AMD Reports First Quarter Results; AMD Sees Improved Operating Results on Sequential Increase in Sales.Business Editors/High-Tech Writers SUNNYVALE Sunnyvale, city (1990 pop. 117,229), Santa Clara co., W Calif., near San Francisco; settled 1849, inc. 1912. A city in Silicon Valley, its many manufactures include semiconductors; machinery and instruments; electrical, electronic, and aerospace products; , Calif.--(BUSINESS WIRE)--April 16, 2003 AMD (Advanced Micro Devices, Inc., Sunnyvale, CA, www.amd.com) A major manufacturer of semiconductor devices including x86-compatible CPUs, embedded processors, flash memories, programmable logic devices and networking chips. (NYSE NYSE See: New York Stock Exchange :AMD) today reported sales of $715 million and a net loss of $146 million for the quarter ended March 30, 2003. The net loss amounted to $0.42 per share. First quarter sales declined by 21 percent from the first quarter of 2002 and increased by four percent from the fourth quarter of 2002. In the first quarter of 2002, AMD reported total sales of $902 million and a net loss of $9 million, or $0.03 per share. In the fourth quarter of 2002, AMD reported sales of $686 million and a net loss of $855 million, or $2.49 per share. Excluding the effects of restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other charges(1) to show the company's results from ongoing operations, the fourth quarter net loss was $235 million, or $0.68 per share. "In a tough market environment and in a quarter that is typically seasonally down, we grew our revenue by four percent from the fourth quarter of 2002," said Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. J. Rivet, chief financial officer. "We believe we gained market share in both our PC processor and Flash memory product lines. And we made significant operating improvements that better position us for a return to profitability. "Our enhanced AMD Athlon A family of Pentium-compatible CPU chips from AMD. The first 32-bit models were introduced as Pentium III-class CPUs in 1999 with a 200 MHz system bus and CPU speeds up to 650 MHz. (TM) processor portfolio, along with increased customer demand, led to a sequential increase of 11 percent in PC processor sales. And despite a seasonal weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. of the global
market for flash memory solutions, the first quarter was our fourth
consecutive quarter of revenue growth and record bit shipments."As projected, we reduced our operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. significantly compared to the fourth quarter of 2002. As a result of our improved cost structure, along with the increase in sales, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become was a positive $84 million(1) and our operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. improved by more than $90 million(1) in the first quarter as compared with our pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma results of the fourth quarter 2002." BUSINESS OVERVIEW PC processor sales of $468 million for the quarter increased by 11 percent from the $420 million reported in the fourth quarter of 2002. AMD showed a significant increase in both unit and dollar sales, based on record mobile shipments and increased penetration into emerging markets, led by China. During the first quarter, AMD commenced production shipments of AMD Opteron A family of 64-bit CPU chips from AMD, formerly code named Sledgehammer (part of the Hammer line). Introduced in April 2003, the Opteron fully supports 32-bit applications, but requires that programs be optimized and recompiled to take full advantage of the 64 bits. (TM) processors for the server and workstation markets. The launch of the AMD Opteron processor family will occur in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of on April 22. Also in the first quarter, AMD introduced several new processor offerings including the AMD Athlon XP A family of Pentium-compatible CPU chips from AMD introduced in 2001. Departing from the traditional MHz designation, Athlon XP chips use model numbers that combine clock speed and architectural features into a numerical rating. processor 3000+, the highest performing desktop PC microprocessor microprocessor, integrated circuit containing the arithmetic, logic, and control circuitry required to interpret and execute instructions from a computer program. . In addition, AMD introduced 12 new mobile processors including the first AMD Athlon processors targeted for thin-and-light notebooks. These are the first AMD Athlon processors targeted for thin-and-light notebooks. AMD memory sales of $218 million were up for the fourth consecutive quarter, on increased unit sales unit sales Sales measured in