AMD Reports Third Quarter Results
SUNNYVALE, Calif.--(BUSINESS WIRE)--
AMD (NYSE:AMD) today reported third quarter 2008 revenue from continuing operations of $1.776 billion, including process technology license revenue of $191 million. Third quarter 2008 revenue increased 32 percent compared to the second quarter of 2008 and 14 percent compared to the third quarter of 2007.
In the third quarter of 2008, AMD reported a net loss of $67 million, or $0.11 per share. For continuing operations, third quarter 2008 income was $41 million, or $0.07 per share, including the process technology license revenue of $191 million, or $0.31 a share. Third quarter 2008 operating income was $131 million. Loss from discontinued operations was $108 million, or $0.18 a share.
Reconciliation of GAAP to Non-GAAP Net Income (Loss)(1)
(Millions except per
share amounts) Q3-08 Q2-08 Q3-07
----------------------------------------------------------------------
GAAP net loss / EPS $ (67) $(0.11) $(1,189) $(1.96) $(396) $(0.71)
----------------------------------------------------------------------
Loss from
discontinued
operations (108) (0.18) (920) (1.52) (52) (0.09)
----------------------------------------------------------------------
Income (loss) from
continuing operations 41 0.07 (269) (0.44) (344) (0.62)
----------------------------------------------------------------------
Gain on sale of
200mm equipment - - 193 0.32 - -
----------------------------------------------------------------------
Marketable
securities
impairment charges - - (36) (0.06) (42) (0.08)
----------------------------------------------------------------------
Amortization of
acquired
intangibles,
integration and
other charges (30) (0.05) (30) (0.05) (41) (0.07)
----------------------------------------------------------------------
Restructuring
charges (9) (0.01) (30) (0.05) - -
----------------------------------------------------------------------
Non-GAAP net income
(loss) $ 80 $ (366) $(261)
----------------------------------------------------------------------
Reconciliation of GAAP to Non-GAAP Operating Income (Loss)(1)
(Millions) Q3-08 Q2-08 Q3-07
----------------------------------------------------------------------
GAAP operating income (loss) $131 $(143) $(181)
----------------------------------------------------------------------
Gain on sale of 200mm equipment - 193 -
----------------------------------------------------------------------
Amortization of acquired intangibles,
integration and other charges (30) (30) (41)
----------------------------------------------------------------------
Restructuring charges (9) (30) -
----------------------------------------------------------------------
Non-GAAP operating income (loss) $170 $(276) $(140)
----------------------------------------------------------------------
In the second quarter of 2008, AMD had revenue from continuing operations of $1.349 billion, a net loss of $1.189 billion, a loss from continuing operations of $269 million and an operating loss of $143 million. In the third quarter of 2007, AMD had revenue from continuing operations of $1.558 billion, a net loss of $396 million, a loss from continuing operations of $344 million and an operating loss of $181 million.
"We achieved a significant milestone with the recent announcement of our Asset Smart strategy, which will transform both AMD and the industry through the creation of 'The Foundry Company'," said Dirk Meyer, AMD's president and CEO. "AMD will be assured access to leading-edge manufacturing processes without the obligation to make the capital investment required to maintain a world-class manufacturing operation. We look forward to the successful closing of this joint venture early in 2009."
"We are pleased to have reached our goal of operational profitability this quarter while increasing gross margin to 51 percent," said Robert J. Rivet, AMD's chief financial officer. "Improved execution across all of our businesses was punctuated by a refresh of our graphics product line-up, driving 55 percent sequential revenue growth and market share gains. In addition, customer adoption of our quad-core microprocessors was strong, with unit shipments increasing 46 percent sequentially."
Third quarter 2008 gross margin was 51 percent, and 45 percent excluding process technology license revenue. This compares favorably to both the second quarter 2008 non-GAAP gross margin of 37 percent, and third quarter of 2007 gross margin of 41 percent.
