AMD Reports Third Quarter Results; Company Reports Lower Revenues on Record Unit Sales of AMD Athlon and AMD Duron Processors at Depressed Prices.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)--Oct. 17, 2001 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. today reported results for the quarter ended September September: see month. 30, 2001. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the third quarter of 2001 were $765,870,000, a decline of 22 percent compared with sales of $985,264,000 in the second quarter of 2001. AMD reported sales of $1,206,549,000 in the third quarter of 2000. The 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 net loss for the quarter, which excludes one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges, amounted to $97,424,000, which was equivalent to $0.28 per share. The pro forma net loss excludes 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 special charges amounting to $89.3 million and additional inventory provisions amounting to $6.9 million. These charges were associated with the company's previously announced plans to close wafer fabrication Wafer Fabrication is a procedure composed of many repeated sequential processes to produce complete electrical or photonic circuits. Examples include production of radio frequency (RF) amplifiers, LEDs, optical computer components, and CPUs for computers. facilities and reduce other manufacturing activities and administrative support that primarily serve AMD foundry A semiconductor manufacturer that makes chips for third parties. It may be a large chip maker that sells its excess manufacturing capacity or one that makes chips exclusively for other companies. service operations. The pro forma net loss also excludes the effects of a charge amounting to $22 million for impaired investments. Total pro forma adjustments, net of tax credits, amounted to $89.5 million. The total net loss under GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). (generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ) for the third quarter of 2001 was $186,929,000, which amounted to $0.54 per share on 345,044,000 shares outstanding. In the second quarter of 2001, AMD reported net income of $17,352,000, which amounted to $0.05 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Net sales for the first nine months of 2001 were $2,939,881,000, compared with $3,469,015,000 for the first nine months of 2000, a decline of 15 percent. Pro forma net income for the first nine months of 2001 amounted to $44,766,000, or $0.13 per diluted share. Pro forma net income for the first nine months of 2000 amounted to $615,792,000, or $1.81 per diluted share. The total net loss under GAAP for the first nine months of 2001 was $44,739,000, or $0.14 per share. Net income for the first nine months of 2000 was $805,058,000, or $2.36 per diluted share. Memory Group sales Group sales Block sale (of large amounts) of securities to institutional investors. group sales The distribution of a new security issue to institutional clients. in the third quarter of 2001 at $210 million declined by 34 percent from the second quarter of 2001, reflecting continuing weakness in the communication sector and excess inventories of flash memory devices at major customers. The company reported record 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. of 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) and AMD Duron A value line of 32-bit, Pentium-compatible CPU chips from AMD. Introduced in 2000 to compete with Intel's Celerons, Durons were pin compatible with AMD's Athlon chips, but had less cache and slower frontside buses. (TM) processors in the quarter. Total PC processor unit sales for the third quarter of 2001, at more than 7.7 million units, remained at the record level of the immediate-prior quarter. In the face of very aggressive competition, average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. (ASPs) for PC processors declined by 20 percent sequentially. "AMD held market share in the 22 percent range in a very weak PC market made more difficult by our principal competitor's efforts to halt our forward momentum," said W. J. Sanders San´ders n. 1. An old name of sandalwood, now applied only to the red sandalwood. See under Sandalwood. III, chairman and chief executive officer. "Those efforts have failed as the performance deficiencies of computers based on Intel's Pentium Pentium Family of microprocessors developed by Intel Corp. Introduced in 1993 as the successor to Intel's 80486 microprocessor, the Pentium contained two processors on a single chip and about 3.3 million transistors. (R) 4 processors have become increasingly evident. Nevertheless, drastic price cuts and large, cash-backed marketing programs from Intel had the effect of driving down ASPs on PC processors in the market segments where we compete directly. "During the quarter, AMD commenced shipments of the newest member of the AMD Athlon processor family, 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, based on the `Palomino' core. AMD Athlon XP processors were designed to deliver extreme performance on the desktop running the new 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. (R) Windows(R) XP operating system operating system (OS) Software that controls the operation of a computer, directs the input and output of data, keeps track of files, and controls the processing of computer programs. . The AMD Athlon XP processor outperforms any other PC processor in the world, unlocking the full potential of a PC when combined with the Windows XP The previous client version of Windows. XP was a major upgrade to the client version of Windows 2000 with numerous changes to the user interface. XP improved support for gaming, digital photography, instant messaging, wireless networking and sharing connections to the Internet. operating system," Sanders said. "Earlier this week at the Microprocessor microprocessor, integrated circuit containing the