AMD Reports Second Quarter Results
- Microprocessor Unit Shipments Increase 22% Year-Over-Year and 38% Sequentially -
SUNNYVALE, Calif.--(BUSINESS WIRE)--
AMD (NYSE:AMD) today reported financial results for the quarter ended June 30, 2007(1). AMD reported second quarter 2007 revenue of $1.378 billion, an operating loss of $457 million, and a net loss of $600 million, or $1.09 per share. These results include an impact of $130 million, or $0.24 per share, from ATI acquisition-related and integration charges of $78 million, employee stock-based compensation expense of $31 million, severance charges of $16 million and debt issuance charges of $5 million. In the first quarter of 2007, AMD reported revenue of $1.233 billion and an operating loss of $504 million. In the second quarter of 2006, AMD reported revenue of $1.216 billion and operating income of $102 million.
Change
-----------------
Q2-07 vs Q2-07 vs
($M except percentages) Q2-07 Q1-07 Q2-06(1) Q1-07 Q2-06
--------------------------- ------- ------- -------- -------- --------
Revenue $1,378 $1,233 $1,216 12% 13%
Operating Income (Loss)
---------------------------
GAAP Operating income
(loss) $(457) $(504) $102
Acquisition-related,
integration and severance
charges $94 $113 NA
Stock-based compensation
expense $31 $28 $18
Non-GAAP Operating income
(loss)(2) $(332) $(363) $120
---------------------------
(1) As a result of the acquisition of ATI, 2006 financial results only
include the results of the former ATI operations from October 25
through December 31, 2006. Therefore, financial results for the
second quarter 2007 do not correlate directly to those for the second
quarter 2006.
(2) In this press release, AMD has provided non-GAAP financial
measures for operating income (loss) and gross margin to reflect its
financial results without acquisition-related, integration and
severance charges and employee stock-based compensation expense.
Management believes this non-GAAP presentation makes it easier for
investors to compare current and historical period operating results.
"While we made solid progress in the second quarter across a number of fronts, we must improve our financial results," said Robert J. Rivet, AMD's Chief Financial Officer. "We achieved a 12 percent sequential revenue increase, improved the gross margin and won back microprocessor unit and revenue market share. Strong distribution channel demand, initial sales to Toshiba, and a broader adoption of AMD platforms led to a 38 percent sequential increase in microprocessor unit shipments. In addition, our Graphics business gained momentum at the end of the quarter as we began shipping the new ATI Radeon HD(TM) 2000 family of graphics processors.
"We continue to focus on realigning our business model and reducing our capital expenditures and cost structure in the second half of the year."
Second quarter 2007 gross margin was 34 percent, excluding stock-based compensation expense, acquisition-related and severance charges, compared to 31 percent in the first quarter of 2007 and 57 percent in the second quarter of 2006. The increase from the prior quarter was largely due to increased microprocessor unit shipments. The second quarter gross margin was impacted by a write-off of older microprocessor inventory of approximately $30 million.
($M except percentages) Q2-07 Q1-07 Q2-06
--------- -------- --------
Gross Margins
------------------------------------------
GAAP Gross margin $461 $347 $690
GAAP Gross margin % 33% 28% 57%
Acquisition-related and severance charges $2 $29 NA
Stock-based compensation expense $2 $2 $2
Non-GAAP Gross margin(2) $465 $378 $692
Non-GAAP Gross margin(2) % 34% 31% 57%
Computing Solutions
Second quarter Computing Solutions segment revenue was $1.098 billion, compared with $918 million in the first quarter of 2007. The 20 percent sequential increase was primarily due to a 38 percent increase in microprocessor unit shipments, offset partially by lower average selling prices (ASPs) for desktop microprocessors. Second quarter server, mobile, and desktop microprocessor revenue increased sequentially. Mobile processor unit shipments increased 21 percent sequentially and 82 percent year-over-year.
Graphics
In the seasonally down second quarter, Graphics segment revenue of $195 million was flat from the first quarter of 2007. Initial sales of the ATI Radeon HD 2000 family of graphics processors were strong in the channel, and design win momentum with key mobile and desktop OEMs continues to grow.
Consumer Electronics
Second quarter Consumer Electronics segment revenue was $85 million, compared with $118 million in the first quarter of 2007. The sequential revenue decline of 28 percent was largely the result of lower handheld unit sales and revenue, partially offset by increased digital TV processor revenue.