Reconciliation of GAAP to Non-GAAP Gross Margin(1) (Millions, except percentages) Q3-08 Q2-08 Q3-07 ---------------------------------------------------------------------- GAAP Gross Margin $905 $696 $635 ---------------------------------------------------------------------- GAAP Gross Margin % 51% 52% 41% ---------------------------------------------------------------------- Process technology license revenue 191 - - ---------------------------------------------------------------------- Gain on sale of 200mm equipment - 193 - ---------------------------------------------------------------------- Non-GAAP Gross Margin $714 $503 $635 ---------------------------------------------------------------------- Non-GAAP Gross Margin % 45% 37% 41% ----------------------------------------------------------------------
Segment Information
(Millions) Q3-08 vs Q2-08 vs Q3-07
----------------------------------------------------------------------
Computing Solutions (including process
technology license revenue in Q3-08)
----------------------------------------------------------------------
Revenue $1,391 26% 8%
----------------------------------------------------------------------
Microprocessor Units up down
----------------------------------------------------------------------
Microprocessor Average Selling Prices
(ASP) flat flat
----------------------------------------------------------------------
Graphics (including game console royalties)
----------------------------------------------------------------------
Revenue $ 385 55% 40%
----------------------------------------------------------------------
Graphic Processor Units up up
----------------------------------------------------------------------
Graphic Processor Average Selling Prices
(ASP) up up
----------------------------------------------------------------------
Current Outlook
AMD's outlook statements are based on current expectations of its continuing operations. 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.
Third quarter 2008 revenue was $1.585 billion, not including process technology license revenue. In light of the current macroeconomic conditions, AMD expects fourth quarter 2008 revenue from continuing operations to be roughly flat to that number.
Additional Highlights
-- As the cornerstone of its Asset Smart strategy, AMD and the
Advanced Technology Investment Company (ATIC) of Abu Dhabi announced
an agreement to create a U.S.-headquartered, leading-edge
semiconductor manufacturing company to address growing demand for
independent foundry production capabilities. The new global company
will serve this need by combining advanced process technology,
industry-leading manufacturing facilities and aggressive plans to
expand its global capacity footprint.
-- AMD announced that Mubadala Development Corporation will increase
its stake in AMD from 8.1 percent to 19.3 percent of outstanding
shares on a fully diluted basis through the purchase of 58 million
newly issued shares and warrants for 30 million additional shares.
-- AMD introduced the entire ATI Radeon HD 4000 family of graphics
cards with 10 new products spanning all market segments. From the ATI
Radeon HD 4870 X2, the world's fastest graphics card designed for the
ultra-enthusiast, to the ATI Radeon HD 4350 providing a great visual
experience for the value-minded market. AMD also strengthened its
workstation graphics product offerings with the introduction of two
new ATI FirePro graphics products.
-- Dell and HP introduced new quad-core server platforms designed
specifically to take advantage of the virtualization performance
advantages of the quad core AMD Opteron processor.
-- AMD expanded its desktop consumer and commercial processor line-up,
introducing:
-- Six new desktop processors, including three quad-core and
three triple-core processors;
-- Four new AMD Business Class processors, extending the B-series
product offerings to a total of 11 processors that support the
essential security and manageability requirements of business
users.
-- Acer, Dell, NEC, Samsung, Toshiba, and others introduced new
notebook systems powered by the recently introduced AMD Turion X2
Ultra notebook platform.
-- 10 of the largest motherboard partners introduced new products
based on the AMD 790GX desktop chipset, delivering best-in-class 3D
graphics performance, enhanced scalability and stability for high-
performance gaming and multimedia.
-- AMD launched a new corporate brand campaign under a new tagline,
"The Future is Fusion." The campaign focuses on how the unique AMD
combination of technologies, coupled with close relationships with
computer manufacturers and a deep understanding of customer needs,
results in exciting next-generation capabilities and experiences at
work, at home, and at play.
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 third 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 an innovative technology company dedicated to collaborating with customers and partners to ignite the next generation of computing and graphics solutions at work, home and play. For more information, visit http://www.amd.com.