terms of physical units rather than dollars. Unit sales data are often used by financial analysts when evaluating the health of a company. driven by our product portfolio for the cellular phone market and continued demand for high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. , feature-rich phones. AMD qualified production on 130 nanometer One billionth of a meter. Nanometers are used to measure the wavelengths of light. See angstrom and metric system. process technology in AMD's Fab 25 Flash memory fab in the first quarter and will commence volume production on 130 nanometer process technology in the second quarter. HIGHLIGHTS OF THE QUARTER -- In March, AMD and Fujitsu (company) Fujitsu - A Japanese elecronics corporation. Fujitsu owns ICL, Amdahl Corporation, and DMR. Home USA, Japan. Limited announced a Memorandum of Understanding (MOU (Minutes Of Usage) A metric used to compute billing and/or statistics for telephone calls or other network use. ) to establish a new Flash memory semiconductor company based on the integration of AMD and Fujitsu's Flash memory operations, including their existing FASL FASL Feet Above Sea Level FASL Fujitsu Amd Semiconductor Limited FASL Fellow, Academic Society of London joint manufacturing venture. -- In March, AMD entered the thin and light mobile PC market with its newly launched line of new, low-voltage adj. 1. (Electricity) subjected to or capable of operating under relative low voltage, usually considered as no greater than 250 volts. Contrasted with high-voltage nt>. Adj. 1. mobile AMD Athlon XP-M processors. -- In March, Gartner/Dataquest Worldwide Quarterly PC Statistics for the fourth quarter of 2002 showed that AMD processor-based desktop and mobile computers increased worldwide unit market share to 19 percent among buyers of Windows(R) operating system-based PCs in 2002. -- In February February: see month. , the AMD Athlon 64 processor won the Microprocessor Report Analysts' Choice for Best PC Processor at the prestigious Microprocessor Report's Analysts' Choice Awards 2002. -- In February, AMD introduced the AMD Athlon XP processor 3000+, the world's highest performing desktop PC processor and introduced the AMD Athlon MP processor 2600+, the highest performing multiprocessor Multiple processors. A multiprocessor machine uses two or more CPUs for routine processing. See multiprocessing. multiprocessor - parallel processing in its line of multiprocessors for servers and workstations. -- In January January: see month. , AMD and IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) announced that the two companies had entered into an agreement to jointly develop chip-making technologies for use in future high-performance Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" products. -- In the first quarter, AMD added five infrastructure partners to the more than 100 companies that have announced support of AMD Opteron and AMD Athlon processors, including Microsoft (Microsoft Corporation, Redmond, WA, www.microsoft.com) The most successful and influential software company. Microsoft's software and Intel's hardware pioneered the PC and revolutionized the computer industry. , IBM DB2, RedHat, SuSE SUSE Stanford University School of Education SuSE Gesellschaft für Software-und Systementwicklung MBH (LINUX distribution) SUSE Suitable for Use as Service Equipment (electrical construction) , NVIDIA, Epic Games Epic Games, also known as Epic and formerly as Epic MegaGames, is a computer game development company based in Cary, North Carolina, United States. History Epic Games was initially founded under the name Potomac Computer Systems and CA Ingres. -- In January, AMD introduced the Am29PDL See page description language. 1. PDL - Page Description Language. 2. PDL - Program Design Language. 3. PDL - Push Down List. 4. PDL - Dave Lebling, one of the co-authors of Zork. 640G, a 64 Mbit page-mode Flash memory device designed for wireless applications such as mobile phones and other applications including television set-top boxes The cable TV box that sits on "top" of the TV "set," although it is often located several feet away in an equipment rack. The set-top box descrambles the premium channels and provides a tuner for the higher cable numbers that very old TVs did not support. . This Flash memory device delivers a superior combination of high-performance, long battery life and sophisticated security. CURRENT OUTLOOK AMD's outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially. Economic and industry conditions remain uncertain, and continue to make it particularly difficult to forecast product demand. The company's current outlook for the second quarter is based on the following projections: -- AMD believes it will continue