in Note 12 - Income Taxes. In addition, for the three and nine months ended September 24, 2022, it resulted in a decrease in the income tax provision with a corresponding increase to net income of $209 million and $346 million and an increase in basic and diluted earnings per share of $0.13 and $0.23 respectively, as compared to the computation under the previous accounting policy. This accounting policy change had no material impact on the Company’s historical consolidated financial statements.
NOTE 3 – Supplemental Financial Statement Information
Accounts Receivable, net
As of September 24, 2022 and December 25, 2021, Accounts receivable, net included unbilled accounts receivable of $1.3 billion and $329 million, respectively. Unbilled accounts receivable primarily represents work completed on 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.
10

Inventories
September 24,
2022
December 25,
2021
 (In millions)
Raw materials$207 $82 
Work in process2,466 1,676 
Finished goods696 197 
Total inventories$3,369 $1,955 
Prepaid Expenses and Other Current AssetsSeptember 24,
2022
December 25,
2021
(In millions)
Prepaid supply agreements$719 $74 
Other401 238 
Total prepaid expenses and other current assets$1,120 $312 
Prepaid supply agreements relate to the short-term portion of payments made to vendors to secure long-term supply capacity.
Property and Equipment, net
September 24,
2022
December 25,
2021
 (In millions)
Land$120 $ 
Building and leasehold improvements596 206 
Equipment1,990 1,534 
Construction in progress176 96 
Property and equipment, gross2,882 1,836 
Accumulated depreciation(1,396)(1,134)
Total property and equipment, net$1,486 $702 
Other Non-Current Assets
September 24,
2022
December 25,
2021
(In millions)
Long-term prepaid supply agreements$1,020 $916 
Software and technology licenses, net552 328 
Other382 234 
Total other non-current assets$1,954 $1,478 
Accrued Liabilities
September 24,
2022
December 25,
2021
 (In millions)
Accrued marketing programs$900 $933 
Accrued compensation and benefits749 705 
Customer program liabilities1,134 314 
Other accrued and current liabilities815 472 
Total accrued liabilities$3,598 $2,424 
11

Revenue
Revenue allocated to remaining performance obligations that are unsatisfied (or partially unsatisfied) include amounts received from customers and amounts that will be invoiced and recognized as revenue in future periods for development services, IP licensing and product revenue. As of September 24, 2022, the aggregate transaction price allocated to remaining performance obligations under contracts with an original expected duration of more than one year was $302 million, of which $244 million is expected to be recognized in the next 12 months. The revenue allocated to remaining performance obligations does not include amounts which have an original expected duration of one year or less.
Revenue recognized over time associated with custom products and development services accounted for approximately 30% and 24% of the Company’s revenue for the three and nine months ended September 24, 2022, respectively, and 22% for each of the three and nine months ended September 25, 2021.
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. In the second quarter of fiscal year 2022, the Company updated its segment reporting structure to align financial reporting with the manner in which the Company manages its business in strategic end markets. The Company’s disclosed measure of segment operating results has been updated consistent with the revised manner in which the Company’s CODM assesses the company’s financial performance and allocates resources. All prior-period segment data have been retrospectively adjusted.
The Company’s four reportable segments are:
the Data Center segment, which primarily includes server microprocessors and GPUs, DPUs, FPGAs and adaptive SoC products for data centers;
the Client segment, which primarily includes microprocessors, accelerated processing units that integrate microprocessors and graphics, and chipsets for desktop and notebook personal computers;
the Gaming segment, which primarily includes discrete GPUs, semi-custom SoC products and development services; and
the Embedded segment, which primarily includes embedded microprocessors and GPUs, FPGAs, adaptive SoC products, and ACAP products.
From time to time, the Company may also sell or license portions of its IP portfolio.
In addition to these reportable segments, the Company has an All Other category, which is not a reportable segment. This category primarily includes certain expenses and credits that are not allocated to any of the reportable segments because 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 costs and licensing gain.
12

