SUNNYVALE, CA, Jul 21, 2011 (MARKETWIRE via COMTEX) --
AMD (NYSE: AMD)
-- AMD revenue $1.57 billion, 2 percent sequential decrease and 5 percent
decrease year-over-year
-- Net income $61 million, earnings per share $0.08, operating income
$105 million
-- Non-GAAP(1) net income $70 million, earnings per share $0.09,
operating income $114 million
-- Gross margin 46 percent
-- Accelerating Fusion Accelerated Processor Unit (APU) shipments drive
record microprocessor unit shipments and record mobile microprocessor
unit shipments
AMD (NYSE: AMD) today announced revenue for the second quarter of 2011
of $1.57 billion, net income of $61 million, or $0.08 per share, and
operating income of $105 million. The company reported non-GAAP net
income of $70 million, or $0.09 per share, and non-GAAP operating
income of $114 million.
"In the first half of 2011, AMD brought to market the most
competitive client offerings in our history, reinforcing our position
as a design and innovation powerhouse," said Thomas Seifert, CFO and
Interim CEO. "Today's computing experience is increasingly being
defined by the ability to deliver brilliant multimedia and video
content with all day battery life. Fusion APUs are ideal to meet this
need, positioning AMD to gain unit market share in the mobile
computing space."
GAAP Financial Results(2)
----------------------------------------------------------------------------
Q2-11 Q1-11 Q2-10
----------------------------------------------------------------------------
Revenue $1.57B $1.61B $1.65B
----------------------------------------------------------------------------
Operating income $105M $54M $125M
----------------------------------------------------------------------------
Net income (loss) / Earnings (loss)
per share $61M/$0.08 $510M/$0.68 $(43)M/$(0.06)
----------------------------------------------------------------------------
Non-GAAP Financial Results(1)
----------------------------------------------------------------------------
Q2-11 Q1-11 Q2-10
----------------------------------------------------------------------------
Revenue $1.57B $1.61B $1.65B
----------------------------------------------------------------------------
Operating income $114M $92M $138M
----------------------------------------------------------------------------
Net income / Earnings per share $70M/$0.09 $56M/$0.08 $83M/$0.11
----------------------------------------------------------------------------
Quarterly Summary
-- Gross margin was 46 percent.
-- Cash, cash equivalents and marketable securities balance at the end of
the quarter was $1.86 billion.
-- AMD's second quarter had 13 weeks of business compared to 14 weeks for
the first quarter.
-- Computing Solutions segment revenue was flat sequentially and
year-over-year. Sequentially, higher mobile microprocessor revenues
were offset by lower desktop and server revenue. The year-over-year
decrease was primarily driven by lower server revenue.
-- Operating income was $142 million, compared with $100 million in
Q1 11 and $128 million in Q2 10.
-- Microprocessor ASP decreased sequentially and year-over-year.
-- AMD launched the highly-anticipated AMD A-Series APU for client
PCs combining a brilliant HD experience, supercomputer-like
performance and all-day battery life for notebooks.
-- AMD Fusion APUs received the 2011 Best Choice of Computex Taipei
Award and the A-Series APU-based products have won 20 reviewer
awards to-date.
-- The AMD A-Series APU has secured more than 150 notebook and
desktop design wins across leading PC manufacturers including
Acer, Asus, Dell, HP, Lenovo, Samsung and Toshiba.
-- Acer and MSI introduced new tablets based on AMD's 2011 HD Tablet
Platform and AMD Z-Series APU that enables outstanding video,
graphics experience and content creation capabilities for
Windows-based tablets.
-- The new AMD Embedded G-Series APU was named Best in Show for
hardware at the Embedded Systems Conference by industry analyst
firm VDC Research.
-- The number of AMD-powered offerings on the most recent TOP500
supercomputers list increased 15 percent, with more than half of
the AMD systems featuring the AMD Opteron(TM) 8- or 12-core
processors.
-- Dell, Cray and NexServe announced new AMD Opteron processor-based
systems aimed at high-performance, compute-intensive workloads.
Leading enterprises, universities and research facilities
worldwide announced new high-performance computing installations
featuring the AMD Opteron(TM) processor.
-- Graphics segment revenue decreased 11 percent sequentially and 17
percent year-over-year. The sequential decrease was driven primarily
by lower discrete mobile unit shipments and seasonality in the desktop
discrete graphics add-in board market. The annual decrease was
primarily driven by lower unit shipments.
-- Operating loss was $7 million, compared with operating income of
$19 million in Q1 11 and $33 million in Q2 10.
