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AMD Reports Fourth Quarter and Annual Results

January 20, 2004 at 4:17 PM EST
Fourth quarter sales up 26% sequentially to $1.2 billion, EPS of $0.12, based on strong Flash memory and processor sales

SUNNYVALE, Calif., Jan 20, 2004 (BUSINESS WIRE) -- AMD (NYSE:AMD) today reported sales of $1.206 billion and net income of $43 million for the quarter ended December 28, 2003. Net income amounted to $0.12 per share.

Fourth quarter sales increased by 76 percent from the fourth quarter of 2002 and increased by 26 percent from the third quarter of 2003. In the fourth quarter of 2002, AMD reported sales of $686 million and a net loss of $855 million, or $2.49 per share. In the third quarter of 2003, AMD reported sales of $954 million and a net loss of $31 million, or $0.09 per share.

The fourth quarter results include a favorable impact of $14 million, or $0.03 per share, due to an adjustment to previously recorded restructuring charges and purchase accounting related to the FASL LLC transaction. The third quarter of 2003 results included a favorable impact of $8 million, or $0.02 per share, due to an adjustment to previously recorded restructuring charges.

For the full year ended December 28, 2003, sales increased by 30 percent from 2002. For fiscal 2003, AMD reported sales of $3.5 billion and a net loss of $274 million, or $0.79 per share. AMD reported sales in 2002 of $2.7 billion and a net loss of $1.3 billion, or $3.81 per share.

"Fourth quarter profitability was driven by solid sales growth across all business lines," said Robert J. Rivet, AMD's chief financial officer. "Sales increased in all regions, and we saw continued penetration in emerging markets, highlighted by record sales in China and Latin America. We continued to achieve high yields across all product lines based on our leading-edge processes and award-winning fabs.

"We saw positive growth across all microprocessor brands, including strong AMD Athlon(TM) XP processor sales in the fourth quarter. Furthermore, we continue to lead the industry to pervasive 64-bit computing based on increasing adoption of AMD Athlon(TM) 64 and AMD Opteron(TM) processors. The addition of new global customers such as Daimler Chrysler, Qualcomm, Pirelli and Bristol-Myers Squibb demonstrate that we have a clear winner in our AMD Opteron processor.

"In its second quarter of existence, our Spansion(TM) Flash memory brand has increased its market share leadership in the growing NOR Flash market. We increased sales to our existing customer base and added new wireless and consumer electronics customers, especially in emerging markets. MirrorBit(TM) technology continues to earn widespread acceptance as an emerging industry standard, and was our fastest growing memory product line."

BUSINESS OVERVIEW

As a result of 26 percent sequential sales growth, AMD recorded a fourth quarter operating profit of $46 million. Cash flow from operations was positive for the second quarter in a row and AMD ended the fourth quarter with a cash balance of $1.313 billion, up from $1.076 billion at the end of the third quarter.

Computation Products Group (CPG) sales of $581 million were up 38 percent as compared to the fourth quarter of 2002 and increased by 15 percent from $503 million in the third quarter of 2003. CPG generated operating income of $63 million in the fourth quarter, up from $19 million in the third quarter, on the strength of an improved average selling price (ASP) and higher unit volumes.

During the quarter, there was strong demand for the AMD Athlon XP desktop processor line and its superior price-performance, which helped drive the increase in ASP. In addition, momentum for AMD64 processors continued to increase. AMD Opteron processor sales grew in the fourth quarter with solid penetration in the enterprise segment. AMD Athlon 64 FX processor sales were strong, and the company believes it is becoming the platform of choice for enthusiasts. IBM, HP and Fujitsu-Siemens began selling AMD64 processor-based systems in the fourth quarter and Sun Microsystems announced plans to deliver AMD Opteron processor-based enterprise servers in the first half of 2004.

Flash memory sales of $566 million in the fourth quarter increased 34 percent from $424 million in the third quarter of 2003 and were up 161 percent from the fourth quarter of 2002. The Flash memory business narrowed its operating loss to $3 million in the fourth quarter.

