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AMD Reports First Quarter Results

SUNNYVALE, Calif.--(BUSINESS WIRE)--Apr. 21, 2009-- AMD (NYSE:AMD) today reported first quarter 2009 results.

For financial reporting purposes, AMD consolidates the operating results of GLOBALFOUNDRIES Inc. in its results as of March 2, 2009 and has created the Foundry segment as of the start of the fiscal year. References to “AMD” in this announcement include these consolidated operating results which are reported for GAAP purposes. “AMD Product Company” refers to AMD, excluding the operating results of the Foundry segment and intersegment eliminations1,2.

AMD reported revenue for first quarter of 2009 of $1.177 billion. First quarter 2009 revenue was flat compared to the fourth quarter of 2008 and decreased 21 percent compared to the first quarter of 2008.

“AMD’s sequential microprocessor unit and revenue growth in difficult economic conditions demonstrate we can grow in an environment where customers are looking for maximum value,” said Dirk Meyer, AMD president and CEO. “We delivered on a number of important priorities in the first quarter. We launched GLOBALFOUNDRIES, maintained our cadence of new product and platform introductions, and made solid progress on our restructuring activities. The result is a more nimble AMD, capable of achieving long-term success based on our strengths designing and integrating industry-leading computing and graphics technologies.”

In the first quarter of 2009, AMD reported a net loss attributable to AMD common stockholders of $416 million or $0.66 per share, which includes a net unfavorable impact of $22 million, or $0.04 per share, as described in the table below3. AMD’s operating loss was $308 million.

In the fourth quarter of 2008, AMD had revenue from continuing operations of $1.162 billion, a net loss of $1.437 billion and an operating loss of $1.274 billion. In the first quarter of 2008, AMD had revenue from continuing operations of $1.487 billion, a net loss of $351 million and an operating loss of $234 million.

In the first quarter of 2009, AMD Product Company reported an adjusted non-GAAP net loss of $189 million and an adjusted non-GAAP operating loss of $124 million.

First quarter 2009 AMD gross margin was 43 percent, including a positive impact of 5 percentage points due to a $64 million benefit from the sale of inventory written down in the fourth quarter of 2008. Fourth quarter 2008 gross margin was 23 percent, including a negative impact of 20 percentage points due to a $227 million inventory write down. First quarter 2009 AMD Product Company non-GAAP gross margin was 35 percent.

Current Outlook

AMD’s outlook statements are based on current expectations. The following statements are forward looking, and actual results could differ materially depending on market conditions and the factors set forth under “Cautionary Statement” below.

Considering current macroeconomic conditions, limited visibility and historical seasonal patterns, AMD expects its Product Company revenue to be down for the second quarter of 2009.

Additional Highlights

  • AMD completed its Asset Smart transaction with the Advanced Technology Investment Company (ATIC) and Mubadala Development Company of Abu Dhabi, creating GLOBALFOUNDRIES, a leading-edge semiconductor manufacturing company.
  • AMD unveiled the “Yukon” platform for ultrathin notebook PCs, which debuted in the award-winning HP Pavilion dv2 notebook that received CES “Best-of-Show” recognition from Laptop Magazine.

AMD Teleconference

AMD will hold a conference call for the financial community at 2:00 p.m. PT (5:00 p.m. ET) today to discuss its first quarter financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its Web site at www.amd.com. The webcast will be available for 10 days after the conference call.