Additional Highlights
-- Toshiba chose AMD as a strategic supplier for its new series of
Satellite notebook computers powered by an AMD platform featuring
AMD Turion(TM) 64 X2 dual-core mobile technology and the AMD M690
chipset.
-- Customers continued to adopt AMD-based solutions across a broader
portion of their product offerings:
-- Acer launched three consumer Aspire notebooks and three
commercial TravelMate notebooks based on AMD Turion 64 X2
dual-core mobile technology.
-- Dell expanded its AMD-based commercial solutions with the
launch of a new AMD-based Latitude notebook and OptiPlex(TM)
desktop. Dell also added ten new PowerEdge(TM) servers powered
by AMD Opteron(TM) processors and two new Dell Inspiron(TM)
desktop systems powered by AMD Athlon(TM) X2 microprocessors.
The AMD-based Dell Inspiron 531 PC received editors' choice
awards from PC Magazine and CNET.
-- Fujitsu-Siemens announced a new Amilo notebook based on AMD
Turion X2 dual-core mobile technology.
-- HP announced two new HP Blade PCs based on single-core AMD
Athlon 64 and AMD Athlon 64 X2 dual-core processors.
-- Sun Microsystems unveiled its new Blade 6000 server based on
AMD Opteron processors.
-- AMD announced that initial revenue shipments of the industry's
first native x86 quad-core processor, "Barcelona," will commence
in the third quarter in both standard and low-power versions. AMD
broadened its portfolio of product offerings in the quarter with
the introduction of:
-- The ATI Radeon HD(TM) 2000 series, a top-to-bottom line of ten
discrete graphics processors for both desktop and mobile
platforms that deliver the Ultimate Visual Experience(TM)
through immersive HD gaming with DirectX(R) 10 and HD media
playback.
-- Three new AMD Opteron processors, models 1222 SE, 2222 SE, and
8222 SE.
-- The AMD Turion 64 X2 dual-core mobile technology TL-66.
-- The AMD Athlon 64 X2 dual-core processor 6000+ and 5200+.
-- 45-watt energy-efficient AMD Athlon X2 dual-core processor BE-
2350 and BE-2300.
-- AMD disclosed details of its next-generation platform for notebook
computing, codenamed "Puma." The platform pairs AMD's next-
generation notebook processor, "Griffin," with the next-
generation AMD "RS780" mobile chipset. "Puma" represents one of
the first results of the "new AMD," delivering an optimized
mobile solution with extended battery life, graphics and video
processing enhancements and improved overall system performance.
-- The Italian stock exchange, Borsa Italiana, joined the growing
roster of global exchange customers running their business on AMD
Opteron processor based technology, including NYSE Group, Inc.,
the International Securities Exchange's Stock Exchange, London
Stock Exchange, Luxembourg Stock Exchange, Montreal Exchange and
Philadelphia Stock Exchange.
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 the seasonally up third quarter, AMD expects revenue to increase in line with seasonality.
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 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 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 third quarter of 2007, timing of new product releases, product features and performance characteristics and planned reductions in capital expenditures and cost structure, 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 require additional funding and may not be able to raise funds on favorable terms or at all; the company's cost reduction efforts will not be effective; customers stop buying the company's products or materially reduce their operations or demand for its products; 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; the company's competitors, customers and suppliers may take actions that will negate the anticipated benefits of the company's acquisition of ATI; 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 third quarter of 2007 and beyond; 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 obtain sufficient manufacturing capacity or components to meet demand for its products or the under-utilization of its microprocessor manufacturing facilities; and unfavorable results of operations of Spansion will adversely impact the company's results of operations. 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 March 31, 2007.