Flash memory sales growth over the third quarter was attributable to large Spansion Flash memory market share gains in the wireless and consumer electronics segments and strong seasonal growth. The business also experienced an increase in average bit density in the Flash products it sold. AMD's Flash operation successfully qualified 110 nm floating gate technology in the quarter, an important milestone on its path to expand the company's leading-edge capacity.

    HIGHLIGHTS OF THE QUARTER

    --  Sun Microsystems, Inc. and AMD announced a strategic alliance
        through which Sun will deliver new AMD Opteron processor-based
        Sun Fire(TM) enterprise servers. The new servers will run
        Solaris, Linux and Sun's Java Enterprise System on two- and
        four-way servers and are expected to ship in the first half of
        2004. Sun also launched the B100x Blade Server with the Mobile
        AMD Athlon XP processor 1800+.

    --  AMD broke ground on a 300 millimeter manufacturing facility.
        The facility, named AMD Fab 36, is located in Dresden,
        Germany, adjacent to AMD Fab 30. AMD Fab 36 is expected to be
        in volume production in 2006.

    --  Fujitsu Siemens Computers announced the CELSIUS V810 high-end
        workstation based on the AMD Opteron processor 200 Series. The
        new workstation is targeted at customers who use
        computer-intensive applications such as digital content
        creation and computer-aided design.

    --  AMD expanded the AMD Opteron(TM) processor family with Models
        148, 248 and 848 -- enabling servers and workstations to
        simultaneously provide cutting-edge 32-bit performance and
        64-bit capability.

    --  AMD announced support for Microsoft(R) Windows(R) Small
        Business Server 2003 on AMD Opteron processor-based servers to
        provide a high-performance, cost-effective solution for
        small-to-medium business customers for their most critical IT
        needs, including file and print, e-mail, Web and database
        services.

    --  The AMD Opteron processor debuted on the Top500 Supercomputer
        List, appearing four times on the list. In addition, the AMD
        Opteron processor was awarded the HPCwire Editor's Choice
        award for Vendor Delivering Most Innovative HPC Technology for
        2003.

    --  Desktop systems based on the AMD Athlon 64 processor became
        available from a variety of tier 1 customers, including
        Packard Bell, Fujitsu Siemens, Fujitsu, HP and eMachines.

    --  PC Magazine honored the AMD Athlon(TM) 64 and AMD Opteron(TM)
        processors with the 2003 Award for Technical Excellence. The
        AMD Athlon 64 FX-51 processor won Tom's Hardware Guide Readers
        Choice award for "Best Innovation in CPUs" for 2003. The AMD64
        platform won eWeek's Top Technologies of 2003. AMD Opteron
        also received "product of the year" awards from CNET and China
        Computerworld.

    --  The Flash business continued to leverage its industry-leading
        technology with the first Spansion Flash memory product based
        on advanced 110nm MirrorBit technology for the wireless
        market. The Spansion S29WS256N is a high performance, 256 Mbit
        1.8-volt product, with sampling expected in the first half of
        2004.

    --  As part of its long-term strategy, the Flash business
        announced plans to increase leading edge capacity for 110nm
        floating gate and 110nm MirrorBit technologies in 2004, with
        128Mbit equivalent capacity planned to be more than 60 percent
        of total fab capacity output.

    --  Robert Bosch GmbH recognized the outstanding performance,
        quality and reliability of Spansion Flash memory products with
        an award for the period 2001-2002. This is the second
        consecutive award from Bosch recognizing AMD's delivery of
        such products over a four-year period.

    --  AMD and Founder Group announced plans to establish a new joint
        Platform Development Lab in Beijing for integrating and
        developing products targeted at information appliances beyond
        the PC market, initially focusing on home digital media
        centers.

