• | Strong 13% quarter-over-quarter revenue growth |
• | $65 million inventory write-down primarily of older-generation APUs |
• | Announced corporate restructuring plan to further reduce operating expenses |
• | Announcing a definitive agreement for Assembly, Test, Mark and Pack (ATMP) manufacturing joint venture |
Q3-15 | Q2-15 | Q3-14 | ||||
Revenue | $1.06B | $942M | $1.43B | |||
Operating income (loss) | $(158)M | $(137)M | $63M | |||
Net income (loss) / Earnings (loss) per share | $(197)M/(0.25) | $(181)M$(0.23) | $17M/$0.02 |
Q3-15 | Q2-15 | Q3-14 | ||||
Revenue | $1.06B | $942M | $1.43B | |||
Operating income (loss) | $(97)M | $(87)M | $87M | |||
Net income (loss) / Earnings (loss) per share | $(136)M$(0.17) | $(131)M$(0.17) | $41M/$0.05 |
• | Revenue of $1.06 billion, up 13 percent sequentially and down 26 percent year-over-year. The sequential increase was due to solid seasonal semi-custom and strong desktop processor and GPU sales. The year-over-year decline was primarily due to decreased sales in the Computing and Graphics segment. |
• | Gross margin of 23 percent, down 2 percentage points sequentially, due to an inventory write-down of $65 million. Non-GAAP(1) gross margin, including the impact of the inventory write-down was 23 percent, down 5 percentage points sequentially. The inventory write-down was due to lower anticipated future demand for older-generation APUs. The gross margin impact of the inventory write-down was 6 percentage points. |
• | Operating loss of $158 million, compared to an operating loss of $137 million for the prior quarter. Non-GAAP(1) operating loss of $97 million, compared to non-GAAP(1) operating loss of $87 million in Q2 2015, primarily due to lower gross margin. |
• | Net loss of $197 million, loss per share of $0.25, and non-GAAP(1) net loss of $136 million, non-GAAP(1) loss per share of $0.17, compared to a net loss of $181 million, loss per share of $0.23 and non-GAAP(1) net loss of $131 million, non-GAAP(1) loss per share of $0.17 in Q2 2015. The impact of the inventory write-down to EPS was $0.08. |
• | Cash and cash equivalents were $755 million at the end of the quarter, down $74 million from the end of the prior quarter, due primarily to a $69 million debt interest payment. |
• | Total debt at the end of the quarter was $2.26 billion, flat from the prior quarter. |
• | Computing and Graphics segment revenue increased 12 percent sequentially and decreased 46 percent from Q3 2014. The sequential increase was primarily due to higher sales of desktop processors and GPUs and the annual decrease was driven primarily by lower client processor sales. |
◦ | Operating loss was $181 million, compared with an operating loss of $147 million in Q2 2015 and an operating loss of $17 million in Q3 2014. The sequential change was primarily driven by an inventory write-down of older-generation products partially offset by higher revenue. The year-over-year change was primarily driven by lower sales. |
◦ | Client processor average selling price (ASP) decreased sequentially and year-over-year primarily driven by lower notebook processor ASP. |
◦ | GPU ASP was flat sequentially and increased year-over-year. The year-over-year change was due to new GPU product offerings and improved AIB ASP. |
• | Enterprise, Embedded and Semi-Custom segment revenue increased 13 percent sequentially, primarily driven by seasonally higher sales of our semi-custom SoCs. The year-over-year decrease of 2 percent was primarily driven by lower embedded product and server processor sales. |
◦ | Operating income was $84 million compared with $27 million in Q2 2015 and $108 million in Q3 2014. The sequential increase was primarily due to the absence of the $33 million charge associated with a technology node transition in Q2 2015 and higher sales. The year-over-year decrease was primarily driven by a portion of the Q3 2015 inventory write-down and product mix. |
• | All Other category operating loss was $61 million compared with operating losses of $17 million in Q2 2015 and $28 million in Q3 2014. The sequential and year-over-year increases were due to restructuring charges recorded in Q3 2015. |