Reconciliation of GAAP Net Income (Loss) Attributable to AMD Common Stockholders to AMD Product Company Non-GAAP Net Income (Loss) 1,2,3,4

     
(Millions except per share amounts)   Q1-09   Q4-08   Q1-08
GAAP net income (loss) attributable to AMD common stockholders / EPS   $ (416 )   $ (0.66 )   $ (1,443 )   $ (2.37 )   $ (364 )   $ (0.60 )
Loss from discontinued operations     -       -       (10 )     (0.02 )     (30 )     (0.05 )
Income (loss) attributable to AMD stockholders from continuing operations   $ (416 )   $ (0.66 )   $ (1,433 )   $ (2.35 )   $ (334 )   $ (0.55 )
Gross margin benefit from sales of inventory written down in Q4-08     64       0.10       -       -       -       -  
Incremental write-down of inventory     -       -       (227 )     (0.37 )     -       -  
Amortization of acquired intangibles     (18 )     (0.03 )     (30 )     (0.05 )     (40 )     (0.07 )
ATI impairment of goodwill and acquired intangible assets     -       -       (684 )     (1.12 )     -       -  
Restructuring charges     (60 )     (0.10 )     (50 )     (0.08 )     -       -  
AMD Product Company formation costs associated with GLOBALFOUNDRIES     (21 )     (0.03 )     (23 )     (0.04 )     -       -  
Investment net charges     (9 )     (0.01 )     (21 )     (0.03 )     -       -  
Gain on debt buyback     108       0.17       26       0.04       -       -  
Gain on sale of Handheld assets     28       0.04       -       -       -       -  
Incremental tax provision related to the formation of GLOBALFOUNDRIES     (114 )     (0.18 )     -       -       -       -  
Net unfavorable impact subtotal   $ (22 )   $ (0.04 )   $ (1,009 )   $ (1.66 )   $ (40 )   $ (0.07 )
Non-GAAP net income (loss) attributable to AMD common stockholders   $ (394 )       $ (424 )       $ (294 )    
Net income (loss) from Foundry segment and intersegment eliminations     (317 )     (0.51 )                
Incremental tax provision related to the formation of GLOBALFOUNDRIES     114       0.18                  
Net (income) loss attributable to non-controlling interest     6       0.01                  
Class B preferred accretion     (8 )     (0.01 )                
AMD Product Company non-GAAP net income (loss)   $ (189 )                    

Reconciliation of GAAP to AMD Product Company Non-GAAP Operating Income (Loss) 1,2,3,4

(Millions) Q1-09 Q4-08 Q1-08
GAAP operating income (loss) $ (308) $ (1,274) $ (234)
Gross margin benefit from sales of inventory written down in Q4-08 64 - -
Incremental write-down of inventory - (227) -
Amortization of acquired intangibles (18) (30) (40)
ATI impairment of goodwill and acquired intangible assets - (684) -
Restructuring charges (60) (50) -
AMD Product Company formation costs associated with GLOBALFOUNDRIES (21) (23) -
Non-GAAP operating income (loss) $ (273) $ (260) $ (194)
Operating income (loss) from Foundry segment and intersegment eliminations (149)    
AMD Product Company non-GAAP operating income (loss) $ (124)    

Reconciliation of GAAP to AMD Product Company Non-GAAP Gross Margin1,2,3,4

 
(Millions, except percentages)   Q1-09   Q4-08   Q1-08
GAAP Gross Margin   $ 503     $ 272     $ 621  
GAAP Gross Margin %     43 %     23 %     42 %
Gross margin benefit from sales of inventory written down in Q4-08     64       -       -  
Incremental write-down of inventory     -       (227 )     -  
Non-GAAP Gross Margin   $ 439     $ 499     $ 621  
Non-GAAP Gross Margin %     37 %     43 %     42 %
Gross margin from Foundry segment and intersegment eliminations     27          
AMD Product Company non-GAAP Gross Margin   $ 412          
AMD Product Company non-GAAP Gross Margin %     35 %        

Select Segment Information4

 
(Millions, except percentages)   Q1-09   vs Q4-08   vs Q1-08
Computing Solutions            
Revenue   $ 938   7%   -21%
Microprocessor Units       up   down
Microprocessor Average Selling Prices (ASP)       down   down
Graphics            
Revenue   $ 222   -18%   -15%
Graphic Processor Units       down   down
Graphic Processor Average Selling Prices (ASP)       down   up

