AMD Reports Third Quarter Results

ADVANCED MICRO DEVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)  
(Millions except per share amounts and percentages)
 
    Quarter Ended   Nine Months Ended
Sept. 26, June 27, Sept. 27, Sept. 26, Sept. 27,
      2009     2009    

2008(1)

 

  2009    

2008 (1)

 

 
Net revenue $ 1,396 $ 1,184 $ 1,797 $ 3,757 $ 4,646
 
Cost of sales 811 743 881 2,220 2,598
             
 
Gross margin 585 441 916 1,537 2,048
 
Gross margin % 42 % 37 % 51 % 41 % 44 %
 
Research and development 420 425 438 1,289 1,383
 
Marketing, general and administrative 221 247 315 755 987
 
Amortization of acquired intangible assets 17 17 30 52 107
 
Impairment of goodwill and acquired intangible assets - - 2 - 405
 
Restructuring charges 4 1 9 65 40
 
Gain on sale of 200 millimeter equipment - - - - (193 )
             
 
Operating income (loss) (77 ) (249 ) 122 (624 ) (681 )
 
Interest income 4 6 7 13 32
Interest expense (114 ) (108 ) (94 ) (319 ) (296 )
Other income (expense), net 47 6 (13 ) 147 (48 )
             
 
Income (loss) before income taxes (140 ) (345 ) 22 (783 ) (993 )
 
Provision (benefit) for income taxes (5 ) (10 ) (1 ) 101 (1 )
             
 
Income (loss) from continuing operations (135 ) (335 ) 23 (884 ) (992 )
 
Income (loss) from discontinued operations, net of tax - - (150 ) - (674 )
             
 
Net income (loss) $ (135 ) $ (335 ) $ (127 ) $ (884 ) $ (1,666 )
 
Net (income) loss attributable to noncontrolling interest 29 25 (7 ) 60 (27 )
 
Class B preferred accretion (22 ) (20 ) - (50 ) -
             
 
Net Income (loss) attributable to AMD common stockholders $ (128 ) $ (330 ) $ (134 ) $ (874 ) $ (1,693 )
             
 
Net income (loss) attributable to AMD common stockholders per common share
 
Basic and diluted
Continuing operations $ (0.18 ) $ (0.49 ) $ 0.03 $ (1.32 ) $ (1.68 )
  Discontinued operations   -     -     (0.25 )  

-

    (1.11 )
Basic and diluted net income (loss) attributable to AMD common stockholders per common share $ (0.18 ) $ (0.49 ) $ (0.22 ) $ (1.32 ) $ (2.79 )
             
 
Shares used in per share calculation
 
Basic and diluted 694 667 608 662 607
 
(1 ) Includes retrospective adoption of FASB Staff Position Accounting Principles Board No. 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP APB 14-1) codified principally in Accounting Standards Codification (ASC) Topic 470, Debt (ASC 470) and FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51 (SFAS 160) now codified in ASC Topic 810, Consolidation (ASC 810) in the first quarter of 2009.
ADVANCED MICRO DEVICES, INC.
AMD NON-GAAP AND RECONCILIATIONS TO CONSOLIDATED STATEMENTS OF OPERATIONS (2)
(Millions except per share amounts and percentages)
     
 
Quarter Ended Nine Months Ended
    Sept. 26, 2009   June 27, 2009   Sept. 26, 2009
   

AMD Product
Company (3)

Foundry
segment and
intersegment
eliminations (4)

AMD

AMD Product
Company (3)

Foundry
segment and
intersegment
eliminations (4)

AMD

AMD Product
Company (3)

Foundry
segment and
intersegment
eliminations (4)