• | AMD expanded its offerings for the commercial client market with new product announcements and security-focused technology partnerships that address the needs of business users and IT decision makers: |
◦ | For the first time, AMD was the exclusive launch processor partner for HP’s newest EliteBook commercial client systems featuring the latest AMD PRO A-Series mobile and desktop processors (formerly codenamed “Carrizo PRO” and “Godavari PRO”). AMD’s new commercial processors deliver exceptional performance and dependability to meet the evolving budget and IT needs of businesses today and tomorrow. AMD PRO mobile processors power some of the first-to-market commercial notebook systems running the Microsoft® Windows® 10 operating system and are the industry’s first commercial |
• | AMD demonstrated innovation leadership with the introduction of the AMD Radeon™ R9 Nano, the fastest Mini ITX graphics card2 ever created and the world’s smallest enthusiast GPU, featuring High-Bandwidth Memory (HBM) to deliver up to 30 percent more performance3 and up to 30 percent lower power4 than AMD’s previous generation graphics cards. |
• | AMD announced the AMD A8-7670K APU delivering an excellent experience and value for today’s mainstream workloads, eSports online gaming, and Microsoft® Windows® 10. |
• | AMD delivered seamless and intuitive support for Windows® 10 and DirectX® 12 across AMD APU and GPU solutions with its new AMD Catalyst™ 15.7 Driver update and continued to out-perform its competitors in DirectX® 12 performance, including in the Ashes of the Singularity and Fable Legends benchmarks. |
• | AMD further solidified itself as a leader in the embedded market with new product introductions and design wins: |
◦ | Announced multiple new discrete AMD Embedded Radeon™ graphics options specifically designed to advance the visual and parallel processing capabilities of embedded applications. |
◦ | Bolstered its No. 1 position in the thin client space with the announcement that the new FUJITSU FUTRO S920, S720 and S520 are powered by AMD Embedded G-Series SOCs, which couple high-performance computing and graphics capability in a highly-integrated, low-power design. |
• | AMD released a carbon footprint analysis of the 6th Generation AMD A-Series APU, formerly codenamed “Carrizo”, showing that using the new processor can result in up to a 50 percent reduction in greenhouse gas emissions compared to AMD’s previous generation APU. |
• | AMD displayed the versatility of its FirePro™ professional graphics to address a variety of markets: |
◦ | Introduced the world’s first server GPU with 32GB of memory for high performance compute (HPC). |
◦ | Announced new professional graphics design wins with the Dell Precision™ 3510, 7510, and 7710 mobile workstations powered by AMD FirePro™ mobile GPUs to address the mobile performance needs of engineers and design pros. |
◦ | Showcased the power of FirePro professional graphics technologies to create stunning visual effects for global film productions such as Baahubali: The Beginning and Golden Drops. |
◦ | Unveiled the world’s first hardware-based virtualized GPU solution. With the AMD Multiuser GPU, IT pros can easily configure solutions to allow up to 15 users on a single AMD GPU. |
• | AMD formed the Radeon Technologies Group to bring a vertical focus on graphics and immersive computing development. With this strategic alignment, AMD is well-positioned to expand its role as the graphics industry leader, recapturing share across traditional graphics markets, and staking leadership positions in new markets such as virtual and augmented reality. |
(Millions except percentages) | Q3-15 | Q2-15 | Q3-14 | |||||||||
GAAP Gross Margin | $ | 239 | $ | 232 | $ | 494 | ||||||
GAAP Gross Margin % | 23 | % | 25 | % | 35 | % | ||||||
Technology node transition charge | — | 33 | — | |||||||||
Stock-based compensation* | — | 1 | 1 | |||||||||
Non-GAAP Gross Margin | $ | 239 | $ | 266 | $ | 495 | ||||||
Non-GAAP Gross Margin % | 23 | % | 28 | % | 35 | % |
(Millions) | Q3-15 | Q2-15 | Q3-14 | |||||||||