About AMD

Advanced Micro Devices (NYSE:AMD) is an innovative technology company dedicated to collaborating with customers and technology partners to ignite the next generation of computing and graphics solutions at work, home and play. For more information, visit http://www.amd.com

Cautionary Statement

This release contains forward-looking statements concerning AMD Product Company, its second quarter 2009 revenue, and its future products and technologies, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as “would,” “may,” “expects,” “believes,” “plans,” “intends,” “projects,” and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this release are based on current beliefs, assumptions and expectations, speak only as of the date of this release and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Risks include the possibility that Intel Corporation’s pricing, marketing and rebating programs, product bundling, standard setting, new product introductions or other activities targeting the company’s business will prevent attainment of the company’s current plans; global business and economic conditions will continue in their current state or worsen resulting in lower than currently expected revenue in the second quarter of 2009 and beyond; the company’s Asset Smart strategy will be less beneficial than anticipated; demand for computers and consumer electronics products and, in turn, demand for the company’s products will be lower than currently expected; customers stop buying the company’s products or materially reduce their demand for its products; the company will require additional funding and may not be able to raise funds on favorable terms or at all; the company’s restructuring efforts will not be effective; the company will be unable to develop, launch and ramp new products and technologies in the volumes and mix required by the market and at mature yields on a timely basis; there will be unexpected variations in market growth and demand for the company’s products and technologies in light of the product mix that it may have available at any particular time or a decline in demand; the company will be unable to transition its products to advanced manufacturing process technologies in a timely and effective way; the company will be unable to maintain the level of investment in research and development and capacity that is required to remain competitive; and the company will be unable to obtain sufficient manufacturing capacity or components to meet demand for its products or will under-utilize its commitment with respect to GLOBALFOUNDRIES’ microprocessor manufacturing facilities. Investors are urged to review in detail the risks and uncertainties in the company’s Securities and Exchange Commission filings, including but not limited to the Annual Report on Form 10-K for the year ended December 27, 2008.

AMD, the AMD Arrow logo, AMD Opteron, AMD Phenom, AMD Athlon and combinations thereof, and ATI, the ATI logo, FireGL, CrossFireX and Radeon are trademarks of Advanced Micro Devices, Inc. Other names are for informational purposes only and used to identify companies and products and may be trademarks of their respective owner.

1 Foundry segment includes the operating results attributable to the front end wafer manufacturing operations and related activities as of the beginning of the first quarter of 2009, which includes the operating results of GLOBALFOUNDRIES from March 2, 2009 through March 28, 2009. Intersegment eliminations consist of revenues, cost of sales and profits on inventory between AMD Product Company and the Foundry segment.

2 The Company is providing non-GAAP financial measures for AMD Product Company such as a statement of operations and selected balance sheet items as reflected in the tables at the end of this press release. In addition, for AMD Product Company, the Company is providing non-GAAP financial measures such as net income (loss), operating income (loss) and gross margin which exclude certain adjustments as reflected in the tables in the body of this press release. AMD is providing these financial measures because it believes it is important for investors to have visibility into AMD’s financial results excluding the Foundry segment, intersegment eliminations and certain adjustments as reflected in the tables in this press release.

3 In this press release, in addition to GAAP financial results, the Company has provided non-GAAP financial measures for AMD net income (loss) attributable to AMD common stockholders, operating income (loss) and gross margin. These non-GAAP financial measures exclude certain adjustments as reflected in the tables in this press release. Management believes this non-GAAP presentation makes it easier for investors to compare current and historical period operating results.

