AMD Reports First Quarter Results

About AMD

Advanced Micro Devices (NYSE: AMD) is an innovative technology company dedicated to collaborating with customers and technology partners to ignite the next generation of computing and graphics solutions at work, home and play. For more information, visit http://www.amd.com

Cautionary Statement

This release contains forward-looking statements concerning AMD Product Company, its second quarter 2009 revenue, and its future products and technologies, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as “would,” “may,” “expects,” “believes,” “plans,” “intends,” “projects,” and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this release are based on current beliefs, assumptions and expectations, speak only as of the date of this release and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Risks include the possibility that Intel Corporation’s pricing, marketing and rebating programs, product bundling, standard setting, new product introductions or other activities targeting the company’s business will prevent attainment of the company’s current plans; global business and economic conditions will continue in their current state or worsen resulting in lower than currently expected revenue in the second quarter of 2009 and beyond; the company’s Asset Smart strategy will be less beneficial than anticipated; demand for computers and consumer electronics products and, in turn, demand for the company’s products will be lower than currently expected; customers stop buying the company’s products or materially reduce their demand for its products; the company will require additional funding and may not be able to raise funds on favorable terms or at all; the company’s restructuring efforts will not be effective; the company will be unable to develop, launch and ramp new products and technologies in the volumes and mix required by the market and at mature yields on a timely basis; there will be unexpected variations in market growth and demand for the company’s products and technologies in light of the product mix that it may have available at any particular time or a decline in demand; the company will be unable to transition its products to advanced manufacturing process technologies in a timely and effective way; the company will be unable to maintain the level of investment in research and development and capacity that is required to remain competitive; and the company will be unable to obtain sufficient manufacturing capacity or components to meet demand for its products or will under-utilize its commitment with respect to GLOBALFOUNDRIES’ microprocessor manufacturing facilities. Investors are urged to review in detail the risks and uncertainties in the company’s Securities and Exchange Commission filings, including but not limited to the Annual Report on Form 10-K for the year ended December 27, 2008.

AMD, the AMD Arrow logo, AMD Opteron, AMD Phenom, AMD Athlon and combinations thereof, and ATI, the ATI logo, FireGL, CrossFireX and Radeon are trademarks of Advanced Micro Devices, Inc. Other names are for informational purposes only and used to identify companies and products and may be trademarks of their respective owner.

¹ 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 through March 28, 2009. Intersegment eliminations consist of revenues, cost of sales and profits on inventory between AMD Product Company and the Foundry segment.

² The Company is providing non-GAAP financial measures for AMD Product Company such as a statement of operations and selected balance sheet items as reflected in the tables at the end of this press release. In addition, for AMD Product Company, the Company is providing non-GAAP financial measures such as net income (loss), operating income (loss) and gross margin which exclude certain adjustments as reflected in the tables in the body of this press release. AMD is providing these financial measures because it believes it is important for investors to have visibility into AMD’s financial results excluding the Foundry segment, intersegment eliminations and certain adjustments as reflected in the tables in this press release.

³ In this press release, in addition to GAAP financial results, the Company has provided non-GAAP financial measures for AMD net income (loss) attributable to AMD common stockholders, operating income (loss) and gross margin. These non-GAAP financial measures exclude certain adjustments as reflected in the tables in this press release. Management believes this non-GAAP presentation makes it easier for investors to compare current and historical period operating results.

⁴ Refer to corresponding tables at the end of this press release for additional AMD and AMD Product Company data.