GAAP operating income (loss) | $ | (158 | ) | $ | (137 | ) | $ | 63 | ||||
Technology node transition charge | — | 33 | — | |||||||||
Restructuring and other special charges, net | 48 | — | — | |||||||||
Amortization of acquired intangible assets | — | — | 3 | |||||||||
Stock-based compensation* | 13 | 17 | 21 | |||||||||
Non-GAAP operating income (loss) | $ | (97 | ) | $ | (87 | ) | $ | 87 |
(Millions except per share amounts) | Q3-15 | Q2-15 | Q3-14 | |||||||||||||||||||||
GAAP net income (loss) /Earnings (loss) per share | $ | (197 | ) | $ | (0.25 | ) | $ | (181 | ) | $ | (0.23 | ) | $ | 17 | $ | 0.02 | ||||||||
Technology node transition charge | — | — | 33 | 0.04 | — | — | ||||||||||||||||||
Restructuring and other special charges, net | 48 | 0.06 | — | — | — | — | ||||||||||||||||||
Amortization of acquired intangible assets | — | — | — | — | 3 | — | ||||||||||||||||||
Stock-based compensation* | 13 | 0.02 | 17 | 0.02 | 21 | 0.03 | ||||||||||||||||||
Non-GAAP net income (loss) / earnings (loss) per share | $ | (136 | ) | $ | (0.17 | ) | $ | (131 | ) | $ | (0.17 | ) | $ | 41 | $ | 0.05 |
* | Beginning in Q1 2015, AMD started excluding the impact of stock-based compensation from non-GAAP results. Prior periods have been adjusted accordingly. |
1. | In this earnings press release, in addition to GAAP financial results, AMD has provided non-GAAP financial measures including non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP operating expenses, non-GAAP net income (loss) and non-GAAP earnings (loss) per share. These non-GAAP financial measures reflect certain adjustments as presented in the tables in this earnings press release. AMD also provided adjusted EBITDA and non-GAAP free cash flow as supplemental measures of its performance. These items are defined in the footnotes to the selected corporate data tables provided at the end of this earnings press release. AMD is providing these financial measures because it believes this non-GAAP presentation makes it easier for investors to compare its operating results for current and historical periods and also because AMD believes it assists investors in comparing AMD’s performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance and for the other reasons described in the CFO Commentary. |
2. | Testing conducted by AMD engineering on the AMD Radeon™ R9 290X GPU vs. the AMD Radeon™ R9 Fury X GPU. Data obtained through isolated direct measurement of GDDR5 and HBM power delivery rails at full memory utilization. Power efficiency calculated as GB/s of bandwidth delivered per watt of power consumed. AMD Radeon™ R9 290X (10.66 GB/s bandwidth per watt) and R9 Fury X (42.66 GB/s bandwidth per watt) GPU, AMD FX-8350, Gigabyte GA-990FX-UD5, 8GB DDR3-1866, Windows 8.1 x64 Professional, AMD Catalyst™ 15.20 Beta HBM-1 |
3. | Typical-use Energy Efficiency as defined by taking the ratio of compute capability as measured by common performance measures such as SpecIntRate, PassMark and PCMark, divided by typical energy use as defined by ETEC (Typical Energy Consumption for notebook computers) as specified in Energy Star Program Requirements Rev 6.0 10/2013. “Kaveri” relative compute capability (4.5) of baseline divided by relative energy efficiency (0.45) of baseline = 10X. “Carrizo” relative compute capability (5.8) of baseline divided by relative energy efficiency (0.23) of baseline = 25.2X (which is 2.4x that of “Kaveri”) CZN-59 |
4. | Testing by AMD Performance Labs using an AMD FX-8800P with AMD Radeon™ R7 graphics, 2x4 DDR3-2133, 256 GB SSD, Windows 8.1 64bit, driver 15.10 scored 2753 in 3DMark® 11 performance. Core™ i7 5500U with HD 5500 graphics, DDR3-1600, 256 SSD, Windows 8.1 64bit, driver 4156 scored 1350 in 3DMark 11 Performance CZN-58 |
5. | Results are based on theoretical performance. The ORION cluster features 300 of the AMD FirePro S9150 GPU installations. According to AMD specifications, the total of all 5.07 teraFLOPS of peak single-precision results in 1,521 petaFLOPS (300 x 5.07 TFLOPS) and the total of all 2.53 teraFLOPS peak double-precision results in 0.76 petaFLOPS (300 x 2.53 TFLOPS) of compute performance. |