4 Refer to corresponding tables at the end of this press release for additional AMD and AMD Product Company data.

ADVANCED MICRO DEVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions except per share amounts and percentages)
       
 
      Quarter Ended
March 28, Dec. 27, March 29,
2009

2008(1)

 

2008(1)

 

      (Unaudited)   (Unaudited)   (Unaudited)
 
Net revenue $ 1,177 $ 1,162 $ 1,487
 
Cost of sales 674 890 866
               
 
Gross margin 503 272 621
 
Gross margin % 43 % 23 % 42 %
 
Research and development 446 465 478
 
Marketing, general and administrative 287 317 337
 
Amortization of acquired intangible assets 18 30 40
 

Impairment of goodwill and acquired intangible assets

- 684 -
 
Restructuring charges 60 50 -
               
 
Operating income (loss) (308 ) (1,274 ) (234 )
 
Interest income 3 7 15
Interest expense (97 ) (95 ) (101 )
Other income (expense), net 104 4 (1 )
               
 
Income (loss) before income taxes (298 ) (1,358 ) (321 )
 
Provision (benefit) for income taxes 116 69 -
               
 
Income (loss) from continuing operations (414 ) (1,427 ) (321 )
 
Income (loss) from discontinued operations, net of tax - (10 ) (30 )
               
 
Net income (loss) $ (414 ) $ (1,437 ) $ (351 )
 

Net (income) loss attributable to noncontrolling interest

6 (6 ) (13 )
 
Class B preferred accretion (8 ) - -
               
 
Net Income (loss) attributable to AMD common stockholders $ (416 ) $ (1,443 ) $ (364 )
               
 
Net income (loss) attributable to AMD common stockholders per common share
 
Basic and diluted
Continuing operations $ (0.66 ) $ (2.35 ) $ (0.55 )
  Discontinued operations     0.00       (0.02 )     (0.05 )
Basic and diluted net income (loss) per common share $ (0.66 ) $ (2.37 ) $ (0.60 )
               
 
Shares used in per share calculation
 
Basic and diluted 626 609 606
 

(1) Includes retrospective adoption of FASB Staff Position Accounting Principles Board No. 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP APB 14-1) in the first quarter of 2009.

ADVANCED MICRO DEVICES, INC.
AMD NON-GAAP AND RECONCILIATIONS TO CONSOLIDATED STATEMENTS OF OPERATIONS(2)  
(Millions except per share amounts and percentages)
     
 
      Quarter Ended March 28, 2009
     

AMD Product
Company (3)

 

Foundry segment and
intersegment
eliminations (4)

  AMD
 
Net revenue $ 1,177 $ - $ 1,177
 
Cost of sales 701 (27 ) 674
               
 
Gross margin 476 27 503
 
Gross margin % 40 % 43 %
 
Research and development 305 141 446
 
Marketing, general and administrative 252 35 287
 
Amortization of acquired intangible assets 18 - 18
 
Restructuring charges 60 - 60
               
 
Operating income (loss) (159 ) (149 ) (308 )
 
Interest income 6 (3 ) 3
Interest expense (74 ) (23 ) (97 )
Other income (expense), net 129 (25 ) 104
               
 
Income (loss) before income taxes (98 ) (200 ) (298 )
 
Provision (benefit) for income taxes (1 ) 117 116
               
 
Net income (loss) $ (97 ) $ (317 ) $ (414 )
 

Net (income) loss attributable to noncontrolling interest

 

6

 
Class B preferred accretion (8 )
               
 
Net income (loss) attributable to AMD common stockholders $ (416 )
               
 

(2) The Company believes this non-GAAP presentation makes it easier for investors to understand what AMD financial results would be if it were not required to consolidate the operations of GLOBALFOUNDRIES.

(3) Consists of the results of the Computing Solutions and Graphics segments and the All other category.

