AMD Reports Fourth Quarter and Annual Results
- Fourth Quarter Microprocessor Unit Shipments Set New Record, Increasing 26 Percent Year-Over-Year and 19 Percent Sequentially - - Fourth Quarter Mobile Processor Revenue Increased 85 Percent Year-Over-Year and 41 Percent Sequentially -
SUNNYVALE, Calif.--(BUSINESS WIRE)--
AMD (NYSE:AMD) today reported financial results for the quarter ended December 31, 2006. As a result of AMD's acquisition of ATI, fourth quarter financial results include the results of the former ATI operations(1) beginning October 25, 2006. Because comparison of fourth quarter consolidated financial results to previous periods do not correlate directly, AMD has provided non-GAAP financial measures for AMD's historical business (pre-acquisition AMD). Management believes this non-GAAP presentation will aid investors by presenting current and historical results in a form that makes it easier to compare current period results with historical results.
AMD reported fourth quarter 2006 revenue of $1.77 billion, an operating loss of $527 million, and a net loss of $574 million, or $1.08 per share. These results include acquisition-related and integration charges of $550 million, or $1.04 per share, and $27 million of employee stock-based compensation expense, or $0.05 per share.
"We believe we once again gained microprocessor unit share in the quarter, as we did in the year, by continuing to execute against our customer acquisition strategy and our product, technology and manufacturing plans," said Robert J. Rivet, AMD's chief financial officer.
-----------------
Change
------------------------------------------
Q4-06 vs Q4-06 vs
($M except percentages) Q4-06 Q3-06 Q4-05(2) Q3-06 Q4-05
----------------------------------------------------------------------
Revenue
----------------------------------------------------------------------
Pre-acquisition AMD $1,374 $1,328 $1,351 3% 2%
----------------------------------------------------------------------
Former ATI operations 398 NA NA
----------------------------------------------------------------------
AMD 1,773 1,328 1,351 34% 31%
----------------------------------------------------------------------
----------------------------------------------------------------------
Operating Income (Loss)
----------------------------------------------------------------------
Pre-acquisition AMD 63 142 272 (56%) (77%)
----------------------------------------------------------------------
Former ATI operations (13) NA NA
----------------------------------------------------------------------
Non-GAAP AMD 50 142 272 (65%) (82%)
----------------------------------------------------------------------
Acquisition-related and
integration charges 550 6 NA
----------------------------------------------------------------------
Stock-based compensation
expense 27 17 4
----------------------------------------------------------------------
GAAP Operating income (loss) $(527) $119 $268
----------------------------------------------------------------------
Excluding the former ATI operations, acquisition-related and integration charges, and employee stock-based compensation expense, AMD reported fourth quarter revenue of $1.37 billion and operating income of $63 million compared with revenue of $1.35 billion and operating income of $272 million for the fourth quarter of 2005(2). Comparable third quarter 2006 revenue was $1.33 billion and operating income was $142 million.
----------------------------
($M except percentages) 2006 2005(2) % Change
---------------------------------------------------------------
Revenue
---------------------------------------------------------------
Pre-acquisition AMD $5,251 $3,935 33%
---------------------------------------------------------------
Former ATI operations 398 NA
---------------------------------------------------------------
AMD 5,649 3,935 44%
---------------------------------------------------------------
---------------------------------------------------------------
Operating Income (Loss)
---------------------------------------------------------------
Pre-acquisition AMD 600 548 9%
---------------------------------------------------------------
Former ATI operations (13) NA
---------------------------------------------------------------
Non-GAAP AMD 587 548 7%
---------------------------------------------------------------
Acquisition-related and integration
charges 557 NA
---------------------------------------------------------------
Stock-based compensation expense 77 5
---------------------------------------------------------------
GAAP Operating income (loss) $(47) $543
---------------------------------------------------------------
AMD revenue increased 33 percent to $5.25 billion and operating income increased 9 percent to $600 million for the year ended December 31, 2006, excluding the former ATI operations, acquisition-related and integration charges, and employee stock-based compensation expense. This compares with revenue of $3.94 billion and operating income of $548 million for the year ended December 25, 2005(2).