AMD, the AMD Arrow logo, AMD Opteron, AMD Turion, AMD Athlon, and combinations thereof, and ATI, the ATI logo, Radeon and Imageon 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
---------------------------------- ----------------------------------
June 30, March 31, July 2,
2007 2007 2006
(Unaudited) (Unaudited) (Unaudited)
---------------------------------- ----------- ----------- -----------
Net revenue $ 1,378 $ 1,233 $ 1,216
Cost of sales 917 886 526
---------------------------------- ----------- ----------- ----------
Gross margin 461 347 690
Gross margin % 33.5% 28.1% 56.7%
Research and development 475 432 279
Marketing, general and
administrative 365 335 309
Amortization of acquired
intangible assets and integration
charges 78 84 -
---------------------------------- ----------- ----------- ----------
Operating income (loss) (457) (504) 102
Interest income 19 16 35
Interest expense (99) (78) (18)
Other income (expense), net (9) 2 7
---------------------------------- ----------- ----------- ----------
Income (loss) before minority
interest, equity in net loss of
Spansion Inc. and other and
income taxes (546) (564) 126
Minority interest in consolidated
subsidiaries (9) (8) (7)
Equity in net loss of Spansion
Inc. and other (13) (16) (12)
---------------------------------- ----------- ----------- ----------
Income (loss) before income taxes (568) (588) 107
Provision (benefit) for income
taxes 32 23 18
---------------------------------- ----------- ----------- ----------
Net income (loss) $ (600) $ (611) $ 89
---------------------------------- ----------- ----------- ----------
Net income (loss) per common share
Basic $ (1.09) $ (1.11) $ 0.18
Diluted $ (1.09) $ (1.11) $ 0.18
---------------------------------- ----------- ----------- ----------
Shares used in per share
calculation
Basic 552 549 485
Diluted 552 549 500
Six Months Ended
----------------------------------- -----------------------
June 30, July 2,
2007 2006
(Unaudited) (Unaudited)
----------------------------------- ----------- -----------
Net revenue $ 2,611 $ 2,548
Cost of sales 1,803 1,079
----------------------------------- ----------- -----------
Gross margin 808 1,469
Gross margin % 30.9% 57.7%
Research and development 907 543
Marketing, general and
administrative 700 565
Amortization of acquired intangible
assets and integration charges 162 -
----------------------------------- ----------- -----------
Operating income (loss) (961) 361
Interest income 35 63
Interest expense (177) (41)
Other income (expense), net (7) (13)
----------------------------------- ----------- -----------
Income (loss) before minority
interest, equity in net loss of
Spansion Inc. and other and income
taxes (1,110) 370
Minority interest in consolidated
subsidiaries (17) (13)
Equity in net loss of Spansion Inc.
and other (29) (30)
----------------------------------- ----------- -----------
Income (loss) before income taxes (1,156) 327
Provision (benefit) for income
taxes 55 53
----------------------------------- ----------- -----------
Net income (loss) $ (1,211) $ 274
----------------------------------- ----------- -----------
Net income (loss) per common share
Basic $ (2.20) $ 0.58
Diluted $ (2.20) $ 0.55
----------------------------------- ----------- -----------
Shares used in per share
calculation
Basic 550 474
Diluted 550 498
ADVANCED MICRO DEVICES, INC.
CONSOLIDATED BALANCE SHEETS
(Millions)
June 30, March 31, December 31,
2007 2007 2006(a)
(Unaudited) (Unaudited)
----------------------------------------------------------------------
Assets
Current assets:
Cash, cash equivalents and
marketable securities $ 1,594 $ 1,167 $ 1,541
Accounts receivable, net 648 667 1,140
Inventories 892 938 814
Prepaid expenses and other
current assets 410 344 443
Deferred income taxes 54 71 25
----------------------------------------------------------------------
Total current assets 3,598 3,187 3,963
Property, plant and equipment,
net 4,575 4,405 3,987
Goodwill 3,180 3,186 3,217
Net investment in Spansion Inc. 326 345 371
Acquisition related intangible
assets, net 1,065 1,136 1,207
Other assets 480 453 402
----------------------------------------------------------------------
Total Assets $ 13,224 $ 12,712 $ 13,147
======================================================================
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable $ 985 $ 1,365 $ 1,338
Accrued compensation and
benefits 192 160 177
Accrued liabilities 768 719 716
Deferred income on shipments to
distributors 92 181 169
Current portion of long-term
debt and capital lease
obligations 219 182 125
Other current liabilities 220 304 327
----------------------------------------------------------------------
Total current liabilities 2,476 2,911 2,852
Deferred income taxes 56 43 31
Long-term debt and capital lease
obligations, less current
portion 5,318 3,659 3,672
Other long-term liabilities 610 591 517
Minority interest in consolidated
subsidiaries 292 303 290
Stockholders' equity:
Capital stock:
Common stock, par value 6 6 5
Capital in excess of par
value 5,237 5,372 5,316
Retained (deficit) earnings (932) (332) 308
Accumulated other comprehensive
income 161 159 156
----------------------------------------------------------------------
Total stockholders' equity 4,472 5,205 5,785
----------------------------------------------------------------------
Total Liabilities and
Stockholders' Equity $ 13,224 $ 12,712 $ 13,147
======================================================================
(a) Derived from the December 31, 2006 Audited Financial Statements of
Advanced Micro Devices, Inc.
ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA
(Unaudited)
(Millions except headcount and percentages)
Quarter Ended Six Months Ended
----------------------------------------------------------------------
June 30, March 31, July 2, June 30, July 2,
Segment Information 2007 2007 2006 2007 2006
(1)
-------------------
-------------------------------------------------- -------------------
Computing Solutions
(2)
Net revenue $ 1,098 $ 918 $ 1,216 $ 2,016 $ 2,553
Operating income
(loss) $ (258) $ (321) $ 136 $ (579) $ 448
Graphics (3)
Net revenue 195 197 - 392 -
Operating income
(loss) (50) (35) - (85) -
Consumer
Electronics (4)
Net revenue 85 118 - 203 -
Operating income
(loss) (22) (4) - (26) -
All Other (5)
Net revenue - - - - (5)
Operating income
(loss) (127) (144) (34) (271) (87)
Total AMD
Net revenue $ 1,378 $ 1,233 $ 1,216 $ 2,611 $ 2,548
Operating income
(loss) $ (457) $ (504) $ 102 $ (961) $ 361
-------------------------------------------------- -------------------
Other Data
-------------------
Depreciation &
amortization
(excluding
amortization of
acquired
intangible
assets) $ 255 $ 243 $ 193 $ 498 $ 367
Capital additions $ 414 $ 586 $ 455 $ 1,000 $ 765
Headcount 16,719 16,745 10,967 16,719 10,967
-------------------------------------------------- -------------------
Adjusted EBITDA (6) $ (143) $ (196) $ 318 $ (339) $ 735
-------------------
(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) Computing Solutions segment includes what was formerly the
Computation Products segment and the Embedded Products segment as
well as revenue from sales of chipsets sold by ATI prior to AMD's
acquisition of ATI.
(3) Graphics segment includes 3D graphics, video and multimedia
products developed for use in desktop and notebook computers,
including home media PCs, professional workstations and servers.
(4) Consumer Electronics segment includes products and revenue related
to mobile phones and PDAs, digital televisions and other consumer
electronics and revenue from royalties received in connection
with sales of game console systems that incorporate the Company's
products.
(5) 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) related activities in Q206
and for six months ended Q206. Also included in this category are
the ATI acquisition-related and integration charges incurred in
Q207 and Q107 and severance charges incurred in Q207. Details of
the ATI acquisition-related, integration and severance charges
and employee stock-based compensation expense are shown below.
ATI acquisition-related, Employee stock-based
integration and severance compensation expense:
charges:
Q207 Q107 Q207 Q107 Q206
------ ------ ---- ---- ----
Amortization Cost of sales
of acquired
intangible
assets $ 71 $ 71 $ 2 $ 2 $ 2
Integration Research and
charges 7 13 development 14 14 7
------ ------
Marketing,
general and
Subtotal 78 84 administrative 15 12 9
---- ---- ----
Cost of fair
value
adjustment of
acquired
inventory - 29 $ 31 $ 28 $ 18
------ ------ ==== ==== ====
ATI
acquisition-
related and
integration
charges $ 78 $ 113
Severance $ 16 $ -
------ ------
Total $ 94 $ 113
====== ======
(6) Reconciliation of Net income
(loss) to Adjusted EBITDA(b)
Q207 Q107 Q206
------ ------ -----
Net income
(loss) $(600) $(611) $ 89
Depreciation
and
amortization 255 243 193
Amortization
of acquired
intangible
assets 71 71 -
Interest
expense 99 78 18
Provision
(benefit) for
income taxes 32 23 18
-------------- ------ ------ -----
Adjusted
EBITDA $(143) $(196) $ 318
====== ====== =====
(b) The Company defines Adjusted EBITDA as net income (loss) adjusted
for depreciation and amortization, amortization of acquired
intangible assets, interest expense and taxes. The Company
calculated and communicated 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 July 19, 2007