to gain share in the wireless segment, and expects to achieve its fifth consecutive quarterly increase in Flash memory revenues. -- AMD believes that processor sales will be flat to up in the historically weakest quarter seasonally, based on an improved product mix and the anticipated benefits of a better-balanced PC supply chain inventory. -- AMD plans for cost reductions in the quarter sufficient to achieve its target of reducing its overall quarterly cost structure to below $800 million. AMD TELECONFERENCE AMD will hold a conference call for the financial community at 2:30 PM Pacific Time today to discuss first quarter financial results. AMD will provide a real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. audio broadcast of the teleconference on the Investor Relations Investor relations The process by which the corporation communicates with its investors. page of its web site at http://www.amd.com or http://www.StreetEvents.com. The web-cast will be available for ten days after the conference call. CAUTIONARY STATEMENT This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , which are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Investors are cautioned that forward-looking statements in this release involve risks and uncertainty that could cause actual results to differ materially from current expectations. Risks include the possibility that global business and economic conditions will worsen wors·en tr. & intr.v. wors·ened, wors·en·ing, wors·ens To make or become worse. worsen Verb to make or become worse worsening adjn resulting in lower than currently expected sales in the second quarter of 2003; that Intel Corporation (company) Intel Corporation - A US microelectronics manufacturer. They produced the Intel 4004, Intel 8080, Intel 8086, Intel 80186, Intel 80286, Intel 80386, Intel 486 and Pentium microprocessor families as well as many other integrated circuits and personal computer networking pricing, marketing programs, product bundling Product bundling is a marketing strategy that involves offering several products for sale as one combined product. This strategy is very common in the software business (for example: bundle a word processor, a spreadsheet, and a database into a single office suite), and in the fast , new product introductions or other activities targeting the company's processor business will prevent attainment of the company's current PC processor sales plans; that demand for personal computers and, in turn, demand for the company's PC processors will be lower than currently expected; that the sales of AMD PC processors will follow seasonal patterns or worse in the second quarter despite the availability of a richer mix of the company's products; that demand for the company's Flash memory products will be lower than currently expected, particularly in the high-end cellular telephone sector; that the company will not achieve sequential growth in sales of Flash memory devices; that the company may not achieve its current product and technology introduction schedules including the current schedule for introducing AMD Athlon XP processors based on the "Barton BARTON, old English law. The demesne land of a manor; a farm distinct from the mansion. " core or the AMD Opteron processor based on AMD 64-bit technology, or the schedule for implementing 90nm process technology in Fab 30; and that the company may not be able to successfully implement the new proposed joint venture with Fujitsu, Ltd. and sustain any benefit from such joint venture. We urge investors 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 29, 2002. About AMD Founded in 1969 and based in Sunnyvale, California Sunnyvale ([sʌniveil]) is a city in Santa Clara County, California, United States. It is one of the major cities that make up the Silicon Valley. As of the 2000 census, the city population was 131,760. , AMD is a global supplier of integrated circuits Integrated circuits Miniature electronic circuits produced within and upon a single semiconductor crystal, usually silicon. Integrated circuits range in complexity from simple logic circuits and amplifiers, about 1/20 in. (1. for the personal and networked computer and communications markets with manufacturing facilities in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Europe, Japan, and Asia. AMD, a Standard & Poor's 500 company, produces microprocessors This is a list of microprocessors. Intel
AMD, the AMD Arrow logo, AMD Athlon, AMD Opteron and combinations thereof are trademarks of Advanced Micro Devices, Inc. in the United States and other jurisdictions. Note:(1) As shown in the attached reconciliation of GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). to Pro-forma Non-GAAP Consolidated Net Loss.