--------------------------
($M except percentages) Q4-06 Q3-06 Q4-05(2)
--------------------------------------------------------------
Gross Margins
--------------------------------------------------------------
GAAP Gross margin $641 $682 774
--------------------------------------------------------------
GAAP Gross margin % 36% 51% 57%
--------------------------------------------------------------
Acquisition-related charges 62 NA NA
--------------------------------------------------------------
Stock-based compensation expense 2 2 0
--------------------------------------------------------------
Non-GAAP Gross margin $705 $684 774
--------------------------------------------------------------
Non-GAAP Gross margin % 40% 52% 57%
--------------------------------------------------------------
Fourth quarter 2006 gross margin was 40 percent, excluding acquisition-related charges and stock-based compensation expense for the applicable periods, compared to 52 percent in the third quarter of 2006 and 57 percent in the fourth quarter of 2005(2). The decrease from the prior quarter was due largely to significantly lower server processor average selling prices (ASPs) and the inclusion of the former ATI operations.
Computation Products
Fourth quarter microprocessor unit shipments grew 26 percent year-over-year and 19 percent sequentially as customers continued leveraging AMD solutions to provide greater choice to the market.
Fourth quarter demand for AMD mobile processors was especially strong, resulting in record unit shipments and revenue. Mobile processor unit shipments and revenue both increased 41 percent quarter-over-quarter. Year-over-year, mobile processor unit shipments increased 76 percent and revenue increased 85 percent. Desktop processor revenue was also strong in the quarter, led by demand for AMD Athlon(TM) 64 X2 dual-core processors. Overall server processor unit shipments were essentially flat compared to the third quarter and ASPs were down significantly.
AMD commenced first revenue shipments of 65nm processors in December as planned.
Graphics and Chipsets, and Consumer Electronics Segments
Revenue from Graphics and Chipsets, and Consumer Electronics segments for the period beginning October 25, 2006, was $398 million. Solid demand for chipsets contributed to Graphics and Chipsets segment revenue of $278 million. Revenue of $120 million for the Consumer Electronics segment was driven by demand for handheld products and game console royalties.
Additional Highlights
-- AMD's acquisition of ATI closed on October 24, joining two industry
leading technology companies to create a processing powerhouse.
-- AMD demonstrated its next-generation processor code-named
"Barcelona," the industry's first native quad-core x86 server
processor, in a four-socket system running 64-bit Windows(R) Server
2003. "Barcelona" will deliver significant architectural and
performance-per-watt enhancements inside a consistent thermal
envelope.
-- Customers continued to expand the number of AMD-based solutions
targeting the commercial market, including:
-- Dell launched two new servers powered by AMD Opteron processors
and its first AMD-based commercial client desktop and notebook
systems.
-- Sun announced three Sun Fire X4000 servers.
-- IBM introduced its first AMD-based 1P tower server, the IBM
System x3105.
-- HP expanded its portfolio of AMD-based servers and blades for
the datacenter with the addition of the 1U 2-socket HP ProLiant
DL365 server and the 4-socket ProLiant BL685c server blade. HP
also introduced the HP dx2255 and dx2250 commercial desktops.
-- Gateway became the latest global computer manufacturer to offer
AMD Opteron-based servers, debuting three new rack mount
servers.
-- Samsung introduced the DB-V60 commercial desktop in Korea.
-- AMD continues to be a technology partner of choice for an
increasing number of enterprises. M&T Bank, ServiceMaster, Sutter
Health, and Wyeth Pharmaceuticals, among others, joined the growing
ranks of enterprise customers adopting AMD64 technology.
-- AMD Opteron processor-based systems remained the fastest growing
platform on the TOP500 Supercomputing list. There are 113 AMD
Opteron processor-based systems on the list, including three of the
top 10, as reported by the TOP500 Organization.
-- Nintendo launched the Wii, featuring an ATI graphics processor
code-named "Hollywood," helping to enable a next-generation gaming
experience for the innovative new gaming console.
-- AMD's industry-leading Imageon(TM) family of media processors from
ATI for handsets continued to gain momentum in the quarter with
more than ten new phone introductions from Motorola, Panasonic
Mobile Communications, HTC, O2, Vodaphone, Cingular, Softbank,
DoComo, and Chungwa Telecom. New devices include RIZR Z3, the SLVR
L7e, Palm Treo 750v, and several Windows Mobile 5.0 based devices
launched by global carriers.
-- AMD brought multi-GPU technology to the masses with the
introduction of the ATI Radeon(TM) X1650 XT featuring CrossFire(TM)
technology. With its incredible image quality and strong
performance, the ATI Radeon X1650 XT delivers enthusiast-class
features at a mainstream price point.