    CURRENT OUTLOOK

AMD's outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially. Economic and industry conditions remain uncertain and continue to make it particularly difficult to forecast product demand. AMD's current outlook for the first quarter of 2004 is based on the following projections:

    --  In its Flash memory business, notwithstanding typical seasonal
        patterns, AMD expects sales to be approximately flat for the
        quarter due to the company's strong position in the market.

    --  For the processor business, AMD expects to be in the range of
        industry seasonal patterns.

    --  In general, AMD believes that seasonal patterns are expected
        to prevail, and aggregate sales to be down slightly.

    AMD TELECONFERENCE

AMD will hold a conference call for the financial community at 2:30 PM Pacific Time 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 http://www.amd.com or http://www.StreetEvents.com. The web-cast will be available for ten days after the conference call.

CAUTIONARY STATEMENT

This release contains forward-looking statements, 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 uncertainty that could cause actual results to differ materially from current expectations. Risks include the possibility that global business and economic conditions will worsen resulting in lower than currently expected sales in the first quarter of 2004; that Intel Corporation's pricing, marketing programs, product bundling, new product introductions or other activities targeting the company's processor business will prevent attainment of the company's current processor sales plans; that Intel Corporation will announce an x86-64 bit offering that will affect the sales ramp of AMD Opteron and AMD Athlon 64 processors; that demand for personal computers and, in turn, demand for the company's processors will be lower than currently expected; that adoption of AMD64 processor-based products by Tier One OEMs will not occur as expected; that demand for the company's Flash memory products will be lower than currently expected, particularly in the high-end cellular telephone sector, and that we will not be able to increase our Flash memory market share; that Intel Corporation will negatively affect NOR Flash memory prices; that customer acceptance of MirrorBit technology will not continue to increase; that we will not continue to be successful integrating the Flash operations of FASL LLC, or be able to achieve or sustain any benefit from its creation; that the company will not be able to meet demand for its products; that the company may not achieve its current product and technology introduction schedules; and that solutions providers will not timely provide the infrastructure, including operating systems and applications, to support the company's AMD64 technology. 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 Form 10-K for the year ended December 29, 2002, and the Quarterly Report on Form 10-Q for the quarter ended September 28, 2003.

About AMD

AMD (NYSE:AMD) designs and produces microprocessors, Flash memory devices and system-on-chip solutions for the computer, communications and consumer electronics industries. AMD is dedicated to helping its customers deliver standards-based, customer-focused solutions for technology users, ranging from enterprises to government agencies and individual consumers. Founded in 1969, AMD is a Standard & Poor's 500 company with global operations and manufacturing facilities in the United States, Europe, Japan and Asia.

AMD, the AMD Arrow logo, AMD Athlon, AMD Opteron and combinations thereof are trademarks of Advanced Micro Devices, Inc. Spansion and MirrorBit are trademarks of FASL LLC. Microsoft and Windows are registered trademarks of Microsoft Corporation in the U.S. and/or other jurisdictions. Other product and company names used in this publication are for identification purposes only and may be trademarks of their respective companies.

Advanced Micro Devices, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands except per share amounts)


                          Quarter Ended                Year Ended
----------------------------------------------------------------------
                 Dec. 28,   Sept. 28,  Dec. 29,    Dec. 28,   Dec. 29,
                   2003       2003       2002       2003       2002*
                (Unaudited)(Unaudited)(Unaudited)(Unaudited)
----------------------------------------------------------------------

Net sales      $1,205,593   $953,759   $686,430 $3,519,168 $2,697,029

Cost of sales     778,508    626,880    506,613  2,327,063  2,105,661
Research and
 development      226,502    213,997    244,848    852,075    816,114
Marketing,
 general and
 administrative   162,807    151,111    194,389    587,307    670,065
Restructuring
 and other
 special
 charges, net      (8,039)    (8,000)   330,575    (13,893)   330,575

----------------------------------------------------------------------
                1,159,778    983,988  1,276,425  3,752,552  3,922,415

