AMD Reports Third Quarter Results; Net income and gross margin growth driven by increased AMD64 processor demand.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. -- 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 $1.239 billion and net income of $44 million for the quarter ended September September: see month. 26, 2004. Net income amounted to $0.12 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. Third quarter sales increased by 30 percent compared to the same period in 2003 and decreased by two percent from the second quarter of 2004. In the third quarter of 2003, AMD reported sales of $954 million and a net loss of $31 million, or $0.09 per share. In the second quarter of 2004, AMD reported sales of $1.262 billion and net income of $32 million, or $0.09 per diluted share. "Our third quarter net income improvement was largely driven by a 21 percent sequential increase in Computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. Products Group (CPG CPG central pattern generators. ) sales and improved gross margin in the Memory Group," 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, AMD's chief financial officer. "AMD64 processor sales represented over one-third of our total CPG sales. Sales growth was driven by both higher average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. (ASP asp, popular name for several species of viper, one of which, the European asp (Vipera aspis), is native to S Europe. It is also a name for the Egyptian cobra (Naja haja). ) and increased unit volumes. "The successful transition to 110nm technology and excellent cost management allowed the Memory Group to remain profitable despite weaker than expected sales into the wireless handset The part of the telephone that contains the speaker and the microphone. On a desktop phone, the part you hold in your hand is the handset. On a cellphone, the entire phone is the handset. See multihandset cordless and headset. market." BUSINESS OVERVIEW Third quarter operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $68 million improved from 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. of $30 million in the third quarter of 2003 and declined slightly from $72 million in the prior quarter. Third quarter gross margin increased to 40 percent from 38 percent in the second quarter of 2004. The improvement was largely due to strong processor sales growth and excellent execution of process technology transitions in both businesses. Computation Products 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. were $672 million in the third quarter of 2004. This is an increase of 34 percent from $503 million in the third quarter of 2003 and is a 21 percent increase from $554 million in the second quarter of 2004. CPG generated operating income of $89 million in the third quarter, up from $58 million in the second quarter of 2004. CPG's improved profitability and higher ASP were driven primarily by a significant increase in processor sales across all markets, with AMD64 processor shipments nearly doubling over the previous quarter. The company also successfully launched the AMD Sempron(TM) processor family in the third quarter. This helped drive significant CPG sales growth in China. In addition, AMD Athlon(TM) 64 processors based on 90nm technology began shipping for revenue in the quarter. Memory Group sales were $538 million in the third quarter, an increase of 27 percent from $424 million in the third quarter of 2003 and a decline of 20 percent from $673 million in the second quarter of 2004. The Memory Group generated operating income of $15 million, down from $45 million in the prior quarter. Third quarter profitability was largely driven by the successful transition to 110nm technology, the smallest node in production by any NOR Flash memory company, as well as increased shipments of Flash memory products based on MirrorBit(TM) technology. Flash memory sales into the embedded market Refers to custom-designed, computer-based devices and applications that perform a fixed set of tasks. It may refer to cellphones and other handhelds, network appliances (routers, access points, modems) and myriad consumer electronics products. remained solid. Flash memory sales into the wireless handset market declined significantly, resulting in a lower Flash memory ASP. ADDITIONAL HIGHLIGHTS OF THE QUARTER --Twenty-five percent of the Fortune Global 100 companies now use AMD Opteron(TM) processor-based systems to run critical enterprise applications. These organizations include industry leaders in banking, insurance, pharmaceuticals, manufacturing, energy and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. . --New AMD Opteron processor-based server customers include AOL (A division of Time Warner, Inc., New York, NY, www.aol.com) The world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services. , Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. , Bell Helicopter Bell Helicopter Textron is an American helicopter and tiltrotor manufacturer headquartered in Fort Worth, Texas. A division of Textron, Bell manufactures military helicopter and tiltrotor products in the United States (primarily in and around Fort Worth as well as in Amarillo, , Sabre Holdings Sabre Holdings or Sabre, Inc. is an American travel technology company, encompassing several brands in three global travel distribution channels: travel agency, airline, and direct to consumer. These areas are serviced by TSG's three main business groups. , BNP Paribas BNP Paribas (Euronext: BNP, TYO: 8665 ) is one of the main banks in Europe and France. It was created on 23 May 2000 through the merger of Banque Nationale de Paris (BNP) and Paribas. , E! Networks, Fox Sports, and Agere Systems Agere Systems Inc. was an integrated circuit components company based in Allentown, Pennsylvania, in the Lehigh Valley region of Pennsylvania, in the United States. Effective April 2, 2007, it was merged into LSI Corporation. . --AMD Opteron processor-based servers and workstations are providing the digital backbone for Star Wars Episode III: Revenge of the Sith. The AMD64 digital processing Digital