-- GPU ASP was flat sequentially and year-over-year.
-- AMD expanded its offerings for the professional graphics market
with the introduction of the AMD FirePro(TM) V5900 and
FirePro(TM) V7900 graphics cards which provide enhanced visual
capabilities designed to improve workflow and increase
productivity for engineers and designers.
-- Dell announced a new, ultra-high performance blade server powered
by the AMD FirePro(TM) V7800P professional graphics.
-- The award-winning AMD Radeon(TM) HD 6000 family of graphics
expanded with the introduction of two sub-$100 cards offering
support for DirectX 11, AMD App acceleration and AMD Eyefinity
multi-display technologies.
-- AMD extended its position as the graphics provider of choice for
the game console market, where more than 140 million
current-generation games consoles are powered by AMD graphics
technology. Nintendo announced it selected AMD to provide the
graphics technology for its next-generation Wii U(TM) System
that will be available next year.
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.
AMD expects revenue to increase 10 percent, plus or minus 2 percent,
sequentially for the third quarter of 2011.
For additional detail regarding AMD's results and outlook please see
the CFO commentary posted at quarterlyearnings.amd.com.
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 second quarter financial
results. AMD will provide a real-time audio broadcast of the
teleconference on the Investor Relations page of its Web site at AMD.
The webcast will be available for 10 days after the conference call.
Reconciliation of GAAP to Non-GAAP Net Income (1)
---------------------------------------------
(Millions except per share
amounts) Q2-11 Q1-11 Q2-10
----------------------------------------------------------------------------
GAAP net income (loss) /
Earnings (loss) per share $ 61 $ 0.08 $ 510 $ 0.68 $ (43) $ (0.06)
----------------------------------------------------------------------------
Equity income (loss) and
dilution gain in investee,
net - - 492 0.66 (120) (0.16)
----------------------------------------------------------------------------
Payment to GLOBALFOUNDRIES - - (24) (0.03) - -
----------------------------------------------------------------------------
Non-GAAP net income excluding
GLOBALFOUNDRIES related items 61 0.08 42 0.06 77 0.11
----------------------------------------------------------------------------
Amortization of acquired
intangible assets (9) (0.01) (9) (0.01) (17) (0.02)
----------------------------------------------------------------------------
Restructuring reversals - - - - 4 0.01
----------------------------------------------------------------------------
Legal settlements - - (5) (0.01) - -
----------------------------------------------------------------------------
Gain on investment sale - - - - 7 0.01
----------------------------------------------------------------------------
Non-GAAP net income / Earnings
per share $ 70 $ 0.09 $ 56 $ 0.08 $ 83 $ 0.11
----------------------------------------------------------------------------
Reconciliation of GAAP to Non-GAAP Operating Income (1)
------------------------
(Millions) Q2-11 Q1-11 Q2-10
----------------------------------------------------------------------------
GAAP operating income $ 105 $ 54 $ 125
----------------------------------------------------------------------------
Payment to GLOBALFOUNDRIES - (24) -
----------------------------------------------------------------------------
Amortization of acquired intangible assets (9) (9) (17)
----------------------------------------------------------------------------
Restructuring reversals - - 4
----------------------------------------------------------------------------
Legal settlements - (5) -
----------------------------------------------------------------------------
Non-GAAP operating income $ 114 $ 92 $ 138
----------------------------------------------------------------------------
Reconciliation of GAAP to Non-GAAP Gross Margin (1)
------------------------
(Millions except percentages) Q2-11 Q1-11 Q4-10
----------------------------------------------------------------------------
GAAP Gross Margin $ 720 $ 691 $ 738
----------------------------------------------------------------------------
GAAP Gross Margin % 46% 43% 45%
----------------------------------------------------------------------------
Payment to GLOBALFOUNDRIES - (24) -
----------------------------------------------------------------------------
Legal settlements - (5) -
----------------------------------------------------------------------------
Non-GAAP Gross Margin $ 720 $ 720 $ 738
----------------------------------------------------------------------------
Non-GAAP Gross Margin % 46% 45% 45%
----------------------------------------------------------------------------
About AMD
AMD (NYSE: AMD) is a semiconductor design innovator leading
the next era of vivid digital experiences with its groundbreaking AMD
Fusion Accelerated Processing Units (APUs) that power a wide range of
computing devices. AMD's server computing products are focused on
driving industry-leading cloud computing and virtualization
environments. AMD's superior graphics technologies are found in a
variety of solutions ranging from game consoles, PCs to
supercomputers. For more information, visit http://www.amd.com.