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.
In a seasonally down first quarter, AMD expects revenue to be in the range of $1.6 to $1.7 billion.
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 fourth 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.
About AMD
Advanced Micro Devices (NYSE:AMD) is a leading global provider of innovative processing solutions in the computing, graphics and consumer electronics markets. AMD is dedicated to driving open innovation, choice and industry growth by delivering superior customer-centric solutions that empower consumers and businesses worldwide. For more information, visit www.amd.com.
Cautionary Statement
This release contains forward-looking statements concerning revenue for the first quarter of 2007 and anticipated product functionality, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that forward-looking statements in this release involve risks and uncertainties that could cause actual results to differ materially from the company's current expectations. Risks include the possibility that Intel Corporation's pricing, marketing programs, product bundling, new product introductions or other activities targeting the company's business will prevent attainment of the company's current revenue plans; demand for computers and consumer electronics products and, in turn, demand for the company's products will be lower than currently expected; global business and economic conditions will worsen, resulting in lower than currently expected revenue in the first quarter of 2007 and beyond; the company will not achieve its current product and technology introduction schedules; the company will require additional capital and will not be able to raise sufficient capital, on favorable terms or at all; the company will not be able to obtain sufficient manufacturing capacity or components to meet demand for its products; solutions providers will not provide the infrastructure to support the company's AMD64 technology in a timely fashion; competitors, customers and suppliers of AMD may take actions that will negate the anticipated benefits of AMD's acquisition of ATI; revenue, cost savings, growth prospects and other synergies expected from the acquisition of ATI will not be fully realized or will take longer to realize than expected; the acquisition will not be accretive in the timeframe expected; there will be delays associated with integrating the companies; and unfavorable results of operations of Spansion will adversely impact the company's results of operations. We urge investors 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 From 10-K for the year ended December 25, 2005 and AMD's quarterly report on Form 10-Q for the quarter ended October 1, 2006.
AMD, the AMD Arrow logo, AMD Athlon, AMD Opteron and combinations thereof, and ATI and the ATI logo, and Imageon, Radeon and Crossfire are trademarks of Advanced Micro Devices, Inc. Other names used are for identification purposes only and may be trademarks of their respective owners.
(1) Former ATI operations include the Graphics and Chipsets, and Consumer Electronics segments.
(2) As a result of Spansion Inc.'s initial public offering (IPO) in December 2005, financial results for periods in 2006 compared to periods in 2005 do not correlate directly. In this press release, all references to and comparisons with periods in 2005 exclude the results of the company's former Memory Products segment.
ADVANCED MICRO DEVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions except per share amounts)
Quarter Ended Year Ended
------------------------------------------------- --------------------
Dec. 31, Oct. 1, Dec. 25, Dec. 31, Dec. 25,
2006 2006 2005 2006 2005(a)
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------------------------------------------- --------------------
Net revenue $ 1,773 $ 1,328 $ 1,838 $ 5,649 $ 5,848
Cost of sales 1,132 645 986 2,857 3,456
------------------------------------------------- --------------------
Gross margin 641 682 852 2,792 2,392
Gross margin
% 36.1% 51.4% 46.4% 49.4% 40.9%
Research and
development 385 277 329 1,205 1,144
Marketing,
general and
adminis-
trative 294 280 317 1,140 1,016
In-process
research and
development 416 - - 416 -
Amortization
of acquired
intangible
assets and
integration
charges 72 6 - 79 -
------------------------------------------------- --------------------
Operating
income
(loss) (527) 119 206 (47) 232
Interest
income 21 31 14 116 37
Interest
expense (67) (18) (24) (126) (105)
Other income
(expense),
net (0) (2) (13) (14) (24)
------------------------------------------------- --------------------
Income (loss)
before
minority
interest,
equity in
net loss of
Spansion
Inc. and
other and
income
taxes (573) 131 182 (71) 140
Minority
interest of
consolidated
subsidiaries (7) (7) 19 (28) 125
Equity in net
loss of
Spansion
Inc. and
other (4) (10) (107) (45) (107)
Provision
(benefit)
for income
taxes (10) (21) (1) 23 (7)
------------------------------------------------- --------------------
Net income
(loss) $ (574) $ 134 $ 96 $ (166) $ 165
------------------------------------------------- --------------------
Net income
(loss) per
common share
Basic $ (1.08) $ 0.28 $ 0.23 $ (0.34) $ 0.41
Diluted $ (1.08) $ 0.27 $ 0.21 $ (0.34) $ 0.40
------------------------------------------------- --------------------
Shares used
in per share
calculation
Basic 531 486 412 492 400
Diluted 531 497 452 492 441
(a) Derived from the December 25, 2005 audited financial statements of
Advanced Micro Devices, Inc.