Advanced Micro Devices, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands except per share amounts)
Quarter Ended
----------------------------------------------------------------------
March 30, Dec. 29, March 31,
2003 2002 2002
(Unaudited) (Unaudited) (Unaudited)
----------------------------------------------------------------------
Net sales $ 714,555 $ 686,430 $ 902,073
Cost of sales 496,592 506,613 586,874
Research and development 203,062 244,848 171,882
Marketing, general and
administrative 138,228 194,389 156,860
Restructuring and other
special charges, net 2,146 330,575 --
----------------------------------------------------------------------
840,028 1,276,425 915,616
----------------------------------------------------------------------
Operating loss (125,473) (589,995) (13,543)
Interest and other income, net 6,740 992 9,538
Interest expense (25,805) (22,296) (12,158)
----------------------------------------------------------------------
Loss before income taxes and equity
in net income of joint venture (144,538) (611,299) (16,163)
Provision (benefit) for income taxes 2,936 243,470 (4,041)
----------------------------------------------------------------------
Loss before equity in net income
of joint venture (147,474) (854,769) (12,122)
Equity in net income of joint venture 1,118 29 2,959
----------------------------------------------------------------------
Net loss $(146,356) $ (854,740) $ (9,163)
----------------------------------------------------------------------
Net loss per common share
Basic $ (0.42) $ (2.49) $ (0.03)
Diluted $ (0.42) $ (2.49) $ (0.03)
----------------------------------------------------------------------
Shares used in per share calculation
-- Basic 345,012 343,949 340,806
-- Diluted 345,012 343,949 340,806
Advanced Micro Devices, Inc.
----------------------------------------------------------------------
RECONCILIATION OF GAAP TO PRO FORMA NON-GAAP CONSOLIDATED NET LOSS
----------------------------------------------------------------------
(Thousands)
Quarter Ended
----------------------------------------------------------------------
March 30, Dec. 29, March 31,
2003 2002 2002
----------------------------------------------------------------------
Net loss (GAAP) $(146,356) $(854,740) $ (9,163)
Adjustments:
Restructuring and other special charges 2,146 330,575 --
Impaired investments -- 3,550 --
R&D expense -- 42,000 --
----------------------------------------------------------------------
Net loss before income taxes (144,210) (478,615) (9,163)
Deferred tax asset write-off -- 243,470 --
----------------------------------------------------------------------
Net loss (Pro Forma Non-GAAP) $(144,210) $(235,145) $ (9,163)
----------------------------------------------------------------------
----------------------------------------------------------------------
RECONCILIATION OF EBITDA TO PRO FORMA EBITDA
----------------------------------------------------------------------
(Thousands)
Quarter Ended
----------------------------------------------------------------------
March 30, Dec. 29, March 31,
2003 2002 2002
----------------------------------------------------------------------
Operating loss $(125,473) $(589,995) $(13,543)
Depreciation and amortization 209,754 199,618 174,108
----------------------------------------------------------------------
EBITDA 84,281 (390,377) 160,565
Adjustments:
Pro forma income from equity investment
in FASL (non-GAAP) 1,917 50 5,076
R&D expense -- 42,000 --
Restructuring and other special charges 2,146 330,575 --
----------------------------------------------------------------------
Pro forma EBITDA $ 88,344 $ (17,752) $165,641
----------------------------------------------------------------------
Advanced Micro Devices, Inc.