AMD
 
Net revenue $ 1,396 $ - $ 1,396 $ 1,184 $ - $ 1,184 $ 3,757 $ - $ 3,757
 
Cost of sales 860 (49 ) 811 763 (20 ) 743 2,323 (103 ) 2,220
                     
 
Gross margin 536 49 585 421 20 441 1,434 103 1,537
 
Gross margin % 38 % 42 % 36 % 37 % 38 % 41 %
 
Research and development 285 135 420 306 119 425 896 393 1,289
 
Marketing, general and administrative 195 26 221 222 25 247 669 86 755
 
Amortization of acquired intangible assets 17 - 17 17 - 17 52 - 52
 
Restructuring charges 4 - 4 1 - 1 65 - 65
                     
 
Operating income (loss) 35 (112 ) (77 ) (125 ) (124 ) (249 ) (248 ) (376 ) (624 )
 
Interest income 3 1 4 3 3 6 12 1 13
Interest expense (70 ) (44 ) (114 ) (71 ) (37 ) (108 ) (215 ) (104 ) (319 )
Other income (expense), net 64 (17 ) 47 16 (10 ) 6 208 (61 ) 147
                     
 
Income (loss) before income taxes 32 (172 ) (140 ) (177 ) (168 ) (345 ) (243 ) (540 ) (783 )
 
Provision (benefit) for income taxes (24 ) 19 (5 ) (19 ) 9 (10 ) (44 ) 145 101
                     
 
Net income (loss) $ 56 $ (191 ) $ (135 ) $ (158 ) $ (177 ) $ (335 ) $ (199 ) $ (685 ) $ (884 )
 
Net (income) loss attributable to noncontrolling interest 29 25 60
 
Class B preferred accretion (22 ) (20 ) (50 )
                     
 
Net income (loss) attributable to AMD common stockholders $ (128 ) $ (330 ) $ (874 )
                     
(2)  

The Company believes this non-GAAP presentation makes it easier for investors to understand what AMD financial results would be if it were not required to consolidate the operations of GLOBALFOUNDRIES.

(3)

Consists of the results of the Computing Solutions and Graphics segments and the All other category.

(4)

See footnotes 3 and 5 in Selected Corporate Data

 
ADVANCED MICRO DEVICES, INC.
CONSOLIDATED BALANCE SHEETS
(Millions)
Sept. 26, Dec. 27,
2009

2008 (5)

 

        (Unaudited)    
 
Assets
 
Current assets:
Cash, cash equivalents and marketable securities $ 2,511 $ 1,096
Accounts receivable, net 572 320
Inventories 515 656
Deferred income taxes 41 28
Prepaid expenses and other current assets 279 279
             
 
Total current assets 3,918

 

2,379
 
Property, plant and equipment, net 3,895 4,296
Acquisition related intangible assets, net 116 168
Goodwill 323 323
Other assets 495 506
             
 
Total Assets $ 8,747  

 

$ 7,672  
 
Liabilities and Stockholders' Equity (Deficit)
 
Current liabilities:
Accounts payable $ 589 $ 631
Accrued compensation and benefits 176 162
Accrued liabilities 605 785
Deferred income on shipments to distributors 127 50
Other short-term obligations 125 86
Current portion of long-term debt and capital lease obligations 295 286
Other current liabilities 159 226
             
 
Total current liabilities 2,076

 

2,226
 
Deferred income taxes 243 91
Long-term debt and capital lease obligations, less current portion 5,275 4,490
Other long-term liabilities 645 569
Noncontrolling interest 1,077 169
 
Stockholders' equity (deficit):
Capital stock:
Common stock, par value 7 6
Capital in excess of par value 6,412 6,264
Retained earnings (deficit) (7,125 ) (6,251 )
  Accumulated other comprehensive income   137       108  
 
Total stockholders' equity (deficit) (569 )

 

127
             
 
Total Liabilities and Stockholders' Equity (Deficit) $ 8,747  

 

$ 7,672  
 
(5 ) Amounts for the year ended December 27, 2008 were derived from the December 27, 2008 audited financial statements, including retrospective adoption of FSP APB 14-1 (now codified in ASC 470) and SFAS 160 (now codified in ASC 810) implemented in the first quarter of 2009.
  ADVANCED MICRO DEVICES, INC.            
SELECTED CORPORATE DATA
(Unaudited)
(Millions except headcount and percentages)
 