arithmetic, logic, and control circuitry required to interpret and execute instructions from a computer program. Forum, the industry's leading microprocessor technical conference, AMD revealed more details about the architecture of the eighth-generation Hammer family of PC processors planned for introduction late next year. The Hammer family will feature on-chip memory control as well as a highly scalable system bus that uses HyperTransport A high-speed interconnection between integrated circuits. Code named Lightning Data Transport and developed by AMD and others, the HyperTransport I/O Link Specification defines a protocol and electrical interface between the CPU, memory and peripheral devices. (TM) technology, enabling the chips inside PCs to communicate with each other up to 24 times faster than with existing technologies. We believe the Hammer family will continue AMD's performance leadership in the PC processor market. "AMD employees throughout the world responded valiantly in the wake of the terrorist attacks 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 and Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. . Despite disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. of air transportation services following the attacks, AMD maintained its operational excellence and met all commitments to customers," Sanders concluded. The company also reported the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of 6.3 million shares of its common stock during the quarter. Current Outlook The company's outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially. The company's current outlook is based on the following projections: Demand for flash memory devices from new customers is expected to offset continuing weakness in demand from customers in the communications sector, where inventories continue to exceed desired levels. Uncertainty in the economy reflecting declining consumer sentiment suggests caution in attempting a precise forecast. Accordingly, the company projects that Memory Group sales in the fourth quarter will range from unchanged to growth of 10 percent over the level of the third quarter of 2001. The company expects that the normal seasonality that was to have benefited the PC market in the fourth quarter will be muted mut·ed adj. 1. a. Muffled; indistinct: a muted voice. b. Mute or subdued; softened: muted colors. 2. at best in light of the impact of global economic uncertainty on consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. . Unit sales of PCs are expected to grow only modestly in the fourth quarter of 2001 from the levels of the third quarter. The encouraging reception of the new AMD Athlon XP processor, the world's highest-performance PC processor; the acceptance of AMD's first multiprocessor Multiple processors. A multiprocessor machine uses two or more CPUs for routine processing. See multiprocessing. multiprocessor - parallel processing server and workstation product, the AMD Athlon MP processor; and the growing success in commercial markets of the AMD Athlon family offerings presage continuing growth in unit shipments of AMD PC processors. In the current quarter, the company again expects to achieve record unit volume sales of AMD Athlon and AMD Duron processors. The company's strengthening competitive position is expected to result in attenuating price declines and to generate revenues ranging from the level of the third quarter of 2001 to as much as 10 percent growth sequentially. If current conditions prevail and as revenues from the company's other IC products and foundry services decline, the company expects that overall revenues will range from flat to high single-digit percentage growth in the fourth quarter. Revenues in this range would be insufficient to offset the current level of expenses, and therefore the company currently expects to report an 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. in the fourth quarter. AMD Teleconference AMD will hold a teleconference for the financial community at 2:30 PM Pacific Daylight Time today to discuss third-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 webcast will be available for two weeks after the teleconference. 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 , and that consumer confidence will continue to decline, resulting in lower than expected sales in the quarter; 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 seventh-generation PC processors will be lower than currently expected; that demand from new customers for the company's flash memory products will be lower than currently expected; that changes in customer needs will dampen anticipated demand for the company's flash memory products; that the company will not continue to be successful in ramping production of the company's highest-performance AMD Athlon processors in Fab 30 in Dresden, Germany; and that the company will not be able to maintain or grow revenues in the current quarter consistent with its current forecast. 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 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 31, 2000, and the report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended July 1, 2001. About AMD 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 Fortune 500 and Standard & Poor's 500 company, produces microprocessors This is a list of microprocessors. Intel
See: New York Stock Exchange :AMD). Visit AMD on the Web For more AMD news and product information, please visit our virtual pressroom at www.amd.com/news/virtualpress/index.html. Additional press releases are available at www.amd.com/news/news.html. Note to Editors: AMD, the AMD logo, AMD Athlon, AMD Duron and combinations thereof are trademarks of Advanced Micro Devices, Inc. HyperTransport is a trademark of the HyperTransport Technology Consortium. Other product names used in this publication are for identification purposes only and may be trademarks of their respective companies.
Advanced Micro Devices, Inc.
