AMD Reports Second Quarter Results

(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
(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
(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:
                    Q207   Q107                         Q207 Q107 Q206
                   ------ ------                        ---- ---- ----
    Amortization                        Cost of sales
     of acquired
     assets        $  71  $  71                         $  2 $  2 $  2
    Integration                         Research and
     charges           7     13          development      14   14    7
                   ------ ------
                                         general and
     Subtotal         78     84          administrative   15   12    9
                                                        ---- ---- ----
    Cost of fair
     adjustment of
     inventory         -     29                         $ 31 $ 28 $ 18
                   ------ ------                        ==== ==== ====
      related and
      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
     amortization    255    243    193
     of acquired
     assets           71     71      -
     expense          99     78     18
     (benefit) for
     income taxes     32     23     18

    -------------- ------ ------ -----
     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.

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