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 26, 2015 | June 27, 2015 | September 27, 2014 | September 26, 2015 | September 27, 2014 | ||||||||||||||||
Net revenue | $ | 1,061 | $ | 942 | $ | 1,429 | $ | 3,033 | $ | 4,267 | ||||||||||
Cost of sales | 822 | 710 | 935 | $ | 2,236 | $ | 2,788 | |||||||||||||
Gross margin | 239 | 232 | 494 | 797 | 1,479 | |||||||||||||||
Gross margin % | 23 | % | 25 | % | 35 | % | 26 | % | 35 | % | ||||||||||
Research and development | 241 | 235 | 278 | 718 | 834 | |||||||||||||||
Marketing, general and administrative | 108 | 134 | 150 | 373 | 460 | |||||||||||||||
Amortization of acquired intangible assets | — | — | 3 | 3 | 10 | |||||||||||||||
Restructuring and other special charges, net | 48 | — | — | 135 | — | |||||||||||||||
Operating income (loss) | (158 | ) | (137 | ) | 63 | (432 | ) | 175 | ||||||||||||
Interest expense | (39 | ) | (40 | ) | (43 | ) | (119 | ) | (136 | ) | ||||||||||
Other expense, net | — | (3 | ) | (1 | ) | (3 | ) | (70 | ) | |||||||||||
Income (loss) before income taxes | (197 | ) | (180 | ) | 19 | (554 | ) | (31 | ) | |||||||||||
Provision for income taxes | — | 1 | 2 | 4 | 8 | |||||||||||||||
Net income (loss) | $ | (197 | ) | $ | (181 | ) | $ | 17 | $ | (558 | ) | $ | (39 | ) | ||||||
Net income (loss) per share | ||||||||||||||||||||
Basic | $ | (0.25 | ) | $ | (0.23 | ) | $ | 0.02 | $ | (0.72 | ) | $ | (0.05 | ) | ||||||
Diluted | $ | (0.25 | ) | $ | (0.23 | ) | $ | 0.02 | $ | (0.72 | ) | $ | (0.05 | ) | ||||||
Shares used in per share calculation | ||||||||||||||||||||
Basic | 785 | 778 | 770 | 780 | 765 | |||||||||||||||
Diluted | 785 | 778 | 785 | 780 | 765 | |||||||||||||||
ADVANCED MICRO DEVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Millions) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 26, 2015 | June 27, 2015 | September 27, 2014 | September 26, 2015 | September 27, 2014 | ||||||||||||||||
Total comprehensive income (loss) | $ | (207 | ) | $ | (174 | ) | $ | 15 | $ | (568 | ) | $ | (38 | ) |
September 26, 2015 | June 27, 2015 | December 27, 2014 | ||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 755 | $ | 829 | $ | 805 | ||||||
Marketable securities | — | — | 235 | |||||||||
Accounts receivable, net | 648 | 687 | 818 | |||||||||
Inventories, net | 761 | 799 | 685 | |||||||||
Prepayments to GLOBALFOUNDRIES | 20 | 19 | 113 | |||||||||
Prepaid expenses | 63 | 54 | 32 | |||||||||
Other current assets | 182 | 63 | 48 | |||||||||
Total current assets | 2,429 | 2,451 | 2,736 | |||||||||
Property, plant and equipment, net | 194 | 289 | 302 | |||||||||
Acquisition related intangible assets, net | — | — | 65 | |||||||||
Goodwill | 320 | 320 | 320 | |||||||||
Other assets | 286 | 321 | 344 | |||||||||
Total Assets | $ | 3,229 | $ | 3,381 | $ | 3,767 | ||||||
Liabilities and Stockholders' Equity (Deficit) | ||||||||||||
Current liabilities: | ||||||||||||
Short-term debt | $ | 230 | $ | 235 | $ | 177 | ||||||
Accounts payable | 388 | 454 | 415 | |||||||||
Payable to GLOBALFOUNDRIES | 226 | 197 | 218 | |||||||||
Accrued liabilities | 408 | 432 | 518 | |||||||||
Other current liabilities | 137 | 30 | 40 | |||||||||
Deferred income on shipments to distributors | 60 | 51 | 72 | |||||||||
Total current liabilities | 1,449 | 1,399 | 1,440 | |||||||||
Long-term debt | 2,030 | 2,034 | 2,035 | |||||||||
Other long-term liabilities | 86 | 89 | 105 | |||||||||
Stockholders' equity (deficit): | ||||||||||||
Capital stock: | ||||||||||||
Common stock, par value | 8 | 8 | 8 | |||||||||
Additional paid-in capital | 6,997 | 6,984 | 6,949 | |||||||||
Treasury stock, at cost | (122 | ) | (121 | ) | (119 | ) | ||||||
Accumulated deficit | (7,204 | ) | (7,007 | ) | (6,646 | ) | ||||||
Accumulated other comprehensive loss | (15 | ) | (5 | ) | (5 | ) | ||||||
Total Stockholders' equity (deficit) | (336 | ) | (141 | ) | 187 | |||||||
Total Liabilities and Stockholders' Equity (Deficit) | $ | 3,229 | $ | 3,381 | $ | 3,767 |
Three Months Ended | Nine Months Ended | |||||||
September 26, 2015 | September 26, 2015 | |||||||
Cash flows from operating activities: | ||||||||
