AMD Reports Fourth Quarter and Annual Results

SUNNYVALE, Calif.—(BUSINESS WIRE)—Jan. 18, 2006— AMD (NYSE: AMD):

-- Fourth Quarter Driven By Record Processor Sales and Profits

-- AMD Reports Fourth Quarter EPS of $0.45, Excluding Non-Cash Charge

AMD (NYSE: AMD) today reported earnings for the quarter ended December 25, 2005. As a result of Spansion Inc.'s initial public offering (IPO), AMD's financial results of operations include Spansion's financial results of operations as a consolidated subsidiary only through December 20, 2005. Because comparison of fourth quarter consolidated financial results to previous periods do not correlate directly, AMD has provided non-GAAP financial statements that exclude Spansion and the Memory Segment results of operations. Management believes this non-GAAP presentation will aid investors by presenting the company's current and historical results in a form that will be more consistent with the presentation of future operating results.

AMD reported record fourth quarter sales of $1.84 billion, operating income of $206 million, and net income of $96 million, or $0.21 per share. These results include a non-cash charge of $110 million, or $0.24 per share, associated with the reduction of AMD's ownership in Spansion to 37.9 percent as a result of Spansion's IPO. Excluding this charge, AMD achieved net income of $205 million, or $0.45 per share.


                                                     Percent Change
                               Q4-05  Q3-05  Q4-04  Q4-05 vs  Q4-05 vs
                                                    Q3-05     Q4-04
                                                                  

Net sales (billions)           $1.84  $1.52  $1.26     21%       45%

Operating Income (millions)     $206    $79    $20    161%      930%

Net Income (millions)            $96    $76   ($30)    26%      420%

Non-GAAP net income excluding 
 Q4-05 non-cash charge 
 (millions)                     $205    $76   ($30)   170%      783%

Diluted EPS                    $0.21  $0.18 ($0.08)    17%      363%

Non-GAAP diluted EPS excluding
 non-cash charge               $0.45  $0.18 ($0.08)   150%      663%



Fourth quarter sales of $1.84 billion, which do not include Spansion's sales from the last five days of the fourth quarter due to Spansion's IPO, increased 45 percent from the fourth quarter of 2004 and 21 percent from the third quarter of 2005. In the fourth quarter of 2004, AMD reported sales of $1.26 billion, operating income of $20 million, and net a loss of $30 million, or $0.08 per share. In the third quarter of 2005, AMD reported sales of $1.52 billion, operating income of $79 million, and net income of $76 million, or $0.18 per share.

                 AMD excluding Memory Products Segment


                                                     Percent Change
                               Q4-05  Q3-05  Q4-04  Q4-05 vs  Q4-05 vs
                                                    Q3-05     Q4-04

Net sales (billions)           $1.35   1.00   0.76     35%       78%

Operating income (millions)     $268    129     59    108%      354%



AMD, excluding the results of the Memory Products Group segment, had fourth quarter sales of $1.35 billion, an increase of 78 percent from the fourth quarter of 2004 and 34 percent from the third quarter of 2005. Comparable sales in the fourth quarter of 2004 were $760 million, resulting in operating income of $59 million. Comparable sales in the third quarter of 2005 were $1.01 billion, resulting in operating income of $129 million.

For the year ended December 25, 2005, AMD achieved record sales of $5.85 billion, a 17 percent increase from 2004. Fiscal year 2005 net income was $165 million, or $0.40 per share. The annual results include a non-cash charge in the fourth quarter of $110 million, or $0.25 per share, associated with the reduction of AMD's ownership in Spansion to 37.9 percent as a result of Spansion's IPO. AMD reported sales in 2004 of $5.00 billion and a net income of $91 million, or $0.25 per share.

AMD, excluding the results of the Memory Products Group segment, had sales of $3.94 billion for the year ended December 25, 2005, an increase of 48 percent from 2004, and operating income of $543 million for 2005. Comparable sales in 2004 were $2.66 billion, resulting in operating income of $187 million.

"AMD's growth rate increased in the fourth quarter resulting in continued market share gains across server, desktop and mobile product lines," said Robert J. Rivet, AMD's chief financial officer. "In addition to solid execution against our product and technology strategies, we made significant strides in the quarter to improve our balance sheet by significantly reducing our debt and increasing our cash and short-term investment balance to $1.8 billion."

BUSINESS OVERVIEW

Record Computation Product Group (CPG) sales of $1.31 billion increased 79 percent from $730 million in the fourth quarter of 2004 and increased 35 percent from $969 million in the third quarter of 2005. CPG generated record operating income of $287 million in the fourth quarter, up from $90 million in the fourth quarter of 2004 and $149 million in the third quarter of 2005.

Compared to the third quarter of 2005, CPG's fourth quarter sales growth was driven by an increase in both units and average selling price (ASP), increased demand from AMD's largest global customers, and an acceleration of AMD's commercial server and client businesses. Server, mobile and desktop processor sales each grew significantly compared to the third quarter of 2005. Mobile processor sales growth was driven by increased shipments of AMD Turion 64 processors. Server and desktop sales growth was driven in particular by increased customer adoption of Dual-Core AMD processors. Geographically, processor sales were especially strong in North America, Europe and Greater China.

In the fourth quarter of 2005, Memory Products Group (MPG) sales through December 20, 2005, of $487 million decreased 3 percent from $504 million in the fourth quarter of 2004 and 6 percent from $516 million in the third quarter of 2005. MPG had an operating loss of $62 million compared to an operating loss of $50 million in the third quarter of 2005.


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