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AMD Reports Second Quarter Results

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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