Net Loss | $ | (197 | ) | $ | (558 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 42 | 133 | ||||||
Stock-based compensation expense | 13 | 47 | ||||||
Non-cash interest expense | 2 | 8 | ||||||
Restructuring and other special charges, net | 11 | 83 | ||||||
Other | 6 | 7 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 35 | 164 | ||||||
Inventories | 24 | (93 | ) | |||||
Prepayments to GLOBALFOUNDRIES | 3 | 97 | ||||||
Prepaid expenses and other assets | (40 | ) | (113 | ) | ||||
Accounts payable, accrued liabilities and other | 12 | (74 | ) | |||||
Payable to GLOBALFOUNDRIES | 30 | 9 | ||||||
Net cash used in operating activities | $ | (59 | ) | $ | (290 | ) | ||
Cash flows from investing activities: | ||||||||
Purchases of available-for-sale securities | — | (227 | ) | |||||
Purchases of property, plant and equipment | (25 | ) | (64 | ) | ||||
Proceeds from maturities of available-for-sale securities | — | 462 | ||||||
Proceeds from sale of property, plant and equipment | 8 | 8 | ||||||
Net cash provided by (used in) investing activities | $ | (17 | ) | $ | 179 | |||
Cash flows from financing activities: | ||||||||
Net proceeds from grants | 4 | 8 | ||||||
Proceeds from issuance of common stock | — | 1 | ||||||
Proceeds from borrowings, net | — | 100 | ||||||
Repayments of long-term debt and capital lease obligations | — | (44 | ) | |||||
Other | (2 | ) | (4 | ) | ||||
Net cash provided by financing activities | $ | 2 | $ | 61 | ||||
Net decrease in cash and cash equivalents | (74 | ) | (50 | ) | ||||
Cash and cash equivalents at beginning of period | $ | 829 | $ | 805 | ||||
Cash and cash equivalents at end of period | $ | 755 | $ | 755 |
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 26, 2015 | June 27, 2015 | September 27, 2014 | September 26, 2015 | September 27, 2014 | ||||||||||||||||
Segment and Category Information | ||||||||||||||||||||
Computing and Graphics (1) | ||||||||||||||||||||
Net revenue | $ | 424 | $ | 379 | $ | 781 | $ | 1,335 | $ | 2,470 | ||||||||||
Operating loss | $ | (181 | ) | $ | (147 | ) | $ | (17 | ) | $ | (403 | ) | $ | (20 | ) | |||||
Enterprise, Embedded and Semi-Custom (2) | ||||||||||||||||||||
Net revenue | 637 | 563 | 648 | 1,698 | 1,797 | |||||||||||||||
Operating income | 84 | 27 | 108 | 156 | 290 | |||||||||||||||
All Other (3) | ||||||||||||||||||||
Net revenue | — | — | — | — | — | |||||||||||||||
Operating loss | (61 | ) | (17 | ) | (28 | ) | (185 | ) | (95 | ) | ||||||||||
Total | ||||||||||||||||||||
Net revenue | $ | 1,061 | $ | 942 | $ | 1,429 | $ | 3,033 | $ | 4,267 | ||||||||||
Operating income (loss) | $ | (158 | ) | $ | (137 | ) | $ | 63 | $ | (432 | ) | $ | 175 | |||||||
Other Data | ||||||||||||||||||||
Depreciation and amortization, excluding amortization of acquired intangible assets | $ | 42 | $ | 45 | $ | 46 | $ | 130 | $ | 145 | ||||||||||
Capital additions | $ | 25 | $ | 17 | $ | 29 | $ | 64 | $ | 73 | ||||||||||
Adjusted EBITDA (4) | $ | (55 | ) | $ | (42 | ) | $ | 133 | $ | (84 | ) | $ | 409 | |||||||
Cash, cash equivalents and marketable securities | $ | 755 | $ | 829 | $ | 938 | $ | 755 | $ | 938 | ||||||||||
Non-GAAP free cash flow (5) | $ | (84 | ) | $ | (75 | ) | $ | (11 | ) | $ | (354 | ) | $ | (287 | ) | |||||
Total assets | $ | 3,229 | $ | 3,381 | $ | 4,325 | $ | 3,229 | $ | 4,325 | ||||||||||
Total debt | $ | 2,260 | $ | 2,269 | $ | 2,208 | $ | 2,260 | $ | 2,208 | ||||||||||
Headcount | 9,475 | 9,469 | 10,149 | 9,475 | 10,149 |
(1 | ) | Computing and Graphics segment primarily includes desktop and notebook processors, chipsets, discrete graphics processing units (GPUs) and professional graphics. | |||||||||
(2 | ) | Enterprise, Embedded and Semi-Custom segment primarily includes server and embedded processors, semi-custom System-on-Chip (SoC) products, development services and technology for game consoles. | |||||||||