Cautionary Statement
This release contains forward-looking statements concerning revenue and other expectations for the fourth quarter of 2008, the expected closing of The Foundry Company joint venture and the increased investment by the Mubadala Development Company which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as "would," "may," "expects," "believes," "plans," "intends," "projects," and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this release are based on current beliefs, assumptions and expectations, speak only as of the date of this release and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Risks include the possibility that Intel Corporation's pricing, marketing and rebating programs, product bundling, standard setting, new product introductions or other activities targeting the company's business will prevent attainment of the company's current plans; global business and economic conditions will worsen, resulting in lower than currently expected revenue in the fourth quarter of 2008 and beyond; the company's Asset Smart strategy will not reach fruition or will be less beneficial than anticipated; the announced transaction for the formation of The Foundry Company and the associated third-party investment will not occur as anticipated; demand for computers and consumer electronics products and, in turn, demand for the company's products will be lower than currently expected; customers stop buying the company's products or materially reduce their demand for its products; the company will require additional funding and may not be able to raise funds on favorable terms or at all; the company's cost containment efforts will not be effective; the company will be unable to develop, launch and ramp new products and technologies in the volumes and mix required by the market and at mature yields on a timely basis; there will be unexpected variations in market growth and demand for the company's products and technologies in light of the product mix that it may have available at any particular time or a decline in demand; the company will be unable to transition to advanced manufacturing process technologies in a timely and effective way, consistent with planned capital expenditures; the company will be unable to maintain the level of investment in research and development and capacity that is required to remain competitive; the company will be unable to divest its Handheld or DTV product businesses in the expected timeframe, if at all, or in a manner contemplated by the company; and the company will be unable to obtain sufficient manufacturing capacity or components to meet demand for its products or will under-utilize its microprocessor manufacturing facilities. Investors are urged to review in detail the risks and uncertainties in the company's Securities and Exchange Commission filings, including but not limited to the Quarterly Report on Form 10-Q for the quarter ended June 28, 2008.
(1) In this press release, in addition to GAAP financial results, AMD has provided non-GAAP financial measures for net income (loss), operating income (loss) and gross margin. Non-GAAP net income (loss) excludes discontinued operations, a gain on the sale of 200mm equipment and other certain charges as reflected in the table. Non-GAAP operating income (loss) excludes a gain on the sale of 200mm equipment and other certain charges as reflected in the table. Non-GAAP gross margin excludes process technology license revenue and a gain on the sale of 200mm equipment as reflected in the table. Management believes this non-GAAP presentation makes it easier for investors to compare current and historical period operating results.
AMD, the AMD Arrow logo, AMD Opteron, AMD Phenom and combinations thereof, and ATI, the ATI logo, FireGL and Radeon are trademarks of Advanced Micro Devices, Inc. Other names are for informational purposes only and used to identify companies and products and may be trademarks of their respective owners.
ADVANCED MICRO DEVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions except per share amounts and percentages)
Quarter Ended Nine Months Ended
----------------------------------------------- ----------------------
Sept. 27, June 28, Sept. 29, Sept. 27, Sept. 29,
2008 2008 2007 2008 2007
(Unaudited)(Unaudited)(Unaudited) (Unaudited)(Unaudited)
----------------------------------------------- ----------------------
Net revenue $1,776 $ 1,349 $1,558 $ 4,581 $ 3,997
Cost of sales 871 653 923 2,376 2,608
----------------------------------------------- ----------------------
Gross margin 905 696 635 2,205 1,389
Gross margin % 51% 52% 41% 48% 35%
Research and
development 422 442 431 1,319 1,261
Marketing,
general and
admini-
strative 313 337 346 984 1,029
Amortization
of acquired
intangible
assets and
integration
charges 30 30 39 89 127
Restructuring
charges 9 30 - 39 -
----------------------------------------------- ----------------------
Operating
income (loss) 131 (143) (181) (226) (1,028)
Interest
income 7 10 19 32 54
Interest
expense (87) (95) (95) (277) (272)
Other income
(expense),
net (4) (10) (1) (15) (8)
----------------------------------------------- ----------------------
Income (loss)
from
continuing
operations
before
minority
interest,
equity in net
loss of
Spansion Inc.
and other and
income taxes 47 (238) (258) (486) (1,254)
Minority
interest in
consolidated
subsidiaries (7) (7) (9) (27) (26)
Equity in net
loss of
Spansion Inc.
and other - (24) (57) (24) (86)
----------------------------------------------- ----------------------
Income (loss)
from
continuing
operations
before income
taxes 40 (269) (324) (537) (1,366)
Provision
(benefit) for
income taxes (1) - 20 (1) 59
----------------------------------------------- ----------------------
Income (loss)
from
continuing
operations $ 41 $ (269) $ (344) $ (536) $(1,425)
Income (loss)
from
discontinued
operations,
net of tax (108) (920) (52) (1,078) (182)
----------------------------------------------- ----------------------
Net income
(loss) $ (67) $(1,189) $ (396) $(1,614) $(1,607)
----------------------------------------------- ----------------------
Net income
(loss) per
common share
Basic and
diluted
Continuing
operations $ 0.07 $ (0.44) $(0.62) $ (0.88) $ (2.59)
Discontinued
operations $(0.18) $ (1.52) $(0.09) $ (1.78) $ (0.33)
----------------------------------------------- ----------------------
Basic and
diluted net
income (loss)
per common
share $(0.11) $ (1.96) $(0.71) $ (2.66) $ (2.92)
----------------------------------------------- ----------------------
Shares used in
per share
calculation
Basic and
diluted 608 607 554 607 551
ADVANCED MICRO DEVICES, INC.