Cautionary Statement
This release contains forward-looking
statements concerning AMD, its third quarter 2011 revenue, and future
market share, 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; 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; GLOBALFOUNDRIES will
be unable to manufacture the company's products on a timely basis in
sufficient quantities and using competitive technologies; 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; the recent earthquake and tsunami in Japan
may have significant impacts on the company's supply chain or its
customers; the company will be unable to transition its products to
advanced manufacturing process technologies in a timely and effective
way; global business and economic conditions will not continue to
improve or will worsen resulting in lower than currently expected
demand; 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; 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; and the company will be
unable to maintain the level of investment in research and
development that is required to remain competitive. 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 Quarterly Report on Form 10-Q for the quarter
ended April 2, 2011.
AMD, the AMD Arrow logo, AMD Opteron, AMD Radeon, and combinations
thereof, and 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) In this press release, in addition to GAAP financial results, the
Company has provided non-GAAP financial measures, including for
non-GAAP net income excluding GLOBALFOUNDRIES related items, non-GAAP
net income, non-GAAP operating income, non-GAAP earnings per share
and non-GAAP gross margin. These non-GAAP financial measures reflect
certain adjustments as presented in the tables in this press release.
The Company also provided Adjusted EBITDA and non-GAAP Adjusted free
cash flow as supplemental measures of its performance. These items
are defined in the footnotes to the selected corporate data tables
provided at the end of this press release. The Company is providing
these financial measures because it believes this non-GAAP
presentation makes it easier for investors to compare its operating
results for current and historical periods and also because the
Company believes it assists investors in comparing the Company's
performance across reporting periods on a consistent basis by
excluding items that it does not believe are indicative of its core
operating performance and for the other reasons described in the
footnotes to the selected data tables. Refer to corresponding tables
at the end of this press release for additional AMD data.
(2) For the year 2010, the Company accounted for its investment in
GLOBALFOUNDRIES under the equity method of accounting. Starting in
the first quarter of 2011, the Company started accounting for its
investment in GLOBALFOUNDRIES under the cost method of accounting.
ADVANCED MICRO DEVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions except per share amounts and
percentages)
Quarter Ended Six Months Ended
------------------------------------------------------ ---------------------
Jul. 2, Apr. 2, Jun. 26, Jul. 2, Jun. 26,
2011 2011 2010 2011 2010
------------------------------------------------------ ---------------------
Net revenue $ 1,574 $ 1,613 $ 1,653 $ 3,187 $ 3,227
Cost of sales 854 922 915 1,776 1,748
------------------------------------------------------ ---------------------
Gross margin 720 691 738 1,411 1,479
Gross margin % 46% 43% 45% 44% 46%
Research and
development 367 367 371 734 694
Marketing, general
and administrative 239 261 229 500 448
Amortization of
acquired intangible
assets 9 9 17 18 34
Restructuring
reversal - - (4) - (4)
------------------------------------------------------ ---------------------
Operating income 105 54 125 159 307
Interest income 2 3 3 5 6
Interest expense (47) (48) (55) (95) (104)
Other income
(expense), net 4 11 (1) 15 303
------------------------------------------------------ ---------------------
Income before equity
income (loss) and
dilution gain in
investee and income
taxes 64 20 72 84 512
Provision (benefit)
for income taxes 3 2 (5) 5 (5)
Equity income (loss)
and dilution gain in
investee, net - 492 (120) 492 (303)
------------------------------------------------------ ---------------------
Net income (loss) $ 61 $ 510 $ (43) $ 571 $ 214
------------------------------------------------------ ---------------------
Net income (loss) per
share
Basic $ 0.08 $ 0.71 $ (0.06) $ 0.79 $ 0.30
Diluted $ 0.08 $ 0.68 $ (0.06) $ 0.76 $ 0.29
------------------------------------------------------ ---------------------
Shares used in per
calculation
Basic 724 720 709 722 708
Diluted 743 764 709 766 732
ADVANCED MICRO DEVICES, INC.