The following table provides a summary of net revenue and operating income by segment: 
Three Months EndedNine Months Ended
September 24,
2022
September 25,
2021
September 24,
2022
September 25,
2021
(In millions)
Net revenue:
Data Center$1,609 $1,108 $4,388 $2,531 
Client1,022 1,692 5,298 5,058 
Gaming1,631 1,434 5,161 3,844 
Embedded1,303 79 3,155 175 
Total net revenue$5,565 $4,313 $18,002 $11,608 
Operating income (loss): 
Data Center$505 $308 $1,404 $622 
Client(26)490 1,342 1,558 
Gaming142 231 687 527 
Embedded635 23 1,553 26 
All Other (1)
(1,320)(104)(3,573)(292)
Total operating income (loss)$(64)$948 $1,413 $2,441 
(1)
For the three and nine months ended September 24, 2022, all other operating losses primarily included $1.0 billion and $2.5 billion of amortization of acquisition-related intangibles, $275 million and $766 million of stock-based compensation expense and $51 million and $400 million of acquisition-related costs, respectively.
For the three and nine months ended September 25, 2021, all other operating losses primarily included $99 million and $267 million of stock-based compensation expense, and $8 million and $33 million of acquisition-related costs, respectively.
NOTE 5 – Business Combinations
Pensando Acquisition
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.
13

The purchase consideration was preliminarily allocated as follows:
(In millions)
Cash and cash equivalents$111 
Accounts receivable31 
Inventory66 
Prepaid expenses and other current assets43 
Property and equipment11 
Deferred tax assets22 
Acquisition-related intangibles349 
Total Assets633 
Accounts payable15 
Accrued and other liabilities61 
Total Liabilities76 
Fair value of net assets acquired557 
Goodwill1,098 
Total purchase consideration$1,655 
The Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the preliminary estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management. The fair values are subject to adjustment for up to one year after the close of the transaction as additional information is obtained. Any adjustments to the preliminary purchase price allocation identified during the measurement period are recognized in the period in which the adjustments are determined. Adjustments to the preliminary purchase price allocation since the completion of the acquisition resulted in an immaterial decrease to goodwill.
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.
14

Following are details of the purchase consideration allocated to acquired intangible assets:
Fair ValueWeighted-average estimated useful life
(In millions)(In years)
Developed technology (1)
$60 4 years
Customer relationships (2)
34 3 years
Customer backlog (3)
16 1 year
Product trademarks (4)
19 5 years
Identified intangible assets subject to amortization129 
In-process research and development (IPR&D) not subject to amortization (5)
220 N/A
Total identified intangible assets acquired$349 
1)The fair value of developed technology was determined using the income approach, specifically the multi-period excess earnings method.
2)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.
3)Customer backlog represents the fair value of non-cancellable customer contract orders using the income approach, specifically the multi-period excess earnings method.
4)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.
5)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 September 24, 2022, the Condensed Consolidated Statements of Operations include immaterial revenue and operating results attributable to Pensando, which are reported under the Data Center segment.
During the three and nine months ended September 24, 2022, Pensando acquisition-related costs of $40 million and $64 million, respectively, were recorded under Cost of sales, Research and development, and Marketing, general and administrative expenses on the Company’s Condensed Consolidated Statements of Operations. Acquisition-related costs are primarily comprised of direct transaction costs, fair value adjustments for acquired inventory and certain compensation charges. The Company may incur additional acquisition-related costs in the future related to the acquisition.
15

Xilinx Acquisition
On February 14, 2022, 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 condensed consolidated financial statements from the Xilinx Acquisition Date to September 24, 2022 and are reported under the Embedded and Data Center segments.
The purchase consideration was preliminarily allocated as follows:
(In millions)
Cash and cash equivalents$2,366 
Short-term investments1,582 
Accounts receivable299 
Inventories539 
Prepaid expenses and other current assets61 
Property and equipment692 
Operating lease right-of-use assets61 
Acquisition-related intangibles27,308 
Deferred tax assets11 
Other non-current assets418 
Total Assets33,337 
Accounts payable116 
Accrued liabilities633 
Other current liabilities191 
Long-term debt1,474 
Long-term operating lease liabilities45 
Deferred tax liabilities4,346 
Other long-term liabilities533 
Total Liabilities7,338 
Fair value of net assets acquired25,999 
Goodwill22,794 
Total purchase consideration$48,793 
The Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the preliminary estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management. The fair values are subject to adjustment for up to one year after the close of the transaction as additional information is obtained. The primary items pending are related to income tax matters. Any adjustments to the preliminary purchase price allocation identified during the measurement period are recognized in the period in which the adjustments are determined.
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.
16