----------------------------------------------------------------------
PRO FORMA NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(Includes Pre-Tax FASL Investment Equity Income in Operating Loss
and other pro forma adjustments)
----------------------------------------------------------------------
(Thousands except per share amounts)
Quarter Ended
----------------------------------------------------------------------
March 30, Dec. 29, March 31,
2003 2002 2002
(Unaudited) (Unaudited) (Unaudited)
---------------------------------------------- ----------- -----------
Net sales $ 714,555 $ 686,430 $902,073
Cost of sales 496,592 506,613 586,874
Income from equity investment in FASL (1,917) (50) (5,076)
Research and development 203,062 202,848 171,882
Marketing, general and administrative 138,228 194,389 156,860
----------------------------------------------------------------------
835,965 903,800 910,540
----------------------------------------------------------------------
Operating loss (121,410) (217,370) (8,467)
Interest and other income, net 6,740 4,542 9,538
Interest expense (25,805) (22,296) (12,158)
----------------------------------------------------------------------
Loss before income taxes (140,475) (235,124) (11,087)
Provision (benefit) for income taxes 2,936 -- (4,041)
Provision (benefit) for taxes on
equity income in FASL 799 21 2,117
----------------------------------------------------------------------
Net loss $(144,210) $(235,145) $ (9,163)
----------------------------------------------------------------------
Net loss per common share
Basic $ (0.42) $ (0.68) $ (0.03)
Diluted $ (0.42) $ (0.68) $ (0.03)
----------------------------------------------------------------------
Shares used in per share calculation
-- Basic 345,012 343,949 340,806
-- Diluted 345,012 343,949 340,806
Advanced Micro Devices, Inc.
CONSOLIDATED BALANCE SHEETS
(Thousands)
March 30, Dec. 29,
2003 2002(a)
----------------------------------------------------------------------
(unaudited) (unaudited)
Assets
Current assets:
Cash, cash equivalents and short-term
investments $ 800,009 $1,037,705
Accounts receivable, net 371,841 395,828
Inventories 440,049 432,603
Prepaid expenses and other current assets 183,091 153,542
----------------------------------------------------------------------
Total current assets 1,794,990 2,019,678
Property, plant and equipment, net 2,910,244 2,880,809
Investment in joint venture 385,503 382,942
Other assets 308,065 335,752
----------------------------------------------------------------------
$5,398,802 $5,619,181
======================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 386,841 $ 352,438
Accrued compensation and benefits 149,389 131,324
Accrued liabilities 270,966 435,657
Restructuring accruals 185,031 212,541
Income taxes payable 36,821 21,246
Deferred income on shipments to distributors 76,923 57,184
Current portion of long-term debt, capital
lease obligations and other 163,911 161,689
----------------------------------------------------------------------
Total current liabilities 1,269,882 1,372,079
Long-term debt, capital lease obligations and
other, less current portion 1,767,036 1,779,837
Stockholders' equity:
Capital stock:
Common stock, par value 3,457 3,445
Capital in excess of par value 1,926,820 1,921,247
Retained earnings 346,312 492,668
Accumulated other comprehensive income 85,295 49,905
----------------------------------------------------------------------
Total stockholders' equity 2,361,884 2,467,265
----------------------------------------------------------------------
$5,398,802 $5,619,181
======================================================================
(a) Derived from the December 29, 2002 audited financial statements of
Advanced Micro Devices, Inc.
AMD
Selected Corporate Data
(Unaudited)
----------------------------------------------------------------------
Segment Breakdown Q1 '03 Q4 '02 Q1 '02
% of % of % of
Sales Revenue Sales Revenue Sales Revenue
-------- ------- ------ -------- ------ -------
----------------------------------------------------------------------
Core Products segment:
PC Processor Products 65 $468M 61 $420M 76 $684M
Memory Products (Flash) 31 218M 32 217M 18 160M
Other IC Products 4 29M 7 47M 5 46M
Foundry Services segment 0 0M 0 2M 1 12M
----------------------------------------------------------------------
----------------------------------------------------------------------
Other Data Q1 '03 Q4 '02 Q1 '02
----------------------------------------------------------------------
Depreciation & Amortization $210M $200M $174M
Capital Additions $181M $138M $199M
Headcount 12,113 12,832 14,442
----------------------------------------------------------------------
International Sales 73% 76% 65%
Research and Development $203M $245M $172M
Research and Development
(Non-GAAP in Q4'02) $203M $203M $172M
EBITDA $84M $(390)M $161M
EBITDA (Pro forma) $88M $(18)M $166M
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