CONSOLIDATED BALANCE SHEETS
(Millions)
------------------------------------------------- ----------- -----------
Jul. 2, Apr. 2, Dec. 25,
2011 2011 2010
------------------------------------------------- ----------- -----------
Assets
Current assets:
Cash, cash equivalents and
marketable securities $ 1,861 $ 1,745 $ 1,789
Accounts receivable, net 759 797 968
Inventories, net 642 648 632
Prepaid expenses and other current
assets 176 221 205
------------------------------------------------- ----------- -----------
Total current assets 3,438 3,411 3,594
Property, plant and equipment, net 686 676 700
Investment in GLOBALFOUNDRIES 486 486 -
Acquisition related intangible
assets, net 19 28 37
Goodwill 323 323 323
Other assets 272 285 310
------------------------------------------------- ----------- -----------
Total Assets $ 5,224 $ 5,209 $ 4,964
================================================= =========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 455 $ 411 $ 376
Accounts payable to GLOBALFOUNDRIES 117 127 205
Accrued liabilities 575 605 698
Deferred income on shipments to
distributors 132 165 143
Other short-term obligations - 34 229
Current portion of long-term debt
and capital lease obligations 4 4 4
Other current liabilities 29 29 19
------------------------------------------------- ----------- -----------
Total current liabilities 1,312 1,375 1,674
Long-term debt and capital lease
obligations, less current portion 2,195 2,192 2,188
Other long-term liabilities 76 84 82
Accumulated loss in excess of
investment in GLOBALFOUNDRIES - - 7
Stockholders' equity:
Capital stock:
Common stock, par value 7 7 7
Additional paid-in capital 6,637 6,611 6,575
Treasury stock, at cost (106) (104) (102)
Accumulated deficit (4,897) (4,958) (5,468)
Accumulated other comprehensive
income - 2 1
------------------------------------------------- ----------- -----------
Total stockholders' equity 1,641 1,558 1,013
------------------------------------------------- ----------- -----------
Total Liabilities and Stockholders'
Equity $ 5,224 $ 5,209 $ 4,964
================================================= =========== ===========
ADVANCED MICRO DEVICES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions)
Six Months
Quarter Ended Ended
----------------------------------------------------------- --------------
Jul. 2, Jul. 2,
2011 2011
----------------------------------------------------------- --------------
Cash flows from operating activities:
Net income $ 61 $ 571
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity income and dilution gain in
investee - (492)
Depreciation and amortization 80 168
Compensation recognized under employee
stock plans 20 47
Non-cash interest expense 6 11
Other (1) 9
Changes in operating assets and
liabilities:
Accounts receivable 2 (187)
Inventories 6 (10)
Prepaid expenses and other current
assets 47 36
Other assets (9) 1
Accounts payable to GLOBALFOUNDRIES (10) (88)
Accounts payable, accrued liabilities
and other (28) (60)
----------------------------------------------------------- --------------
Net cash provided by operating activities $ 174 $ 6
----------------------------------------------------------- --------------
Cash flows from investing activities:
Purchases of property, plant and equipment (67) (105)
Purchases of available-for-sale securities (559) (952)
Proceeds from sale and maturity of
available-for-sale securities 396 830
Other - (17)
----------------------------------------------------------- --------------
Net cash used in investing activities $ (230) $ (244)
----------------------------------------------------------- --------------
Cash flows from financing activities:
Proceeds from borrowings, net of issuance
cost 5 170
Net proceeds from foreign grants 3 10
Proceeds from issuance of AMD common stock 6 15
Repayments of debt and capital lease
obligations (4) (5)
Other (2) (4)
----------------------------------------------------------- --------------
Net cash provided by financing activities $ 8 $ 186
----------------------------------------------------------- --------------
Net decrease in cash and cash equivalents (48) (52)
----------------------------------------------------------- --------------
Cash and cash equivalents at beginning of
period $ 602 $ 606
----------------------------------------------------------- --------------
Cash and cash equivalents at end of period $ 554 $ 554
----------------------------------------------------------- --------------
ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA
(Millions except headcount)
Quarter Ended Six Months Ended
---------------------------------------------------- -----------------------
Segment and
Category Jul. 2, Apr. 2, Jun. 26, Jul. 2, Jun. 26,
Information 2011 2011 2010 2011 2010
---------------------------------------------------- -----------------------
Computing
Solutions (1)
Net revenue $ 1,207 $ 1,200 $ 1,212 $ 2,407 $ 2,372
Operating
income $ 142 $ 100 $ 128 $ 242 $ 274
Graphics (2)
Net revenue 367 413 440 780 849
Operating
income (loss) (7) 19 33 12 80
All Other (3)
Net revenue - - 1 - 6
Operating loss (30) (65) (36) (95) (47)
Total
Net revenue $ 1,574 $ 1,613 $ 1,653 $ 3,187 $ 3,227
Operating
income $ 105 $ 54 $ 125 $ 159 $ 307
---------------------------------------------------- -----------------------
Other Data
Depreciation
and
amortization
(excluding
amortization
of acquired
intangible
assets) $ 71 $ 79 $ 83 $ 150 $ 166
Capital
additions $ 67 $ 38 $ 31 $ 105 $ 79
Adjusted EBITDA
(4) $ 205 $ 198 $ 244 $ 403 $ 546
Cash, cash
equivalents
and marketable
securities $ 1,861 $ 1,745 $ 1,896 $ 1,861 $ 1,896
Adjusted free
cash flow (5) $ 143 $ 154 $ 76 $ 297 $ 253
Total assets $ 5,224 $ 5,209 $ 4,955 $ 5,224 $ 4,955
Long-term debt
and capital
lease
obligations $ 2,199 $ 2,196 $ 2,421 $ 2,199 $ 2,421
Headcount 11,599 11,256 10,649 11,599 10,649
---------------------------------------------------- -----------------------
(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) All Other category includes certain operating expenses and credits that
are not allocated to the operating segments. Also included in this
category are amortization of acquired intangible assets and
restructuring charges. It also includes the results of the Handheld
business unit because the operating results of this business unit were
not material.