(4) See footnotes 3 and 5 in Selected Corporate Data

ADVANCED MICRO DEVICES, INC.    
CONSOLIDATED BALANCE SHEETS
(Millions)
  March 28, Dec. 27,
2009

2008(5)

 

        (Unaudited)    
 
Assets
 
Current assets:
Cash, cash equivalents and marketable securities $ 2,719 $ 1,096
Accounts receivable, net 414 320
Inventories 539 656
Prepaid expenses and other current assets 254 279
Deferred income taxes 45 28
             
 
Total current assets 3,971 2,379
 
Property, plant and equipment, net 4,137 4,296
Goodwill 323 323
Acquisition related intangible assets, net 150 168
Other assets 471 506
             
 
Total Assets   $ 9,052     $ 7,672  
 
Liabilities and Stockholders' Equity (Deficit)
 
Current liabilities:
Accounts payable $ 497 $ 631
Accrued compensation and benefits 147 162
Accrued liabilities 684 785
Deferred income on shipments to distributors 87 50
Current portion of long-term debt and capital lease obligations 281 286
Other short-term obligations 134 86
Other current liabilities 249 226
             
 
Total current liabilities 2,079 2,226
 
Deferred income taxes 219 91
Long-term debt and capital lease obligations, less current portion 5,282 4,490
Other long-term liabilities 546 569
Noncontrolling interest 1,089 169
 
Stockholders' equity (deficit):
Capital stock:
Common stock, par value 7 6
Capital in excess of par value 6,380 6,264
Retained earnings (deficit) (6,667 ) (6,251 )
  Accumulated other comprehensive income     117       108  
 
Total stockholders' equity (deficit) (163 ) 127
             
 
Total Liabilities and Stockholders' Equity (Deficit)   $ 9,052     $ 7,672  
 
 

(5) Amounts for the year ended December 27, 2008 were derived from the December 27, 2008 audited financial statements, including retrospective adoption of FSP APB 14-1 implemented in the first quarter of 2009.

ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA
(Unaudited)
(Millions except headcount and percentages)
     
 
   

 

 

Quarter Ended

   

March 28,

Dec. 27,

March 29,

Segment and Category Information from Continuing Operations

2009

2008

2008

             
 
Computing Solutions (1)
Net revenue $ 938 $ 873 $ 1,194
Operating income (loss) $ (36 ) $ (431 ) $ (164 )
 
Graphics (2)
Net revenue 222 270 262
Operating income (loss) 1 (10 ) 13
 
Foundry (3)
Net revenue 283
Operating income (loss) (141 )
 
All Other (4)
Net revenue 17 19 31
Operating income (loss) (124 ) (833 ) (83 )
 
Intersegment eliminations (5)
Net revenue (283 )
Operating income (loss) (8 )
 
Total from Continuing Operations
Net revenue $ 1,177 $ 1,162 $ 1,487
Operating income (loss) $ (308 ) $ (1,274 ) $ (234 )
 
             
 

Revenue Reconciliation

 
Revenue from continuing operations $ 1,177 $ 1,162 $ 1,487
Revenue from discontinued operations   -     8     18  
Total revenue $ 1,177 $ 1,170 $ 1,505
 
             
 

Other Data

 
AMD Product Company (excludes Foundry segment and intersegment eliminations)
Depreciation and amortization
(excluding amortization of acquired intangible assets) $ 105
Capital additions $ 17
Adjusted EBITDA (6) $ 99
Cash, cash equivalents and marketable securities (7) $ 1,599
Total assets (7) $ 4,536
Long-term debt (7) $ 3,711
Headcount 10,511
 
 
AMD
Depreciation and amortization
(excluding amortization of acquired intangible assets) $ 262 $ 271 $ 266
Capital additions $ 84 $ 112 $ 322
Adjusted EBITDA (6) $ 77 $ (284 ) $ 73
Headcount 13,408 14,652 16,398
             
 
See footnotes on the next page

(1)

Computing Solutions segment includes microprocessors, chipsets and embedded processors.

(2)

Graphics segment includes graphics, video and multimedia products developed for use in desktop and notebook computers, including home media PCs, professional workstations, servers and also includes royalties received in connection with the sale of game console systems that incorporate the Company’s graphics technology.

(3)

Foundry segment includes the operating results attributable to the front end wafer manufacturing operations and related activities as of the beginning of the first quarter of 2009, which includes the operating results of GLOBALFOUNDRIES from March 2, 2009 through March 28, 2009. Prior periods have not been recast.

