AMD Reports First Quarter Results

AMD today announced revenue for the first quarter of 2011 of $1.61 billion, net income of $510 million, or $0.68 per share, and operating income of $54 million. The company reported non-GAAP net income of $56 million, or $0.08 per share, and non-GAAP operating income of $92 million.

Q1-11 Q4-10 Q1-10 ----------- ----------- ----------- Revenue $1.61B $1.65B $1.57B Operating income $54M $413M $182M Net income / Revenues per share $510M/$0.68 $375M/$0.50 $257M/$0.35

Q1-11 Q4-10 Q1-10 ----------- ----------- ----------- Revenue $1.61B $1.65B $1.57B Operating income $92M $141M $130M Net income / Revenues per share $56M/$0.08 $106M/$0.14 $63M/$0.09

ADVANCED MICRO DEVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Quarter Ended ------------------------------- Apr. 2, Dec. 25, Mar. 27, 2011 2010 2010 --------- --------- --------- Net revenue $ 1,613 $ 1,649 $ 1,574 Cost of sales 922 906 833 --------- --------- --------- Gross margin 691 743 741 Gross margin % 43% 45% 47% Technology and development 367 352 323 Marketing, general and administrative 261 250 219 Legal settlement - - Amortization of acquired intangible assets 9 11 17 --------- --------- --------- Operating income 54 413 182 Interest income 3 2 3 Interest expense Other income, net 11 14 304 --------- --------- --------- Income earlier equity income and dilution gain in investee and income taxes 20 390 440 Provision for income taxes 2 42 - Equity income and dilution gain in investee, net 492 27 --------- --------- --------- Net income $ 510 $ 375 $ 257 --------- --------- --------- Net income per common share Basic $ 0.71 $ 0.52 $ 0.36 Diluted $ 0.68 $ 0.50 $ 0.35 --------- --------- --------- Shares used in per share calculation Basic 720 717 707 Diluted 764 758 754 ADVANCED MICRO DEVICES, INC. CONSOLIDATED BALANCE SHEETS Apr. 2, Dec. 25, 2011 2010 --------- --------- Assets Current assets: Cash, cash equivalents and marketable securities $ 1,745 $ 1,789 Accounts receivable, net 797 968 Inventories, net 648 632 Prepaid expenses and other current assets 221 205 --------- --------- Total current assets 3,411 3,594 Property, plant and equipment, net 676 700 Investment in GLOBALFOUNDRIES 486 - Acquisition related intangible assets, net 28 37 Goodwill 323 323 Other assets 285 310 --------- --------- Total Assets $ 5,209 $ 4,964 --------- --------- Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 411 $ 376 Accounts payable to GLOBALFOUNDRIES 127 205 Accrued liabilities 605 698 Deferred income on shipments to distributors 165 143 Other short-term obligations 34 229 Current portion of long-term debt and capital lease obligations 4 4 Other current liabilities 29 19 --------- --------- Total current liabilities 1,375 1,674 Long-term debt and capital lease obligations, less current portion 2,192 2,188 Other long-term liabilities 84 82 Accumulated loss in excess of investment in GLOBALFOUNDRIES - 7 Stockholders' equity: Capital stock: Common stock, par value 7 7 Additional paid-in capital 6,611 6,575 Treasury stock, at cost Accumulated deficit Accumulated other comprehensive income 2 1 --------- --------- Total stockholders' equity 1,558 1,013 --------- --------- Total Liabilities and Stockholders' Equity $ 5,209 $ 4,964 --------- --------- ADVANCED MICRO DEVICES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS Quarter Ended --------- Apr. 2, 2011 --------- Cash flows from operating activities: Net income $ 510 Adjustments to reconcile net income to net cash used in operating activities: Equity income and dilution gain in investee Depreciation and amortization 88 Compensation recognized in accordance with employee stock plans 27 Non-cash interest expense 5 Provision for deferred income taxes 9 Other 11 Changes in operating assets and liabilities: Accounts receivable Inventories Prepaid expenses and other current assets Other assets 10 Accounts payable to GLOBALFOUNDRIES Accounts payable, accrued liabilities and other --------- Net cash used in operating activities --------- Cash flows from investing activities: Purchases of property, plant and equipment Purchases of available-for-sale securities Proceeds from sale and maturity of available-for-sale securities 434 Other --------- Net cash used in investing activities --------- Cash flows from financing activities: Proceeds from borrowings, net of issuance cost 165 Net proceeds from foreign grants 7 Proceeds from issuance of common stock 9 Repayments of debt and capital lease obligations Other --------- Net cash provided by financing activities 178 --------- Net decrease in cash and cash equivalents --------- Cash and cash equivalents at beginning of period 606 --------- Cash and cash equivalents at end of period $ 602 --------- ADVANCED MICRO DEVICES, INC. SELECTED CORPORATE DATA Quarter Ended ------------------------------- Apr. 2, Dec. 25, Mar. 27, Segment and Category Information 2011 2010 2010 --------- ---------- --------- Computing Solutions Net revenue $ 1,200 $ 1,219 $ 1,160 Operating income $ 100 $ 91 $ 146 Graphics Net revenue 413 424 409 Operating income 19 68 47 All Other Net revenue - 6 5 Operating income 254 Total Net revenue $ 1,613 $ 1,649 $ 1,574 Operating income $ 54 $ 413 $ 182 --------- ---------- --------- Other Data Depreciation and amortization $ 79 $ 78 $ 83 Capital additions $ 38 $ 38 $ 48 Adjusted EBITDA $ 198 $ 241 $ 302 Cash, cash equivalents and marketable securities $ 1,745 $ 1,789 $ 1,932 Adjusted free cash flow $ 154 $ 11 $ 177 Total assets $ 5,209 $ 4,964 $ 5,232 Long-term debt and capital lease obligations, including the current portion $ 2,196 $ 2,192 $ 2,604 Headcount 11,256 