Note: Figures may not foot due to rounding
ADVANCED MICRO DEVICES, INC.
CONSOLIDATED BALANCE SHEETS
(Millions)
Dec. 31, Oct. 1, Dec. 25,
2006 2006 2005(a)
(Unaudited) (Unaudited)
----------------------------------------------------------------------
Assets
Current assets:
Cash, cash equivalents and
marketable securities $ 1,541 $ 2,357 $ 1,795
Accounts receivable, net 1,141 688 806
Inventories 814 466 389
Prepaid expenses and other current
assets 443 326 477
Deferred income taxes 25 75 93
----------------------------------------------------------------------
Total current assets 3,965 3,912 3,559
Property, plant and equipment, net 3,985 3,404 2,701
Goodwill 3,217 - -
Net investment in Spansion Inc. 371 671 721
Acquired intangible assets, net 1,207 - -
Other assets 401 392 307
----------------------------------------------------------------------
Total Assets $ 13,147 $ 8,379 $ 7,288
======================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 1,338 901 856
Accrued compensation and benefits 177 147 227
Accrued liabilities 715 473 389
Income taxes payable 78 18 3
Deferred income on shipments to
distributors 170 116 142
Current portion of long-term debt
and capital lease obligations 125 45 43
Other current liabilities 249 192 162
----------------------------------------------------------------------
Total current liabilities 2,851 1,892 1,822
Deferred income taxes 31 76 93
Long-term debt and capital lease
obligations 3,672 644 1,327
Other long-term liabilities 517 482 459
Minority interest in consolidated
subsidiaries 290 272 235
Stockholders' equity:
Capital stock:
Common stock, par value 5 5 4
Capital in excess of par value 5,316 3,959 2,710
Retained earnings 308 882 474
Accumulated other comprehensive
income 156 167 164
----------------------------------------------------------------------
Total stockholders' equity 5,786 5,012 3,352
----------------------------------------------------------------------
Total Liabilities and Stockholders'
Equity $ 13,147 $ 8,379 $ 7,288
======================================================================
(a) Derived from the December 25, 2005 audited financial statements of
Advanced Micro Devices, Inc.
Note: Figures may not foot due to rounding
ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA
(Unaudited)
(Millions except headcount and percentages)
Quarter Ended Year Ended
---------------------------------------------------- -----------------
Dec. 31, Oct. 1, Dec. 25, Dec. 31, Dec. 25,
Segment Information (1) 2006 2006 2005 2006 2005
-------------------------
---------------------------------------------------- -----------------
Computation Products (2)
Net revenue $ 1,344 $ 1,290 $1,307 $ 5,104 $3,793
Operating income (loss) $ 72 $ 168 $ 305 $ 706 $ 641
Embedded Products (3)
Net revenue 30 38 41 149 136
Operating income (loss) 0 (1) (15) (18) (55)
Subtotal
Net revenue 1,373 1,327 1,348 5,253 3,929
Operating income (loss) 73 167 291 688 586
Graphics and Chipsets (4)
Net revenue 278 - - 278 -
Operating income (loss) (33) - - (33) -
Consumer Electronics (5)
Net revenue 120 - - 120 -
Operating income (loss) 20 - - 20 -
Subtotal (Former ATI
operations)
Net revenue 398 - - 398 -
Operating income (loss) (13) - - (13) -
All Other (6)
Net revenue 1 0 3 (3) 6
Operating income (loss) (587) (48) (22) (723) (43)
Subtotal (excluding
Memory Products segment)
Net revenue 1,773 1,328 1,351 5,649 3,935
Operating income (loss) (527) 119 268 (47) 543
Memory Products (7)
Net revenue - - 487 - 1,913
Operating income (loss) - - (62) - (311)
Total AMD
Net revenue $ 1,773 $ 1,328 $1,838 $ 5,649 $5,848
Operating income (loss) $ (527) $ 119 $ 206 $ (47) $ 232
---------------------------------------------------- -----------------
Other Data (AMD excluding Memory
Products segment)
----------------------------------
Research and development
expenses $ 385 $ 277 $ 256 $ 1,205 $ 854
Marketing, general and
administrative expenses $ 294 $ 280 $ 250 $ 1,140 $ 808
Depreciation &
amortization (excluding
amortization of acquired
intangible assets) $ 223 $ 200 $ 153 $ 790 $ 668
Amortization of acquired
intangible assets $ 47 - - $ 47 -
Capital additions $ 666 $ 425 $ 250 $ 1,856 $1,109
Headcount 16,464 11,609 9,860 16,464 9,860
International revenue % 65.7% 70.9% 70.0% 68.8% 70.4%
---------------------------------------------------- -----------------
Adjusted EBITDA (8) $ 170 $ 331 $ 396 $ 1,236 $1,483
-------------------------
---------------------------------------------------- -----------------
SEE FOOTNOTES
Note: Figures may not foot due to rounding
ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA FOOTNOTES
(Unaudited)
(Millions)
(1) Starting in Q406, the Company no longer allocates employee stock-
based compensation and profit sharing expenses to its segments.