(4)

All Other category includes non-Foundry segment employee stock-based compensation expense and certain operating expenses and credits that are not allocated to the operating segments. Also included in this category are charges for the impairment of goodwill and acquired intangible assets for prior periods, amortization of acquired intangible assets, restructuring and AMD Product Company formation costs associated with GLOBALFOUNDRIES. Details of these significant items are shown below. The All Other category also includes the results of our Handheld business.
       
Employee stock-based compensation expense, ATI acquisition-related charges, restructuring charges and AMD Product Company formation costs associated with GLOBALFOUNDRIES:
 
Quarter Ended
Q109   Q408   Q108
Employee stock-based compensation expense $ 17 $ 20 $ 21
Impairment of goodwill and acquired intangible assets - 684 -
Amortization of acquired intangible assets 18 30 40
Restructuring charges 60 50 -
AMD Product Company formation costs associated with GLOBALFOUNDRIES   21       23       -  
$ 116     $ 807     $ 61  
 
 

(5)

Represents intersegment eliminations of $283 million in revenue and $275 million in cost of sales and profits on inventory between AMD Product Company and the Foundry segment.
 

(6)

AMD reconciliation of net income (loss) attributable to AMD common stockholders to AMD Product Company (excluding Foundry segment and intersegment eliminations) Adjusted EBITDA*
 

Quarter Ended

Q109
Net income (loss) attributable to AMD common stockholders $ (416 )
Net income (loss) attributable to noncontrolling interest (6 )
Class B preferred accretion 8
Foundry segment and intersegment eliminations net loss 317
AMD Product Company net income (loss) $ (97 )
Depreciation and amortization 105
Amortization of acquired intangible assets 18
Interest expense 74
Provision (benefit) for income taxes     (1 )
Adjusted EBITDA $ 99  
 
AMD reconciliation of net income (loss) attributable to AMD common stockholders to Adjusted EBITDA*
 
Quarter Ended
Q109   Q408   Q108
Net income (loss) attributable to AMD common stockholders $ (416 ) $ (1,443 ) $ (364 )
Impairment of goodwill and acquired intangible assets - 684 -
Depreciation and amortization 262 271 266
Amortization of acquired intangible assets 18 30 40
Interest expense 97 95 101
Provision (benefit) for income taxes 116 69 -
Income (loss) from discontinued operations, net of tax     -       10       30  
Adjusted EBITDA $ 77     $ (284 )   $ 73  
 

(7)

Reconciliation of select balance sheet items
 

Cash, cash
equivalents and
marketable securities

Total Assets Long-term debt
AMD Product Company

$

1,599

$

4,536

$

3,711

Foundry segment and intersegment eliminations     1,120     4,516      

1,717

AMD

$

2,719

$

9,052

$

5,428

 
 

*The Company defines Adjusted EBITDA as net income (loss) attributable to AMD common stockholders adjusted for impairment of goodwill and acquired intangible assets, depreciation and amortization, amortization of acquired intangible assets, interest expense, taxes and discontinued operations. AMD Product Company's adjusted EBITDA is also adjusted for the Foundry segment and intersegment eliminations net income (loss), net income (loss) attributable to noncontrolling interest and class B preferred accretion. The Company calculates and communicates Adjusted EBITDA because management believes it is of interest to investors and lenders in relation to its overall capital structure and its ability to borrow additional funds. The Company’s calculation of Adjusted EBITDA may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view Adjusted EBITDA as an alternative to the U.S. GAAP operating measure of net income or U.S. GAAP liquidity measures of cash flows from operating, investing and financing activities. In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows.

Source: Advanced Micro Devices

Advanced Micro Devices
Drew Prairie, 512-602-4425 (Editorial)
drew.prairie@amd.com
Ruth Cotter, 408-749-3887 (Investors)
ruth.cotter@amd.com