CONSOLIDATED BALANCE SHEETS
(Millions)
Sept. 27, Dec. 29,
2008 2007(a)
(Unaudited)
----------------------------------------------------------------------
Assets
Current assets:
Cash, cash equivalents and marketable
securities $ 1,341 $ 1,889
Accounts receivable, net 620 603
Inventories 844 802
Prepaid expenses and other current assets 240 396
Deferred income taxes 20 64
Assets of discontinued operations 283 1,304
----------------------------------------------------------------------
Total current assets 3,348 5,058
Property, plant and equipment, net 4,440 4,711
Goodwill 945 950
Acquisition related intangible assets, net 224 311
Other assets 535 520
----------------------------------------------------------------------
Total Assets $ 9,492 $11,550
======================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 737 $ 992
Accrued compensation and benefits 143 183
Accrued liabilities 850 815
Deferred income on shipments to distributors 65 101
Current portion of long-term debt and capital
lease obligations 266 238
Other short-term obligations 94 -
Other current liabilities 226 270
Liabilities of discontinued operations 11 26
----------------------------------------------------------------------
Total current liabilities 2,392 2,625
Deferred income taxes 4 6
Long-term debt and capital lease obligations,
less current portion 4,874 5,031
Other long-term liabilities 657 633
Minority interest in consolidated subsidiaries 175 265
Stockholders' equity:
Capital stock:
Common stock, par value 6 6
Capital in excess of par value 5,981 5,921
Retained earnings (deficit) (4,714) (3,100)
Accumulated other comprehensive income 117 163
----------------------------------------------------------------------
Total stockholders' equity 1,390 2,990
----------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 9,492 $11,550
======================================================================
(a) Amounts for the year ended December 29, 2007 were derived from the
December 29, 2007 audited financial statements, adjusted for
discontinued operations.
ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA (1)
(Unaudited)
(Millions except headcount and percentages)
Quarter Ended Nine Months Ended
---------------------------------------------------------------------
Segment
Information from
Continuing Sept. 27, June 28, Sept. 29, Sept 27, Sept. 29,
Operations 2008 2008 2007 2008 2007
------------------
------------------------------------------------- -------------------
Computing
Solutions (2)
Net revenue $ 1,391 $ 1,101 $ 1,283 $ 3,687 $ 3,299
Operating
income
(loss) $ 143 $ (9) $ (122) $ (29) $ (722)
Graphics (3)
Net revenue 385 248 275 894 698
Operating
income
(loss) 47 (38) 11 22 (55)
All Other (4)
Net revenue - - - - -
Operating
income
(loss) (59) (96) (70) (219) (251)
Total from
Continuing
Operations
Net revenue $ 1,776 $ 1,349 $ 1,558 $ 4,581 $ 3,997
Operating
income
(loss) $ 131 $ (143) $ (181) $ (226) $(1,028)
------------------------------------------------- -------------------
Revenue
Reconciliation
-----------------
Revenue from
continuing
operations $ 1,776 $ 1,349 $ 1,558 $ 4,581 $ 3,997
Revenue from
discontinued
operations 44 37 74 130 246
-------- -------- -------- -------- --------
Total revenue $ 1,820 $ 1,386 $ 1,632 $ 4,711 $ 4,243
Components of
Discontinued
Operations
-----------------
Operating loss $ (24) $ (42) $ (52) $ (116) $ (182)
Impairment of
goodwill and
acquired
intangible assets (84) (876) - (960) -
Restructuring
charges - (2) - (2) -
-------- -------- -------- -------- --------
Total loss
from
discontinued
operations $ (108) $ (920) $ (52) $(1,078) $ (182)
------------------------------------------------- -------------------
Other Data
-----------------
Depreciation &
amortization
(excluding
amortization of
acquired
intangible
assets) $ 266 $ 263 $ 261 $ 794 $ 755
Capital additions $ 83 $ 104 $ 417 $ 509 $ 1,417
Adjusted EBITDA
(5) $ 422 $ 119 $ 66 $ 622 $ (237)
------------------------------------------------- -------------------
Headcount 15,460 15,653 16,498 15,460 16,498
-----------------
------------------------------------------------- -------------------
(1) Comparative amounts adjusted for discontinued operations except
for headcount data.