 
      Quarter Ended Nine Months Ended
Sept. 26, June 27, Sept 27, Sept. 26, Sept 27,
Segment and Category Information from Continuing Operations 2009 2009 2008 2009 2008
                                 
 
Computing Solutions (1)
Net revenue $ 1,069 $ 910 $ 1,391 $ 2,917 $ 3,686
Operating income (loss) $ 76 $ (72 ) $ 143 $ (31 ) $ (30 )
 
Graphics (2)
Net revenue 306 251 385 779 895
Operating income (loss) 8 (12 ) 47 (3 ) 22
 
Foundry (3)
Net revenue 256 253 792
Operating income (loss) (101 ) (101 ) (334 )
 
All Other (4)
Net revenue 21 23 21 61 65
Operating income (loss) (49 ) (41 ) (68 ) (214 ) (673 )
 
Intersegment eliminations (5)
Net revenue (256 ) (253 ) (792 )
Operating income (loss) (11 ) (23 ) (42 )
 
Total from Continuing Operations
Net revenue $ 1,396 $ 1,184 $ 1,797 $ 3,757 $ 4,646
Operating income (loss) $ (77 ) $ (249 ) $ 122 $ (624 ) $ (681 )
                                 
 
Revenue Reconciliation
 
Revenue from continuing operations $ 1,396 $ 1,184 $ 1,797 $ 3,757 $ 4,646
Revenue from discontinued operations   -     -     23     -     65  
Total revenue $ 1,396 $ 1,184 $ 1,820 $ 3,757 $ 4,711
                                 
 
Other Data
 
AMD Product Company (excludes Foundry segment and intersegment eliminations)
Depreciation and amortization
(excluding amortization of acquired intangible assets) $ 96 $ 103 $ 303
Capital additions $ 19 $ 15 $ 51
Adjusted EBITDA (6) $ 215 $ 14 $ 327
Cash, cash equivalents and marketable securities (7) $ 1,536 $ 1,637 $ 1,536
Total assets (7) $ 4,376 $ 4,405 $ 4,376
Long-term debt (7) $ 3,541 $ 3,703 $ 3,541
Headcount 10,412 10,366 10,412
 
AMD
Depreciation and amortization
(excluding amortization of acquired intangible assets) $ 265 $ 265 $ 266 $ 792 $ 797
Capital additions $ 97 $ 112 $ 83 $ 293 $ 509
Adjusted EBITDA (6) $ 263 $ 50 $ 407 $ 390 $ 585
Headcount 13,379 13,281 15,460 13,379 15,460
                                 
 
See footnotes on the next page
     
(1 ) Computing Solutions segment includes microprocessors, chipsets and embedded processors.
(2 ) Graphics segment includes graphics, video and multimedia products developed for use in desktop and notebook computers, including home media PCs, professional workstations, servers and also includes royalties received in connection with the sale of game console systems that incorporate the Company’s graphics technology.
(3 ) Foundry segment includes the operating results attributable to the front end wafer manufacturing operations and related activities as of the beginning of the first quarter of 2009, which includes the operating results of GLOBALFOUNDRIES from March 2, 2009 onward. Prior periods have not been recast.
(4 ) All Other category includes non-Foundry segment employee stock-based compensation expense and certain operating expenses and credits that are not allocated to the operating segments. Also included in this category are charges for the impairment of goodwill and acquired intangible assets for prior periods, amortization of acquired intangible assets, restructuring and AMD Product Company formation costs associated with GLOBALFOUNDRIES. Details of these significant items are shown below. The All Other category also includes the results of our Handheld business unit.
 
