Q2-16 | Q1-16 | Q2-15 | ||||
Revenue | $1,027M | $832M | $942M | |||
Operating loss | $(8)M | $(68)M | $(137)M | |||
Net income (loss) / earnings (loss) per share | $69M/$0.08 | $(109)M/$(0.14) | $(181)M/$(0.23) |
Q2-16 | Q1-16 | Q2-15 | ||||
Revenue | $1,027M | $832M | $942M | |||
Operating income (loss) | $3M | $(55)M | $(87)M | |||
Net loss / loss per share | $(40)M/$(0.05) | $(96)M/$(0.12) | $(131)M/$(0.17) |
• | Q2 2016, Q1 2016 and Q2 2015 were 13-week fiscal quarters. |
• | Revenue of $1,027 million, up 23 percent sequentially and up 9 percent year-over-year primarily due to higher sales of semi-custom SoCs. |
• | Gross margin of 31 percent, down 1 percentage point sequentially, due primarily to a higher mix of semi-custom SoC sales. |
• | Operating expenses of $353 million, compared to $344 million for the prior quarter. Non-GAAP operating expenses of $342 million, compared to non-GAAP operating expenses of $332 million in Q1 2016, primarily due to increased marketing investments. |
• | Operating loss of $8 million, compared to an operating loss of $68 million in Q1 2016. Non-GAAP(1) operating income of $3 million, compared to non-GAAP(1) operating loss of $55 million in Q1 2016, primarily due to higher sales. |
• | Net income of $69 million, earnings per share of $0.08, and non-GAAP(1) net loss of $40 million, non-GAAP(1) loss per share of $0.05. This is compared to a net loss of $109 million, loss per share of $0.14 and non-GAAP(1) net loss of $96 million, non-GAAP(1) loss per share of $0.12 in Q1 2016. The GAAP sequential and year-over-year improvements were primarily due to a gain of $150 million related to the formation of our assembly, test, mark and pack (ATMP) joint venture (JV) with Nantong Fujitsu Microelectronics Co., Ltd. (NFME), partially offset by related taxes of $27 million. The non-GAAP sequential and year-over-year improvements were primarily due to higher sales and an IP licensing gain. |
• | Cash and cash equivalents were $957 million at the end of the quarter, up $241 million from the end of the prior quarter, primarily due to net cash proceeds received from the ATMP JV transaction with NFME which closed in Q2 2016. |
• | Total debt at the end of the quarter was $2.24 billion, flat from the prior quarter. |
• | Computing and Graphics segment revenue of $435 million decreased 5 percent sequentially and increased 15 percent from Q2 2015. The sequential decrease was primarily due to decreased sales of client desktop processors and chipsets and the year-over-year increase was driven primarily by increased notebook processor and GPU sales. |
◦ | Operating loss was $81 million, compared with an operating loss of $70 million in Q1 2016 and an operating loss of $147 million in Q2 2015. The sequential increase was primarily due to lower revenue. The year-over-year improvement was primarily due to higher revenue and lower operating expenses. |
◦ | Client average selling price (ASP) increased sequentially driven by a higher desktop processor ASP and decreased year-over-year primarily due to lower notebook processor ASP. |
◦ | GPU ASP remained flat sequentially and decreased year-over-year. The year-over-year decrease was primarily driven by lower desktop GPU ASP. |
• | Enterprise, Embedded and Semi-Custom segment revenue of $592 million increased 59 percent sequentially and increased 5 percent year-over-year due to higher sales of semi-custom SoCs. |
◦ | Operating income was $84 million compared with $16 million in Q1 2016 and $27 million in Q2 2015 primarily due to higher revenue from the sale of semi-custom SoC products and a $26 million IP licensing gain in Q2 2016 compared to $7 million in Q1 2016. |