PROFORMA NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(Includes Pre-Tax FASL Investment Equity Income in Operating
Income and other proforma adjustments below)
(Thousands except per share amounts)
Quarter Ended Nine Months Ended
(Unaudited) (Unaudited)
-----------------------------------------------------
Sept. 30, July 1, Oct. 1, Sept. 30, Oct. 1,
2001 2001 2000 2001 2000
-----------------------------------------------------
Net sales $765,870 $985,264 $1,206,549 $2,939,881 $3,469,015
Cost of
sales 587,155 636,199 639,010 1,938,184 1,857,334
(Income) loss
from equity
investment in
FASL 2,036 (12,521) (7,558) (33,097) (5,953)
Research and
development 161,185 171,114 162,764 490,059 479,712
Marketing,
general and
administrative 150,918 156,291 141,931 456,346 438,259
----------------------------------------------------
901,294 951,083 936,147 2,851,492 2,769,352
----------------------------------------------------
Operating income
(loss) (135,424) 34,181 270,402 88,389 699,663
Interest income
and other, net 10,749 12,308 19,789 41,880 60,852
Interest
expense (9,946) (20,199) (17,382) (51,790) (40,105)
-----------------------------------------------------
Income (loss)
before income
taxes (134,621) 26,290 272,809 78,479 720,410
Provision
(benefit)
for income
taxes (36,348) 3,717 50,356 19,912 102,134
Provision (benefit)
for taxes on
equity income
in FASL (849) 5,221 3,152 13,801 2,484
-----------------------------------------------------
Net income
(loss) $(97,424) $17,352 $ 219,301 $ 44,766 $615,792
----------------------------------------------------
Net income (loss) per
common share
Basic $ (0.28) $ 0.05 $ 0.70 $ 0.14 $ 2.00
Diluted $ (0.28) $ 0.05 $ 0.64 $ 0.13 $ 1.81
----------------------------------------------------
Shares used in per
share calculation
-- Basic 345,044 330,120 311,943 329,837 307,942
-- Diluted 345,044 340,533 352,893 338,308 350,082
----------------------------------------------------
Advanced Micro Devices, Inc.
THE PROFORMA ADJUSTMENTS ARE AS FOLLOWS:
(Thousands)
Quarter Ended Nine Months Ended
----------------------------------------------------
Sept. 30, July 1, Oct. 1, Sept. 30, Oct. 1,
2001 2001 2000 2001 2000
----------------------------------------------------
Additional inventory
provision $ 6,901 $ -- $ -- $6,901 $ --
Restructuring and
other
special charges 89,305 -- -- 89,305 --
Sale of Legerity -- -- 336,899 -- 336,899
Impaired
investments 21,969 -- -- 21,969 --
----------------------------------------------------
Total before income
taxes and
extraordinary item (118,175) -- 336,899 (118,175) 336,899
Provision (benefit)
for income taxes (28,670) -- 124,653 (28,670) 124,653
Extraordinary item
-- debt retirement,
net of tax benefit -- -- (22,980) -- (22,980)
----------------------------------------------------
Total $(89,505) $ -- $189,266 $(89,505) $189,266
----------------------------------------------------
Advanced Micro Devices, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands except per share amounts)
Quarter Ended Nine Months Ended
(Unaudited) (Unaudited)
---------------------------------------------------
Sept. 30, July 1, Oct. 1, Sept. 30, Oct. 1,
2001 2001 2000 2001 2000
---------------------------------------------------
Net sales $765,870 $985,264 $1,206,549 $2,939,881 $3,469,015
Cost of sales 594,056 636,199 639,010 1,945,085 1,857,334
Research and
development 161,185 171,114 162,764 490,059 479,712
Marketing,
general and
administrative 150,918 156,291 141,931 456,346 438,259
Restructuring and
other special
charges 89,305 -- -- 89,305 --
----------------------------------------------------
995,464 963,604 943,705 2,980,795 2,775,305
----------------------------------------------------
Operating income
(loss) (229,594) 21,660 262,844 (40,914) 693,710
Gain on sale
of Legerity -- -- 336,899 -- 336,899
Interest and other
income (expense),
net (11,220) 12,308 19,789 19,911 60,852
Interest
expense (9,946) (20,199) (17,382) (51,790) (40,105)
----------------------------------------------------
Income (loss) before
income taxes,
equity in joint
venture and
extraordinary
item (250,760) 13,769 602,150 (72,793) 1,051,356
Provision (benefit)
for income
taxes (65,018) 3,717 175,009 (8,758) 226,787
----------------------------------------------------
Income (loss) before
equity in joint
venture and
extraordinary
item (185,742) 10,052 427,141 (64,035) 824,569
Equity in net
income (loss) in
joint venture (1,187) 7,300 4,406 19,296 3,469
----------------------------------------------------
Income (loss)
before
extraordinary
item (186,929) 17,352 431,547 (44,739) 828,038
Extraordinary item
-- debt
retirement, net
of tax benefit -- -- 22,980 -- 22,980
Net income
(loss) $(186,929) $17,352 $408,567 $(44,739) $805,058
----------------------------------------------------
Net income (loss)
per common share
Basic:
Income (loss) before
extraordinary
item $(0.54) $0.05 $ 1.38 $ (0.14) $ 2.69
Net income
(loss) $(0.54) $0.05 $ 1.31 $ (0.14) $ 2.61
----------------------------------------------------
Diluted:
Income (loss) before
extraordinary
item $(0.54) $0.05 $ 1.24 $ (0.14) $ 2.42
Net income (loss) $(0.54) $0.05 $ 1.18 $ (0.14) $ 2.36
Shares used in
per share calculation
- Basic 345,044 330,120 311,943 329,837 307,942
- Diluted 345,044 340,533 352,893 329,837 350,082
----------------------------------------------------
Advanced Micro Devices, Inc.