Employee stock-based compensation expense, ATI acquisition-related charges, restructuring charges and AMD Product Company formation costs associated with GLOBALFOUNDRIES:
 
Quarter Ended Nine Months Ended
Q309 Q209 Q308 Q309 Q308
Employee stock-based compensation expense $ 17 $ 18 $ 20 $ 52 $ 59
Impairment of goodwill and acquired intangible assets - - 2 - 405
Amortization of acquired intangible assets 17 17 30 52 107
Restructuring charges 4 1 9 65 40
AMD Product Company formation costs associated with GLOBALFOUNDRIES   -     -     -     21     -  
$ 38   $ 36   $ 61   $ 190   $ 611  
 
 
(5 ) Represents intersegment eliminations in revenue and in cost of sales and profits on inventory between AMD Product Company and the Foundry segment. For the quarters ended September 26, 2009, June 27, 2009, and nine months ended September 26, 2009, intersegment eliminations of revenue was $256 million, $253 million and $792 million, respectively. For the quarters ended September 26, 2009, June 27, 2009, and nine months ended September 26, 2009, intersegment eliminations of cost of sales and profits on inventory was $245 million, $230 million and $750 million, respectively.
 
(6 ) AMD reconciliation of net income (loss) attributable to AMD common stockholders to AMD Product Company (excluding Foundry segment and intersegment eliminations) Adjusted EBITDA*
 
Quarter Ended Nine Months Ended
Q309 Q209 Q309
Net income (loss) attributable to AMD common stockholders $ (128 ) $ (330 ) $ (874 )
Net income (loss) attributable to noncontrolling interest (29 ) (25 ) (60 )
Class B preferred accretion 22 20 50
Foundry segment and intersegment eliminations net loss 191 177 685
AMD Product Company net income (loss) $ 56 $ (158 ) $ (199 )
Depreciation and amortization 96 103 303
Amortization of acquired intangible assets 17 17 52
Interest expense 70 71 215
Provision (benefit) for income taxes   (24 )   (19 )   (44 )
Adjusted EBITDA $ 215   $ 14   $ 327  
 
AMD reconciliation of net income (loss) attributable to AMD common stockholders to Adjusted EBITDA*
 
Quarter Ended Nine Months Ended
Q309 Q209 Q308 Q309 Q308
Net income (loss) attributable to AMD common stockholders $ (128 ) $ (330 ) $ (134 ) $ (874 ) $ (1,693 )
Impairment of goodwill and acquired intangible assets - - 2 - 405
Depreciation and amortization 265 265 266 792 797
Amortization of acquired intangible assets 17 17 30 52 107
Interest expense 114 108 94 319 296
Provision (benefit) for income taxes (5 ) (10 ) (1 ) 101 (1 )
Income (loss) from discontinued operations, net of tax   -     -     150     -     674  
Adjusted EBITDA $ 263   $ 50   $ 407   $ 390   $ 585  
 
(7 ) Reconciliation of select balance sheet items
Q309 Q209

Cash, cash equivalents
and marketable
securities

Total Assets Long-term debt**

Cash, cash equivalents
and marketable
securities

Total Assets Long-term debt**
AMD Product Company $ 1,536 $ 4,376 $ 3,541 $ 1,637 $ 4,405 $ 3,703
Foundry segment and intersegment eliminations   975       4,371       2,029   877     4,278     1,829
AMD $ 2,511     $ 8,747     $ 5,570 $ 2,514   $ 8,683   $ 5,532
 
 
*The Company defines Adjusted EBITDA as net income (loss) attributable to AMD common stockholders adjusted for impairment of goodwill and acquired intangible assets, depreciation and amortization, amortization of acquired intangible assets, interest expense, taxes and discontinued operations. AMD Product Company's adjusted EBITDA is also adjusted for the Foundry segment and intersegment eliminations net income (loss), net income (loss) attributable to noncontrolling interest and class B preferred accretion. The Company calculates and communicates 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
** Long-term debt also includes the current portion of long-term debt and capital lease obligations.

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