• | All Other category operating loss was $11 million compared with $14 million in Q1 2016 and $17 million in Q2 2015. |
• | AMD and NFME created a joint venture offering differentiated ATMP capabilities to both AMD and a broader range of customers. |
• | The AMD Board of Directors appointed Board member John Caldwell as Chairman. |
• | AMD unveiled the Radeon™ RX GPU product lineup based on its new Polaris architecture based on 14nm FinFET technology, enabling generational leaps in energy efficiency and advancing the company’s work to bring virtual reality to mainstream consumers. |
▪ | AMD announced availability of the Radeon™ RX 480 graphics card, which is designed to deliver premium VR experiences to the largest segment of GPU buyers. |
▪ | AMD also announced the acquisition of software company HiAlgo Inc., a developer of unique PC gaming technologies, which will help drive future gaming innovation in Radeon Software that will benefit owners of Radeon™ RX Series GPUs and beyond. |
• | AMD launched its 7th Generation A-Series APU mobile processors (“Bristol Ridge” and “Stoney Ridge”), designed for powerful productivity and entertainment performance. |
▪ | AMD 7th Generation APUs can be found today in the HP ENVY x360, with new notebook designs from Acer, Asus, Dell, HP, Lenovo, and others expected to become available throughout 2016. |
• | AMD conducted the world’s first live public demonstration of its upcoming x86 “Zen” processor core architecture in the next-generation AM4 desktop processor (codenamed “Summit Ridge”). |
• | AMD extended its leadership in gaming as Microsoft announced two new AMD-powered game consoles to its Xbox family that enable the next generation of immersive gaming experiences through support for new technologies like HDR, 4K and high fidelity VR. |
• | AMD continued to drive innovation in the professional graphics market with the introduction of the industry’s only hardware-virtualized GPU for blade servers (AMD FirePro™ S7100X) and the world’s first workstation graphics card with industry-leading 32GB memory support (AMD FirePro™ W9100 32GB). |
• | AMD joined with ARM, Huawei, IBM, Mellanox, Qualcomm Technologies and Xilinx to establish a new, open specification for high-performance, coherent interconnect technology designed to significantly improve compute efficiency for servers running datacenter workloads. |
• | AMD released its 21st annual corporate responsibility (CR) report detailing the company’s progress toward its social and environmental goals. |
(Millions except percentages) | Q2-16 | Q1-16 | Q2-15 | |||||||||
GAAP Gross Margin | $ | 319 | $ | 269 | $ | 232 | ||||||
GAAP Gross Margin % | 31 | % | 32 | % | 25 | % | ||||||
Technology node transition charge | — | — | 33 | |||||||||
Stock-based compensation | — | 1 | 1 | |||||||||
Non-GAAP Gross Margin | $ | 319 | $ | 270 | $ | 266 | ||||||
Non-GAAP Gross Margin % | 31 | % | 32 | % | 28 | % |
(Millions) | Q2-16 | Q1-16 | Q2-15 | |||||||||
GAAP operating expenses | $ | 353 | $ | 344 | $ | 369 | ||||||
Restructuring and other special charges, net | (7 | ) | (3 | ) | — | |||||||
Stock-based compensation | 18 | 15 | 16 | |||||||||
Non-GAAP operating expenses | $ | 342 | $ | 332 | $ | 353 |
(Millions) | Q2-16 | Q1-16 | Q2-15 | |||||||||
GAAP operating loss | $ | (8 | ) | $ | (68 | ) | $ | (137 | ) | |||
Technology node transition charge | — | — | 33 | |||||||||
Restructuring and other special charges, net | (7 | ) | (3 | ) | — | |||||||