Following are details of the purchase consideration allocated to acquired intangible assets:
Fair ValueWeighted-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)
793 1 year
Corporate trade name (4)
65 1 year
Product trademarks (4)
895 12 years
Identified intangible assets subject to amortization26,338 
In-process research and development (IPR&D) not subject to amortization (5)
970 N/A
Total identified intangible assets acquired$27,308 
(1)The fair value of developed technology was determined using the income approach, specifically, the multi-period excess earnings method.
(2)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.
(3)Customer backlog represents the fair value of non-cancellable customer contract orders using the income approach, specifically the multi-period excess earnings method.
(4)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.
(5)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 $970 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 life.
The Company also assumed unvested restricted stock units with estimated fair value of $1.2 billion, of which $275 million was included as a component of the purchase consideration and $951 million will be recognized as expense subsequent to the acquisition.
The Condensed Consolidated Statements of Operations include the following revenue and operating income attributable to Xilinx for the three and nine months ended September 24, 2022:
Three Months Ended September 24, 2022Nine Months Ended
September 24, 2022
(In millions)
Net revenue$1,312 $3,122 
Operating income$644 $1,470 
Operating income attributable to Xilinx recorded under the Embedded and Data Center segments does not include amortization of acquisition-related intangibles, employee stock-based compensation expense and acquisition-related costs, which are recorded under the “All Other” segment.
During the three and nine months ended September 24, 2022, Xilinx acquisition-related costs of $11 million and $336 million, respectively, were recorded under Cost of sales, Research and development, and Marketing, general and administrative expenses on the Company’s Condensed Consolidated Statements of Operations. Acquisition-related costs are primarily comprised of direct transaction costs, fair value adjustments for acquired inventory and certain compensation charges. The Company may incur additional acquisition-related costs in the future related to the Xilinx acquisition.
17

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).
Three Months EndedNine Months Ended
September 24, 2022September 25, 2021September 24, 2022September 25, 2021
(In millions)
Net revenue$5,565 $5,258 $18,518 $14,290 
Net income (loss)$397 $224 $1,928 $(369)
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 three months ended September 24, 2022 includes Xilinx and Pensando results for the same period; the three months ended September 25, 2021 includes Xilinx results for the three months ended October 2, 2021 and Pensando results for the three months ended September 30, 2021; the nine months ended September 24, 2022 includes Xilinx results for the nine-month period beginning January 2, 2022 through September 24, 2022 and Pensando results for the nine-month period beginning January 1, 2022 through September 24, 2022; and the nine months ended September 25, 2021 includes Xilinx results for the nine months ended October 2, 2021 and Pensando results for the nine months ended September 30, 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 the first quarter of 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 September 24, 2022 were as follows:
Weighted-average Remaining Useful Life September 24, 2022
Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
(In millions)
Developed technology15 years$12,360 $(512)$11,848 
Customer relationships14 years12,324 (1,411)10,913 
Customer backlog5 months809 (494)315 
Corporate trade name5 months65 (40)25 
Product trademarks11 years914 (47)867 
Identified intangible assets subject to amortization26,472 (2,504)23,968 
IPR&D not subject to amortizationN/A1,194 — 1,194 
Total acquisition-related intangible assets$27,666 $(2,504)$25,162 
Acquisition-related intangible asset balance as of September 25, 2021 was not material.
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Acquisition-related intangible amortization expense was $1.0 billion and $2.5 billion for the three and nine months ended September 24, 2022, respectively.
Based on the carrying value of acquisition-related intangibles recorded as of September 24, 2022, and assuming no subsequent impairment of the underlying assets, the estimated annual amortization expense for acquisition-related intangibles is expected to be as follows:
Fiscal Year(In millions)
Remainder of 2022$1,044 
20232,804 
20242,286 
20252,061 
20261,951 
2027 and thereafter13,822 
Total$23,968 
Goodwill
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. The Company performed a goodwill impairment test immediately prior to and after the segment change and determined that no indicators of impairment to goodwill existed.
The carrying amount of goodwill as of September 24, 2022 and December 25, 2021 was $24.2 billion and $289 million, respectively, and was assigned to reporting units within the following reportable segments:
December 26, 2021Acquisitions and related adjustmentsReassignment due to segment changeSeptember 24, 2022
(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 1,104 1,782 2,886 
Gaming  238 238 
Embedded  21,063