(2) Computing Solutions segment includes microprocessors, chipsets
and embedded processors. For the quarter ended June 28, 2008 and
nine months ended September 27, 2008, the operating loss
includes a $193M gain on the sale of 200 mm equipment. For the
quarter and nine months ended Sept. 27, 2008, revenue includes
$191M in technology license revenue.
(3) Graphics segment includes graphics, video and multimedia products
developed for use in desktop and notebook computers, including
home media PCs, professional workstations and servers. Starting
in the quarter ended June 28, 2008 this segment also includes
royalties received in connection with the sale of game console
systems that incorporate the Company's graphics technology.
Prior periods have been recast to conform to current period
presentation.
(4) All Other category includes employee stock-based compensation
expense and certain operating expenses and credits that are not
allocated to the operating segments. Also included in this
category are the restructuring, severance and ATI acquisition-
related charges. Details of the restructuring, severance and ATI
acquisition-related charges and employee stock-based
compensation expense are shown below.
Restructuring, severance, and ATI acquisition-related charges:
Nine Months
Quarter Ended Ended
Q308 Q208 Q307 Q308 Q307
-------------- ------------
Restructuring charges $ 9 $30 $ - $ 39 $ -
Severance charges - - 2 - 18
-------------- ------------
Subtotal $ 9 $30 $ 2 $ 39 $ 18
Amortization of acquired intangible
assets 29 30 34 88 102
Integration charges 1 - 5 1 25
-------------- ------------
Total amortization of acquired
intangibles and integration charges $30 $30 $39 $ 89 $127
Cost of fair value adjustment of
acquired inventory - - - - 18
-------------- ------------
ATI acquisition-related charges $30 $30 $39 $ 89 $145
-------------- ------------
Restructuring, severance, and ATI
acquisition-related charges $39 $60 $41 $128 $163
============== ============
Employee stock-based compensation expense:
Nine Months
Quarter Ended Ended
Q308 Q208 Q307 Q308 Q307
------------------- ------------
Cost of sales $ 2 $ 3 $ 2 $ 8 $ 7
Research and development 9 8 12 32 38
Marketing, general and
administrative 7 6 11 15 36
------------------- ------------
$ 18 $ 17 $ 25 $ 55 $ 81
=================== ============
(5) Reconciliation of income (loss) from continuing operations to
Adjusted EBITDA(a)
Nine Months
Quarter Ended Ended
Q308 Q208 Q307 Q308 Q307
------------------- ---------------
Income (loss)
from
continuing
operations $ 41 $(269) $(344) $(536) $(1,425)
Depreciation
and
amortization 266 263 261 794 755
Amortization
of acquired
intangible
assets 29 30 34 88 102
Interest
expense 87 95 95 277 272
Provision
(benefit)
for income
taxes (1) - 20 (1) 59
--------------------------------- ---------------
Adjusted
EBITDA $422 $ 119 $ 66 $ 622 $ (237)
=================== ===============
(a) The Company defines Adjusted EBITDA as income (loss) from
continuing operations adjusted for depreciation and
amortization, amortization of acquired intangible assets,
interest expense and taxes. The Company calculates and
communicates Adjusted EBITDA because management believes it is
of interest to investors and lenders in relation to its overall
capital structure and its ability to borrow additional funds.
The Company's calculation of Adjusted EBITDA may or may not be
consistent with the calculation of this measure by other
companies in the same industry. Investors should not view
Adjusted EBITDA as an alternative to the U.S. GAAP operating
measure of net income or U.S. GAAP liquidity measures of cash
flows from operating, investing and financing activities. In
addition, Adjusted EBITDA does not take into account changes in
certain assets and liabilities as well as interest and income
taxes that can affect cash flows.
Source: Advanced Micro Devices, Inc.
Released October 16, 2008