Stock-based compensation | 18 | 16 | 17 | |||||||||
Non-GAAP operating income (loss) | $ | 3 | $ | (55 | ) | $ | (87 | ) |
(Millions except per share amounts) | Q2-16 | Q1-16 | Q2-15 | |||||||||||||||||||||
GAAP net income (loss) /income (loss) per share | $ | 69 | $ | 0.08 | $ | (109 | ) | $ | (0.14 | ) | $ | (181 | ) | $ | (0.23 | ) | ||||||||
Technology node transition charge | — | — | — | — | 33 | 0.04 | ||||||||||||||||||
Restructuring and other special charges, net | (7 | ) | (0.01 | ) | (3 | ) | — | — | — | |||||||||||||||
Stock-based compensation | 18 | 0.02 | 16 | 0.02 | 17 | 0.02 | ||||||||||||||||||
Gain on sale of 85% of ATMP JV | (150 | ) | (0.19 | ) | — | — | — | — | ||||||||||||||||
Equity in income (loss) of ATMP JV | 3 | — | — | — | — | — | ||||||||||||||||||
Tax provision related to sale of 85% of ATMP JV | 27 | 0.03 | — | — | — | — | ||||||||||||||||||
Non-GAAP net loss/loss per share | $ | (40 | ) | $ | (0.05 | ) | $ | (96 | ) | $ | (0.12 | ) | $ | (131 | ) | $ | (0.17 | ) |
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. |
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 25, 2016 | March 26, 2016 | June 27, 2015 | June 25, 2016 | June 27, 2015 | ||||||||||||||||
Net revenue | $ | 1,027 | $ | 832 | $ | 942 | $ | 1,859 | $ | 1,972 | ||||||||||
Cost of sales | 708 | 563 | 710 | 1,271 | 1,414 | |||||||||||||||
Gross margin | 319 | 269 | 232 | 588 | 558 | |||||||||||||||
Gross margin % | 31 | % | 32 | % | 25 | % | 32 | % | 28 | % | ||||||||||
Research and development | 243 | 242 | 235 | 485 | 477 | |||||||||||||||
Marketing, general and administrative | 117 | 105 | 134 | 222 | 265 | |||||||||||||||
Amortization of acquired intangible assets | — | — | — | — | 3 | |||||||||||||||
Restructuring and other special charges, net | (7 | ) | (3 | ) | — | (10 | ) | 87 | ||||||||||||
Licensing gain | (26 | ) | (7 | ) | — | (33 | ) | — | ||||||||||||
Operating loss | (8 | ) | (68 | ) | (137 | ) | (76 | ) | (274 | ) | ||||||||||
Interest expense | (41 | ) | (40 | ) | (40 | ) | (81 | ) | (80 | ) | ||||||||||
Other income (expense), net | 150 | — | (3 | ) | 150 | (3 | ) | |||||||||||||
Income (loss) before equity loss and income taxes | 101 | (108 | ) | (180 | ) | (7 | ) | (357 | ) | |||||||||||
Provision for income taxes | 29 | 1 | 1 | 30 | 4 | |||||||||||||||
Equity in income (loss) of ATMP JV | (3 | ) | — | — | (3 | ) | — | |||||||||||||
Net income (loss) | $ | 69 | $ | (109 | ) | $ | (181 | ) | $ | (40 | ) | $ | (361 | ) | ||||||
Net income (loss) per share | ||||||||||||||||||||
Basic | $ | 0.09 | $ | (0.14 | ) | $ | (0.23 | ) | $ | (0.05 | ) | $ | (0.46 | ) | ||||||
Diluted | $ | 0.08 | $ | (0.14 | ) | $ | (0.23 | ) | $ | (0.05 | ) | $ | (0.46 | ) | ||||||
Shares used in per share calculation | ||||||||||||||||||||
Basic | 794 | 793 | 778 | 794 | 778 | |||||||||||||||
Diluted | 821 | 793 | 778 | 794 | 778 | |||||||||||||||
ADVANCED MICRO DEVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Millions) | ||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 25, 2016 | March 26, 2016 | June 27, 2015 | June 25, 2016 | June 27, 2015 | ||||||||||||||||
Total comprehensive income (loss) | $ | 72 | $ | (107 | ) | $ | (174 | ) | $ | (35 | ) | $ | (361 | ) |
June 25, 2016 | December 26, 2015 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 957 | $ | 785 | ||||
Accounts receivable, net | 671 | 533 | ||||||
Inventories, net | 743 | 678 | ||||||
Prepayment and other - GLOBALFOUNDRIES | 12 | 33 | ||||||
Prepaid expenses | 68 | 43 | ||||||