These expenses are recorded in the All Other category. Prior
period information has been restated to conform to current period
presentation.
(2) Computation Products segment includes PC processors and pre-
acquisition AMD chipset products and related revenue.
(3) Embedded Products segment includes embedded processors and
products and related revenue for global commercial and consumer
markets.
(4) Graphics and Chipsets, formerly known as the ATI PC segment,
includes 3D graphics, video and multimedia products, and former
ATI chipsets developed for use in desktop and notebook computers,
including home media PCs, professional workstations and servers
and related revenue.
(5) Consumer Electronics, formerly known as the ATI Consumer segment,
includes products and revenue related to mobile phones, PDAs,
digital televisions, and consumer electronics.
(6) The All Other category includes employee stock-based compensation
expense, profit sharing expense, certain operating expenses and
credits that are not allocated to the operating segments and
Personal Internet Communicator (PIC) products. Also included in
this category are the ATI acquisition-related and integration
charges incurred in Q406 and Q306. Details of the ATI
acquisition-related and integration charges and employee stock-
based compensation expense are shown below.
ATI acquisition-related and
integration charges:
Q406 Q306 FY06
------------ -------
Amortization of acquired
intangible assets $ 47 $ - $ 47
Integration charges 25 6 $ 31
------------ -------
Subtotal 72 6 79
In-process research and
development 416 - $ 416
Cost of fair value adjustment
of acquired inventory 62 - $ 62
------------ -------
Total $ 550 $ 6 $ 557
============ =======
Employee stock-based
compensation expense:
Q406 Q306 Q405 FY06 FY05
----------------------------------
Cost of sales $ 2 $ 2 $ - $ 8 $ -
Research and development 13 6 - 30 -
Marketing, general and
administrative 12 8 4 39 5
----------------------------------
$ 27 $ 17 $ 4 $ 77 $ 5
==================================
(7) Memory Products segment included Flash memory products of AMD and
Spansion. Spansion closed its IPO on Dec 21, 2005. Since that
time, AMD uses the equity method of accounting to reflect its
proportionate share of Spansion's net income (loss). For Q406,
the Consolidated Statements of Operations line item "Equity in
net loss of Spansion Inc. and other" includes the Company's share
of Spansion Inc.'s operating results and other items related to
the Company's investment in Spansion, which are preliminary and
subject to change.
(8) Reconciliation of Net income (loss) to Adjusted EBITDA(a)
Q406 Q306 Q405 FY06 FY05
----------------------------------
Net income (loss) $(574) $134 $ 96 $ (166) $ 165
Depreciation and amortization 223 200 277 790 1,219
In-process research and
development 416 - - 416 -
Amortization of acquired
intangible assets 47 - - 47 -
Interest expense 67 18 24 126 105
Provision (benefit) for income
taxes (10) (21) (1) 23 (7)
------------------------------------------------------------------
Adjusted EBITDA $ 170 $331 $396 $1,236 $1,483
==================================
(a) Starting in Q406, the Company defines Adjusted EBITDA as net
income (loss) adjusted for interest expense, tax, depreciation
and amortization, amortization of acquired intangible assets, and
in-process research and development.
Note: Figures may not foot due to rounding
Source: Advanced Micro Devices, Inc.
Released January 23, 2007