(3 | ) | All Other category primarily includes certain expenses and credits that are not allocated to any of the operating segments. Also included in this category are amortization of acquired intangible assets and stock-based compensation expense. In addition, the Company also included the following adjustments for the indicated periods: for the third quarter of 2015 and nine months ended September 26, 2015, the Company included net restructuring and other special charges; and for the nine months ended September 27, 2014, the Company included an adjustment for workforce rebalancing severance charges. | |||||||||
(4 | ) | Reconciliation of GAAP Operating Income (Loss) to Adjusted EBITDA* |
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 26, 2015 | June 27, 2015 | September 27, 2014 | September 26, 2015 | September 27, 2014 | ||||||||||||||||
GAAP operating income (loss) | $ | (158 | ) | $ | (137 | ) | $ | 63 | $ | (432 | ) | $ | 175 | |||||||
Restructuring and other special charges, net | 48 | — | — | 135 | — | |||||||||||||||
Technology node transition charge | — | 33 | — | 33 | — | |||||||||||||||
Stock-based compensation expense | 13 | 17 | 21 | 47 | 65 | |||||||||||||||
Amortization of acquired intangible assets | — | — | 3 | 3 | 10 | |||||||||||||||
Depreciation and amortization | 42 | 45 | 46 | 130 | 145 | |||||||||||||||
Workforce rebalancing severance charges | — | — | — | — | 14 | |||||||||||||||
Adjusted EBITDA | $ | (55 | ) | $ | (42 | ) | $ | 133 | $ | (84 | ) | $ | 409 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 26, 2015 | June 27, 2015 | September 27, 2014 | September 26, 2015 | September 27, 2014 | |||||||||||||||
GAAP net cash provided by (used in) operating activities | $ | (59 | ) | $ | (58 | ) | $ | 18 | $ | (290 | ) | $ | (214 | ) | |||||
Purchases of property, plant and equipment | (25 | ) | (17 | ) | (29 | ) | (64 | ) | (73 | ) | |||||||||
Non-GAAP free cash flow | $ | (84 | ) | $ | (75 | ) | $ | (11 | ) | $ | (354 | ) | $ | (287 | ) |
* | The Company presents “Adjusted EBITDA” as a supplemental measure of its performance. Adjusted EBITDA for the Company is determined by adjusting operating income (loss) for depreciation and amortization, stock-based compensation expense and amortization of acquired intangible assets. In addition, the Company also excluded the following adjustments for the indicated periods: for the third quarter of 2015 and nine months ended September 26, 2015, the Company excluded restructuring and other special charges, net, for the second quarter of 2015 and nine months ended September 26, 2015, the Company excluded a technology node transition charge, and for the nine months ended September 27, 2014, the Company excluded an adjustment for workforce rebalancing severance charges. The Company calculates and communicates Adjusted EBITDA because the Company’s management believes it is of importance to investors and lenders in relation to its overall capital structure and its ability to borrow additional funds. In addition, the Company presents Adjusted EBITDA because it believes this measure assists investors in comparing its performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. The Company’s calculation of Adjusted EBITDA may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view Adjusted EBITDA as an alternative to the GAAP operating measure of operating income (loss) or GAAP liquidity measures of cash flows from operating, investing and financing activities. In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows. | |||||||||
** | The Company also presents non-GAAP free cash flow as a supplemental measure of its performance. Non-GAAP free cash flow is determined by adjusting GAAP net cash provided by (used in) operating activities for capital expenditures. The Company calculates and communicates non-GAAP free cash flow in the financial earnings press release because the Company’s management believes it is of importance to investors to understand the nature of these cash flows. The Company’s calculation of non-GAAP free cash flow may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view non-GAAP free cash flow as an alternative to GAAP liquidity measures of cash flows from operating activities. The Company has provided reconciliations within the earnings press release of these non-GAAP financial measures to the most directly comparable GAAP financial measures. |