Other current assets | 55 | 248 | ||||||
Total current assets | 2,506 | 2,320 | ||||||
Property, plant and equipment, net | 169 | 188 | ||||||
Goodwill | 289 | 278 | ||||||
Investment in ATMP JV | 62 | — | ||||||
Other assets | 290 | 298 | ||||||
Total Assets | $ | 3,316 | $ | 3,084 | ||||
Liabilities and Stockholders' Equity (Deficit) | ||||||||
Current liabilities: | ||||||||
Short-term debt | $ | 226 | $ | 230 | ||||
Accounts payable | 616 | 279 | ||||||
Payable to GLOBALFOUNDRIES | 94 | 245 | ||||||
Payable to ATMP JV | 150 | — | ||||||
Accrued liabilities | 392 | 472 | ||||||
Other current liabilities | 61 | 124 | ||||||
Deferred income on shipments to distributors | 42 | 53 | ||||||
Total current liabilities | 1,581 | 1,403 | ||||||
Long-term debt | 2,012 | 2,007 | ||||||
Other long-term liabilities | 136 | 86 | ||||||
Stockholders' equity (deficit): | ||||||||
Capital stock: | ||||||||
Common stock, par value | 8 | 8 | ||||||
Additional paid-in capital | 7,053 | 7,017 | ||||||
Treasury stock, at cost | (125 | ) | (123 | ) | ||||
Accumulated deficit | (7,346 | ) | (7,306 | ) | ||||
Accumulated other comprehensive loss | (3 | ) | (8 | ) | ||||
Total Stockholders' equity (deficit) | (413 | ) | (412 | ) | ||||
Total Liabilities and Stockholders' Equity (Deficit) | $ | 3,316 | $ | 3,084 |
(1) Amounts reflected adoption of FASB ASU 2015-17, Balance Sheet Classification of Deferred Taxes beginning in the first quarter of 2016. | ||||
(2) Amounts reflected adoption of FASB ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs beginning in the first quarter of 2016. |
Three Months Ended | Six Months Ended | |||||||
June 25, 2016 | June 25, 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 69 | $ | (40 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Gain on sale of equity interests in ATMP JV | (150 | ) | (150 | ) | ||||
Equity in income (loss) of ATMP JV | (1 | ) | (1 | ) | ||||
Depreciation and amortization | 33 | 66 | ||||||
Provision for deferred income taxes | 11 | 11 | ||||||
Stock-based compensation expense | 18 | 34 | ||||||
Non-cash interest expense | 3 | 7 | ||||||
Other | (1 | ) | (6 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (164 | ) | (138 | ) | ||||
Inventories | (69 | ) | (66 | ) | ||||
Prepayment and other - GLOBALFOUNDRIES | 14 | 21 | ||||||
Prepaid expenses and other assets | (139 | ) | (117 | ) | ||||
Payable to ATMP JV | 150 | 150 | ||||||
Payable to GLOBALFOUNDRIES | (139 | ) | (151 | ) | ||||
Accounts payable, accrued liabilities and other | 280 | 253 | ||||||
Net cash used in operating activities | $ | (85 | ) | $ | (127 | ) | ||
Cash flows from investing activities: | ||||||||
Purchases of property, plant and equipment | (21 | ) | (47 | ) | ||||
Proceeds from sale of equity interests in ATMP JV | 351 | 351 | ||||||
Other | (1 | ) | (1 | ) | ||||
Net cash provided by investing activities | $ | 329 | $ | 303 | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common stock | 2 | 2 | ||||||
Repayments of borrowings, net | (4 | ) | (4 | ) | ||||
Other | (1 | ) | (2 | ) | ||||
Net cash used in financing activities | $ | (3 | ) | $ | (4 | ) | ||
Net increase in cash and cash equivalents | 241 | 172 | ||||||
Cash and cash equivalents at beginning of period | $ | 716 | $ | 785 | ||||
Cash and cash equivalents at end of period | $ | 957 | $ | 957 |
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 25, 2016 | March 26, 2016 | June 27, 2015 | June 25, 2016 | June 27, 2015 | ||||||||||||||||
Segment and Category Information | ||||||||||||||||||||
Computing and Graphics (1) | ||||||||||||||||||||