11,068 10,365 Computing Solutions segment includes microprocessors, chipsets and embedded processors. Graphics segment includes graphics, video and multimedia products developed for use in desktop and notebook computers, including home media PCs, professional workstations, servers and as well includes royalties received in connection with the sale of game console systems that incorporate the Company's graphics innovation. All Other category includes certain operating expenses and credits that are not allocated to the operating segments. As well included in this category are amortization of acquired intangible assets and restructuring charges. It as well includes the results of the Handheld business unit because the operating results of this business unit were not material. AMD reconciliation of GAAP operating income to Adjusted EBITDA* Quarter Ended ------------------------------- Apr. 2, Dec. 25, Mar. 27, 2011 2010 2010 --------- --------- --------- GAAP operating income $ 54 $ 413 $ 182 Payment to GLOBALFOUNDRIES 24 - - Legal settlement 5 - Depreciation and amortization 79 78 83 Employee stock-based compensation expense 27 22 20 Amortization of acquired intangible assets 9 11 17 --------- --------- --------- Adjusted EBITDA $ 198 $ 241 $ 302 --------- --------- --------- Non-GAAP adjusted free cash flow reconciliation** Quarter Ended ------------------------------- Apr. 2, Dec. 25, Mar. 27, 2011 2010 2010 --------- --------- --------- GAAP net cash provided by operating activities $ $ $ 23 Non-GAAP adjustment 360 262 202 --------- --------- --------- Non-GAAP net cash provided by operating activities 192 49 225 Purchases of property, plant and equipment --------- --------- --------- Non-GAAP adjusted free Cash Flow $ 154 $ 11 $ 177 --------- --------- --------- * Starting with the quarter ended December 26, 2009, the Company presented "Adjusted EBITDA" as a supplemental measure of its performance. Adjusted EBITDA for the Company was determined by adjusting operating income for depreciation and amortization, employee stock-based compensation expense and amortization of acquired intangible assets. Just in case, for the first quarter of 2011, the Company included an adjustment related to a payment to GLOBALFOUNDRIES and a legal settlement with a third party; and for the fourth quarter of 2010, the Company included an adjustment related to its legal settlement with a third party. The Company calculates and communicates Adjusted EBITDA in the financial schedules because the Company's management believes it is of importance to investors and lenders in relation to its overall capital structure and its ability to borrow additional funds. Moreover, the Company presents Adjusted EBITDA because it believes this measure assists investors in comparing its performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. 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 GAAP operating measure of operating income or GAAP liquidity measures of cash flows from operating, investing and financing activities. Furthermore, Adjusted EBITDA does not take into account changes in certain assets and liabilities as so then as interest and income taxes that can affect cash flows. ** Starting in the first quarter of 2010, the Company presents non-GAAP adjusted free cash flow as a supplemental measure of its performance. In 2008 and 2009 the Company and certain of its subsidiaries entered into supplier agreements with IBM Credit LLC and certain of its subsidiaries,. Pursuant to these supplier agreements, the AMD Parties sold to the IBM Parties invoices of selected distributor clients. Because the Company does not recognize revenue until its distributors sell its products to their clients, in accordance with U.S. GAAP, the Company classifies funds received from the IBM Parties as debt on the balance sheet. Even more, for cash flow purposes, these funds are classified as cash flows from financing activities. When a distributor pays the applicable IBM Party, the Company reduces the distributor's accounts receivable and the corresponding debt resulting in a non-cash accounting entry. Because the Company does not receive the cash from the distributor to reduce the accounts receivable, the distributor's payment is never reflected in the Company's cash flows from operating activities. Non-GAAP adjusted free cash flow for the Company was determined by adjusting GAAP net cash provided by operating activities by adding the distributors' payments to the IBM Parties to GAAP net cash provided by operating activities. This amount is at that time further adjusted by subtracting capital expenditures. As a rule, pursuant to this agreement U.S. GAAP, the reduction in accounts receivable is assumed to be a source of operating cash flows. In fixed and final form, the Company believes that treating the payments from its distributor clients to the IBM Parties as if the Company as a matter of fact received the cash from the distributor and next used that cash to pay down the debt is more reflective of the economic substance of the transaction. On February 11, 2011, the Company terminated its supplier agreements with the IBM Parties. The Company calculates and communicates non-GAAP adjusted free cash flow in the financial schedules because the Company's management believes it is of importance to investors to understand the nature of these cash flows. The Company's calculation of non-GAAP Adjusted free cash flow may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view non-GAAP Adjusted Free Cash Flow as an alternative to GAAP liquidity measures of cash flows from operating or financing activities.