CONSOLIDATED BALANCE SHEETS
(Thousands)
Sept. 30, July 1, December 31,
2001 2001 2000(A)
----------------------------------------------------
(unaudited) (unaudited)
Assets
Current assets:
Cash, cash equivalents
and short-term
investments $ 903,534 $ 1,057,163 $ 1,293,165
Accounts receivable, net 588,563 728,356 547,200
Inventories 449,078 400,849 343,541
Deferred income taxes 168,846 188,946 218,527
Prepaid expenses and
other current assets 289,722 175,522 255,256
----------------------------------------------------
Total current assets 2,399,743 2,550,836 2,657,689
Property, plant and
equipment, net 2,715,292 2,668,271 2,636,467
Investment in joint venture 396,351 377,639 261,728
Other assets 227,819 234,207 211,851
----------------------------------------------------
$ 5,739,205 $ 5,830,953 $ 5,767,735
====================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 369,064 $ 314,606 $ 477,369
Accrued compensation
and benefits 143,987 121,523 172,815
Accrued liabilities 382,797 315,928 276,721
Income tax payable 49,591 38,184 74,806
Deferred income on
shipments to distributors 34,620 67,407 92,828
Current portion of
long-term debt, capital
lease obligations and other 192,487 220,080 129,570
----------------------------------------------------
Total current liabilities 1,172,546 1,077,728 1,224,109
Deferred income taxes 139,850 198,203 203,986
Long-term debt, capital
lease obligations and
other, less current portion 796,021 754,717 1,167,973
Stockholders' equity:
Capital stock:
Common stock, par value 3,471 3,464 3,141
Capital in excess of
par value 1,890,646 1,955,498 1,406,290
Retained earnings 1,811,522 1,998,450 1,856,261
Accumulated other
comprehensive loss (74,851) (157,107) (94,025)
----------------------------------------------------
Total stockholders' equity 3,630,788 3,800,305 3,171,667
----------------------------------------------------
$ 5,739,205 $ 5,830,953 $ 5,767,735
====================================================
(A) Derived from the December 31, 2000 audited financial
statements of Advanced Micro Devices, Inc.
AMD
Selected Corporate Data
(Unaudited)
Segment Breakdown Q3 '01 Q2 '01 Q3 '00
----------------- % of % of % of
Sales Revenue Sales Revenue Sales Revenue
----- ------- ------ ------- ------ -------
Core Products segment:
PC Processor
Products 61 $467M 60 $588M 52 $625M
Memory Products
(Flash) 28 210M 32 316M 35 420M
Other IC Products 8 64M 5 51M 8 99M
Voice Communications
segment 0 0 0 0 1 17M
Foundry Services
segment 3 25M 3 30M 4 46M
Other Data Q3 '01 Q2 '01 Q3 '00
--------- ------ ------ ------
Depreciation
and Amortization $160M $159M $154M
Capital Additions $164M $215M $249M
Headcount 15,152 15,088 14,004
International Sales 68% 61% 57%
Research and Development $161M $171M $163M
EBITDA $(70)M $181M $417M
EBITDA (Proforma) $25M $193M $424M
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