Net revenue | $ | 435 | $ | 460 | $ | 379 | $ | 895 | $ | 911 | ||||||||||
Operating loss | $ | (81 | ) | $ | (70 | ) | $ | (147 | ) | $ | (151 | ) | $ | (222 | ) | |||||
Enterprise, Embedded and Semi-Custom (2) | ||||||||||||||||||||
Net revenue | 592 | 372 | 563 | 964 | 1,061 | |||||||||||||||
Operating income | 84 | 16 | 27 | 100 | 72 | |||||||||||||||
All Other (3) | ||||||||||||||||||||
Net revenue | — | — | — | — | — | |||||||||||||||
Operating loss | (11 | ) | (14 | ) | (17 | ) | (25 | ) | (124 | ) | ||||||||||
Total | — | |||||||||||||||||||
Net revenue | $ | 1,027 | $ | 832 | $ | 942 | $ | 1,859 | $ | 1,972 | ||||||||||
Operating loss | $ | (8 | ) | $ | (68 | ) | $ | (137 | ) | $ | (76 | ) | $ | (274 | ) | |||||
Other Data | ||||||||||||||||||||
Depreciation and amortization, excluding amortization of acquired intangible assets | $ | 33 | $ | 33 | $ | 45 | $ | 66 | $ | 88 | ||||||||||
Capital additions | $ | 21 | $ | 26 | $ | 17 | $ | 47 | $ | 39 | ||||||||||
Adjusted EBITDA (4) | $ | 36 | $ | (22 | ) | $ | (42 | ) | $ | 14 | $ | (29 | ) | |||||||
Cash and cash equivalents | $ | 957 | $ | 716 | $ | 829 | $ | 957 | $ | 829 | ||||||||||
Non-GAAP free cash flow (5) | $ | (106 | ) | $ | (68 | ) | $ | (74 | ) | $ | (174 | ) | $ | (268 | ) | |||||
Total assets | $ | 3,316 | $ | 2,981 | $ | 3,353 | $ | 3,316 | $ | 3,353 | ||||||||||
Total debt | $ | 2,238 | $ | 2,236 | $ | 2,241 | $ | 2,238 | $ | 2,241 | ||||||||||
Headcount | 8,099 | 9,047 | 9,469 | 8,099 | 9,469 |
(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, technology for game consoles and licensing portions of its intellectual property portfolio. | |||||||||
(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 stock-based compensation expense and restructuring and other special charges, net. In addition, the Company also included amortization of acquired intangible assets for six months ended June 27, 2015. | |||||||||
(4 | ) | Reconciliation of GAAP Operating Loss to Adjusted EBITDA* |
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 25, 2016 | March 26, 2016 | June 27, 2015 | June 25, 2016 | June 27, 2015 | ||||||||||||||||
GAAP operating loss | $ | (8 | ) | $ | (68 | ) | $ | (137 | ) | $ | (76 | ) | $ | (274 | ) | |||||
Technology node transition charge | — | — | 33 | — | 33 | |||||||||||||||
Restructuring and other special charges, net | (7 | ) | (3 | ) | — | (10 | ) | 87 | ||||||||||||
Stock-based compensation | 18 | 16 | 17 | 34 | 34 | |||||||||||||||
Amortization of acquired intangible assets | — | — | — | — | 3 | |||||||||||||||
Depreciation and amortization | 33 | 33 | 45 | 66 | 88 | |||||||||||||||
Adjusted EBITDA | $ | 36 | $ | (22 | ) | $ | (42 | ) | $ | 14 | $ | (29 | ) |
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 25, 2016 | March 26, 2016 | June 27, 2015 | June 25, 2016 | June 27, 2015 | ||||||||||||||||
GAAP net cash used in operating activities | $ | (85 | ) | $ | (42 | ) | $ | (57 | ) | $ | (127 | ) | $ | (229 | ) | |||||
Purchases of property, plant and equipment | (21 | ) | (26 | ) | (17 | ) | (47 | ) | (39 | ) | ||||||||||
Non-GAAP free cash flow | $ | (106 | ) | $ | (68 | ) | $ | (74 | ) | $ | (174 | ) | $ | (268 | ) |
* | 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 restructuring and other special charges, net. In addition, the Company excluded a technology node transition charge for the three months and six months ended June 27, 2015 and amortization of acquired intangible assets for the six months ended June 27, 2015. 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. |