----------------------------------------------------------------------

Operating income
 (loss)            45,815    (30,229)  (589,995)  (233,384)(1,225,386)

Interest and
 other income,
 net                8,913        493        992     21,116     32,132
Interest expense  (30,943)   (26,848)   (22,296)  (109,960)   (71,349)

----------------------------------------------------------------------

Income (loss)
 before minority
 interest,
 income taxes,
 and equity in
 net income
(loss) of
 joint venture     23,785    (56,584)  (611,299)  (322,228)(1,264,603)

Minority
 interest in
 (income) loss
 of
 subsidiary        19,408     25,353          -     44,761          -
Provision for
 income taxes           -          -    243,470      2,936     44,586
Equity in net
 income (loss)
 of
 joint venture
 and other              -          -         29      5,913      6,177

----------------------------------------------------------------------

Net income (loss)  43,193    (31,231)  (854,740)  (274,490)(1,303,012)

----------------------------------------------------------------------

Net income (loss) per
 common share

Basic               $0.12     $(0.09)    $(2.49)    $(0.79)    $(3.81)

Diluted             $0.12     $(0.09)    $(2.49)    $(0.79)    $(3.81)

----------------------------------------------------------------------

Shares used in per share
 calculation

- Basic           357,090    347,334    343,949    346,934    342,334
- Diluted         416,190    347,334    343,949    346,934    342,334

----------------------------------------------------------------------

*Derived from the December 29, 2002 audited financial statements of
 Advanced Micro Devices, Inc.


Advanced Micro Devices, Inc.

----------------------------------------------------------------------
RECONCILIATION OF NET  Income (LOSS) TO EBITDA
(Thousands)
----------------------------------------------------------------------
                        Quarter Ended                Year Ended
----------------------------------------------------------------------
               Dec. 28,   Sept. 28,  Dec. 29,   Dec. 28,    Dec. 29,
                  2003       2003      2002       2003        2002
              (Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
----------------------------------------------------------------------
Net income
 (loss)         $43,193   $(31,231) $(854,740) $(274,490)$(1,303,012)
Depreciation
 and
 amortization   287,311    285,030    199,800    995,663     756,200
Interest
 income          (3,236)    (3,244)    (4,655)   (19,851)    (35,390)
Interest
 expense         30,943     26,848     22,296    109,960      71,349
Provision
 for income
 taxes                -          -    243,470      2,936      44,586

----------------------------------------------------------------------
EBITDA          358,211    277,403   (393,829)   814,218    (466,267)

Advanced Micro Devices, Inc.
CONSOLIDATED BALANCE SHEETS
(Thousands)
                                Dec. 28,     Sept. 28,      Dec. 29,
                                  2003         2003            2002*
----------------------------------------------------------------------
                               (unaudited)  (unaudited)
Assets

Current assets:
  Cash, cash equivalents and
   short-term investments      $1,313,367   $1,075,939     $1,006,655
  Accounts receivable, net        609,457      543,444        395,828
  Inventories                     697,658      692,395        432,603
  Prepaid expenses and other
   current assets                 177,145      206,202        184,592
  Deferred income taxes           102,651      113,569         91,137

----------------------------------------------------------------------

     Total current assets       2,900,278    2,631,549      2,110,815

Property, plant and equipment,
 net                            3,848,492    3,808,567      2,880,809
Investment in joint venture             -            -        382,942
Other assets                      345,575      295,289        335,752

----------------------------------------------------------------------

                               $7,094,345   $6,735,405     $5,710,318
======================================================================

Liabilities and Stockholders' Equity

Current:
  Notes payable                        $-           $-           $913
  Accounts payable                490,318      335,925        352,438
  Accrued compensation and
   benefits                       160,644      156,569        131,324
  Accrued liabilities             329,420      310,861        435,657
  Restructuring accruals           29,770       43,901         99,974
  Income taxes payable             41,370       47,279         21,246
  Deferred income on shipments
   to distributors                116,949       89,329         57,184
  Current portion of long-term
   debt and capital lease
   obligations                    193,266      200,717         71,339
  Other current liabilities        90,533       84,458         89,437
----------------------------------------------------------------------