(4) AMD reconciliation of GAAP operating income to Adjusted EBITDA*
Quarter Ended Six Months Ended
--------------------------------- ----------------------
Jul. 2, Apr. 2, Jun. 26, Jul. 2, Jun. 26,
2011 2011 2010 2011 2010
--------------------------------- ----------------------
GAAP operating
income $ 105 $ 54 $ 125 $ 159 $ 307
Payments to
GLOBALFOUNDRIES - 24 - 24 -
Legal settlement - 5 - 5 -
Depreciation and
amortization 71 79 83 150 166
Employee stock-
based
compensation
expense 20 27 23 47 43
Amortization of
acquired
intangible
assets 9 9 17 18 34
Restructuring
reversal - - (4) - (4)
----------------------------------------------------- ----------------------
Adjusted EBITDA $ 205 $ 198 $ 244 $ 403 $ 546
================================= ======================
(5) Non-GAAP adjusted free cash flow reconciliation**
Quarter Ended Six Months Ended
-------------------------------- ---------------------
Jul. 2, Apr. 2, Jun. 26, Jul. 2, Jun. 26,
2011 2011 2010 2011 2010
-------------------------------- ---------------------
GAAP net cash
provided by (used
in) operating
activities $ 174 $ (168) $ (98) $ 6 $ (75)
Non-GAAP
adjustment 36 360 205 396 407
-------------------------------- ---------------------
Non-GAAP net cash
provided by
operating activities 210 192 107 402 332
Purchases of
property, plant
and equipment (67) (38) (31) (105) (79)
-------------------------------- ---------------------
Non-GAAP adjusted
free cash flow $ 143 $ 154 $ 76 $ 297 $ 253
================================ =====================
* Starting in the fourth quarter of 2009, the Company presented
"Adjusted EBITDA" as a supplemental measure of its performance.
Adjusted EBITDA for the Company is determined by adjusting
operating income (loss) for depreciation and amortization,
employee stock-based compensation expense and amortization of
acquired intangible assets. In addition, for the first quarter
of 2011 and the six months ended July 2, 2011, the Company
included adjustments related to a payment to GLOBALFOUNDRIES
and a legal settlement with a third party. For the second
quarter of 2010 and the six months ended June 26, 2010, the
Company included an adjustment for certain restructuring
reversals. 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. In addition, 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 (loss) or 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.
** 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 (collectively, the "AMD Parties") entered into
supplier agreements with IBM Credit LLC and certain of its
subsidiaries (collectively, the "IBM Parties"). Pursuant to
these supplier agreements, the AMD Parties sold to the IBM
Parties invoices of selected distributor customers. Because the
Company does not recognize revenue until its distributors sell
its products to their customers, under U.S. GAAP, the Company
classifies funds received from the IBM Parties as debt on the
balance sheet. Moreover, 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 noncash 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 (used in)
operating activities by adding the distributors' payments to
the IBM Parties to GAAP net cash provided by (used in)
operating activities. This amount is then further adjusted by
subtracting capital expenditures. Generally, under U.S. GAAP,
the reduction in accounts receivable is assumed to be a source
of operating cash flows. Therefore, the Company believes that
treating the payments from its distributor customers to the IBM
Parties as if the Company actually received the cash from the
distributor and then 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.
Media Contact
Drew Prairie
512-602-4425
Email Contact
Investor Contact
Ruth Cotter
408-749-3887
Email Contact
SOURCE: Advanced Micro Devices
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