ADVANCED MICRO DEVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions except per share amounts and percentages)


		Quarter Ended
		March 28,			Dec. 27,			March 29,
			2009			2008 ⁽¹⁾			2008 ⁽¹⁾
		(Unaudited)			(Unaudited)			(Unaudited)

Net revenue		$	1,177		$	1,162		$	1,487

Cost of sales			674			890			866


Gross margin			503			272			621

Gross margin %			43	%		23	%		42	%

Research and development			446			465			478

Marketing, general and administrative			287			317			337

Amortization of acquired intangible assets			18			30			40

Impairment of goodwill and acquired intangible assets			-			684			-

Restructuring charges			60			50			-


Operating income (loss)			(308	)		(1,274	)		(234	)

Interest income			3			7			15
Interest expense			(97	)		(95	)		(101	)
Other income (expense), net			104			4			(1	)


Income (loss) before income taxes			(298	)		(1,358	)		(321	)

Provision (benefit) for income taxes			116			69			-


Income (loss) from continuing operations			(414	)		(1,427	)		(321	)

Income (loss) from discontinued operations, net of tax			-			(10	)		(30	)


Net income (loss)		$	(414	)	$	(1,437	)	$	(351	)

Net (income) loss attributable to noncontrolling interest			6			(6	)		(13	)

Class B preferred accretion			(8	)		-			-


Net Income (loss) attributable to AMD common stockholders		$	(416	)	$	(1,443	)	$	(364	)


Net income (loss) attributable to AMD common stockholders per common share

Basic and diluted
	Continuing operations	$	(0.66	)	$	(2.35	)	$	(0.55	)
	Discontinued operations		0.00			(0.02	)		(0.05	)
Basic and diluted net income (loss) per common share		$	(0.66	)	$	(2.37	)	$	(0.60	)


Shares used in per share calculation

Basic and diluted			626			609			606

(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) 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 March 28, 2009
	AMD Product Company ⁽³⁾			Foundry segment and intersegment eliminations ⁽⁴⁾			AMD

Net revenue	$	1,177		$	-		$	1,177

Cost of sales		701			(27	)		674


Gross margin		476			27			503

Gross margin %		40	%					43	%

Research and development		305			141			446

Marketing, general and administrative		252			35			287

Amortization of acquired intangible assets		18			-			18

Restructuring charges		60			-			60


Operating income (loss)		(159	)		(149	)		(308	)

Interest income		6			(3	)		3
Interest expense		(74	)		(23	)		(97	)
Other income (expense), net		129			(25	)		104


Income (loss) before income taxes		(98	)		(200	)		(298	)

Provision (benefit) for income taxes		(1	)		117			116


Net income (loss)	$	(97	)	$	(317	)	$	(414	)

Net (income) loss attributable to noncontrolling interest								6

Class B preferred accretion								(8	)


Net income (loss) attributable to AMD common stockholders							$	(416	)


(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)
			March 28,			Dec. 27,
				2009			2008 ⁽⁵⁾
			(Unaudited)

Assets

Current assets:
	Cash, cash equivalents and marketable securities		$	2,719		$	1,096
	Accounts receivable, net			414			320
	Inventories			539			656
	Prepaid expenses and other current assets			254			279
	Deferred income taxes			45			28


		Total current assets		3,971			2,379

Property, plant and equipment, net				4,137			4,296
Goodwill				323			323
Acquisition related intangible assets, net				150			168
Other assets				471			506


Total Assets			$	9,052		$	7,672

Liabilities and Stockholders' Equity (Deficit)

Current liabilities:
	Accounts payable		$	497		$	631
	Accrued compensation and benefits			147			162
	Accrued liabilities			684			785
	Deferred income on shipments to distributors			87			50
	Current portion of long-term debt and capital lease obligations			281			286
	Other short-term obligations			134			86
	Other current liabilities			249			226


		Total current liabilities		2,079			2,226

Deferred income taxes				219			91
Long-term debt and capital lease obligations, less current portion				5,282			4,490
Other long-term liabilities				546			569
Noncontrolling interest				1,089			169

Stockholders' equity (deficit):
	Capital stock:
	Common stock, par value			7			6
	Capital in excess of par value			6,380			6,264
	Retained earnings (deficit)			(6,667	)		(6,251	)
	Accumulated other comprehensive income			117			108

		Total stockholders' equity (deficit)		(163	)		127


Total Liabilities and Stockholders' Equity (Deficit)			$	9,052		$	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 implemented in the first quarter of 2009.

ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA
(Unaudited)
(Millions except headcount and percentages)


				Quarter Ended
	March 28,			Dec. 27,			March 29,
Segment and Category Information from Continuing Operations		2009			2008			2008


Computing Solutions (1)
Net revenue	$	938		$	873		$	1,194
Operating income (loss)	$	(36	)	$	(431	)	$	(164	)

Graphics (2)
Net revenue		222			270			262
Operating income (loss)		1			(10	)		13

Foundry (3)
Net revenue		283
Operating income (loss)		(141	)

All Other (4)
Net revenue		17			19			31
Operating income (loss)		(124	)		(833	)		(83	)

Intersegment eliminations (5)
Net revenue		(283	)
Operating income (loss)		(8	)

Total from Continuing Operations
Net revenue	$	1,177		$	1,162		$	1,487
Operating income (loss)	$	(308	)	$	(1,274	)	$	(234	)



Revenue Reconciliation

Revenue from continuing operations	$	1,177		$	1,162		$	1,487
Revenue from discontinued operations		-			8			18
Total revenue	$	1,177		$	1,170		$	1,505



Other Data

AMD Product Company (excludes Foundry segment and intersegment eliminations)
Depreciation and amortization
(excluding amortization of acquired intangible assets)	$	105
Capital additions	$	17
Adjusted EBITDA (6)	$	99
Cash, cash equivalents and marketable securities (7)	$	1,599
Total assets (7)	$	4,536
Long-term debt (7)	$	3,711
Headcount		10,511


AMD
Depreciation and amortization
(excluding amortization of acquired intangible assets)	$	262		$	271		$	266
Capital additions	$	84		$	112		$	322
Adjusted EBITDA (6)	$	77		$	(284	)	$	73
Headcount		13,408			14,652			16,398


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 through March 28, 2009. 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.

	Employee stock-based compensation expense, ATI acquisition-related charges, restructuring charges and AMD Product Company formation costs associated with GLOBALFOUNDRIES:

		Quarter Ended
		Q109			Q408			Q108
	Employee stock-based compensation expense	$	17		$	20		$	21
	Impairment of goodwill and acquired intangible assets		-			684			-
	Amortization of acquired intangible assets		18			30			40
	Restructuring charges		60			50			-
	AMD Product Company formation costs associated with GLOBALFOUNDRIES		21			23			-
		$	116		$	807		$	61


(5)	Represents intersegment eliminations of $283 million in revenue and $275 million in cost of sales and profits on inventory between AMD Product Company and the Foundry segment.

(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
		Q109
	Net income (loss) attributable to AMD common stockholders	$	(416	)
	Net income (loss) attributable to noncontrolling interest		(6	)
	Class B preferred accretion		8
	Foundry segment and intersegment eliminations net loss		317
	AMD Product Company net income (loss)	$	(97	)
	Depreciation and amortization		105
	Amortization of acquired intangible assets		18
	Interest expense		74
	Provision (benefit) for income taxes		(1	)
	Adjusted EBITDA	$	99

	AMD reconciliation of net income (loss) attributable to AMD common stockholders to Adjusted EBITDA*

		Quarter Ended
		Q109			Q408			Q108
	Net income (loss) attributable to AMD common stockholders	$	(416	)	$	(1,443	)	$	(364	)
	Impairment of goodwill and acquired intangible assets		-			684			-
	Depreciation and amortization		262			271			266
	Amortization of acquired intangible assets		18			30			40
	Interest expense		97			95			101
	Provision (benefit) for income taxes		116			69			-
	Income (loss) from discontinued operations, net of tax		-			10			30
	Adjusted EBITDA	$	77		$	(284	)	$	73

(7)	Reconciliation of select balance sheet items

		Cash, cash equivalents and marketable securities						Total Assets			Long-term debt
	AMD Product Company	$	1,599					$	4,536		$	3,711
	Foundry segment and intersegment eliminations		1,120						4,516			1,717
	AMD	$	2,719					$	9,052		$	5,428

*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 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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