     Total current liabilities  1,452,270    1,269,039      1,259,512

Deferred income taxes             157,690      166,385         91,137
Long-term debt and capital
 lease obligations              1,899,674    1,880,859      1,570,322
Other long-term liabilities       428,761      425,282        322,082
Minority interest in (income)
 loss of subsidiary               717,640      711,056              -

Stockholders' equity:
  Capital stock:
     Common stock, par value       3,500        3,478          3,445
  Capital in excess of par
   value                        1,958,833    1,939,968      1,921,247
  Retained earnings               217,893      174,700        492,668
  Accumulated other
   comprehensive income           258,084      164,638         49,905
----------------------------------------------------------------------

     Total stockholders'
       equity                   2,438,310    2,282,784      2,467,265

----------------------------------------------------------------------

                               $7,094,345   $6,735,405     $5,710,318
======================================================================


*Derived from the December 29, 2002 audited financial statements of
 Advanced Micro Devices, Inc.

                     Advanced Micro Devices, Inc.
                       Selected Corporate Data
                             (Unaudited)

                           Quarter Ended              Year Ended
----------------------------------------------------------------------
                       Dec. 28, Sept. 28, Dec. 29,  Dec. 28,  Dec. 29,
Segment Information     2003*     2003*     2002      2003*      2002
----------------------------------------------------------------------
Computation Products(1)
 Revenue                $581M    $503M     $422M    $1,960M    $1,756M
 Operating Income
  (Loss)                  63M      19M    (157)M      (23)M     (661)M

Memory Products (2)
 Revenue                 566M     424M      217M     1,419M       741M
 Operating Income
  (Loss)                 (3)M    (49)M     (59)M     (190)M     (160)M

All Other (3)
 Revenue                  59M      26M       48M       140M       200M
 Operating Income
  (Loss)                (14)M       0M    (374)M      (21)M     (405)M

Total AMD
 Revenue               1,206M     954M      686M     3,519M     2,697M
 Operating Income
  (Loss)                  46M    (30)M    (590)M     (233)M   (1,225)M

----------------------------------------------------------------------

                       Dec. 28, Sept. 28, Dec. 29,  Dec. 28,  Dec. 29,
Other Data              2003*     2003*    2002       2003*     2002
----------------------------------------------------------------------
Depreciation &
 Amortization           $287M    $285M     $200M      $996M     $756M

Capital Additions       $164M    $138M     $138M      $586M     $705M

Headcount              14,353   14,380    12,832     14,353    12,832

----------------------------------------------------------------------

International Sales       81%      79%       76%        77%       71%

Research and
 Development            $227M    $214M     $245M      $852M     $816M

EBITDA                  $358M    $277M   $(394)M      $814M   ($466)M



* Information includes the results of FASL, LLC, AMD's majority owned
  subsidiary. Prior periods do not include data for FASL LLC as the
  information is not available.

(1) Computation Products segment includes PC processors and Chipsets.

(2) Memory Products segment includes Flash memory products of AMD and
    FASL LLC.

(3) The All Other category includes Embedded Processors, Network
    Products, Geode products, and Foundry Services. Also included in
    the All Other category is certain operating expenses that are not
    allocated to the operating segments.

Note: Figures may not foot due to rounding

SOURCE: Advanced Micro Devices, Inc.

AMD, Corporate Public Relations
Morris Denton, 512-602-2685
512-751-8416 (mobile)
morris.denton@amd.com
Dave Kroll, 408-749-3310
408-981-1690 (mobile)
dave.kroll@amd.com
AMD, Investor Relations
Mike Haase, 408-749-3124
mike.haase@amd.com
Ruth Cotter, 408-749-3887
ruth.cotter@amd.com
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