processing is the process of altering digital data in any form. The most common situations where digital processing is involved are computer graphics and digital audio processing. pipeline at JAK Films includes pre-visualization and pre-postproduction, which involves 3-D match moving, 3-D modeling, lighting, shading See Phong shading, Gouraud shading, flat shading and programmable shading. , texturing, compositing and rendering See render. (graphics, text) rendering - The conversion of a high-level object-based description into a graphical image for display. For example, ray-tracing takes a mathematical model of a three-dimensional object or scene and converts it into a bitmap image. techniques. --AMD demonstrated the industry's first x86 dual-core processor on 90nm process technology. HP, 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) and Sun Microsystems Sun Microsystems, Inc. (NASDAQ: JAVA[3]) is an American vendor of computers, computer components, computer software, and information-technology services, founded on 24 February 1982. , among others, announced support for AMD's dual-core technology. --As an official sponsor and technology partner to Scuderia Ferrari Scuderia Ferrari is the name for the Gestione Sportiva, the division of the Ferrari automobile company concerned with racing. Though the Scuderia and Ferrari Corse Clienti continue to manage the racing activities of numerous Ferrari customers and private teams, Ferrari's racing and the USPS (1) (Uninterruptible Switching Power Supply) A power supply for a computer that contains its own battery and uninterruptible power supply (UPS) circuitry. See power supply and UPS. Pro Cycling Team A cycling team is a group of cyclists who join a team or are acquired and train together to compete in bicycle races of any kind - whether they are recreational or professional - and the supporting personnel. , AMD helped make history as Ferrari secured an unprecedented 14th Formula One Constructors' title and Michael Schumacher Michael Schumacher (pronounced / /, born January 3, 1969, in Hürth Hermülheim, Germany)[4] is a former Formula One driver, and seven-time world champion. secured a record 7th Drivers' World Championship, while Lance Armstrong Lance Armstrong (born Lance Edward Gunderson on September 18, 1971) is a retired American professional road racing cyclist. He won the Tour de France—cycling's most prestigious race—seven consecutive times, from 1999 to 2005. became the world's first six-time Tour de France Tour de France World's most prestigious and difficult bicycle race. Staged for three weeks each July—usually in some 20 daylong stages—the Tour typically comprises 20 professional teams of nine riders each and covers some 3,600 km (2,235 miles) of flat and winner. --AMD launched the new AMD Sempron processor family, which redefines everyday computing computing - computer for value-conscious buyers of desktop and notebook PCs. Acer Acer trees of the family Aceraceae. Acer rubrum ingestion of wilted or dries leaves of this tree causes acute hemolytic anemia characterized by red urine, jaundice, anemia and methemoglobinemia in horses. , HP and Lenovo are among the initial leading OEMs to offer AMD Sempron processor-based systems. --VMware ESX See VMware. Server, a leading virtual infrastructure software application that enables enterprises to partition A reserved part of disk or memory that is set aside for some purpose. On a PC, new hard disks must be partitioned before they can be formatted for the operating system, and the Fdisk utility is used for this task. and manage systems in mission-critical environments, was qualified on AMD Opteron processor-based systems from HP and IBM. --With the release of Microsoft(R) Windows(R) XP Service Pack 2, Enhanced Virus Protection Enhanced Virus Protection, often abbreviated as EVP, is a proprietary technology used by AMD which attempts to prevent malicious computer code from being executed without the user's knowledge or permission. can be enabled on all AMD Athlon 64 processors, the first PC processors to offer an enhanced level of security against certain viruses. --AMD introduced the Mobile AMD Athlon 64 processor 3000+ for thin-and-light notebooks, and the highest performing 32-bit/64-bit processors available for mobile PCs, the AMD Athlon 64 processor 3700+, for desktop-replacement notebooks. --Spansion completed its transition to 110nm technology at Fab 25 in Austin, Texas. --AMD established a Greater China headquarters in Beijing. CURRENT OUTLOOK AMD's outlook statements are based on current expectations. The following statements are forward looking, and actual results could differ materially depending on market conditions. In the fourth quarter of 2004, AMD expects overall sales to increase, driven by processor sales that exceed seasonal trends, and flat-to-up Flash memory sales. AMD TELECONFERENCE AMD will hold a conference call for the financial community at 2:30 p.m. PT 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 www.amd.com or www.streetevents.com. The webcast will be available for 10 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 uncertainties 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 fourth quarter of 2004; that Intel Corporation's 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 processor sales plans; that demand for personal computers and, in turn, demand for the company's processors will be lower than currently expected; that adoption of AMD64 products by OEMs will not occur as expected; that demand for the company's Flash memory products will be lower than currently expected, particularly in the high-end mobile telephone sector and that the company will not be able to increase Flash memory market share; 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 will negatively affect NOR Flash memory prices; that customer acceptance of MirrorBit technology will not continue to increase; that the company will not be able to meet demand for its products; that the company may not achieve its current product and technology introduction schedules; that the company's transition to 90nm manufacturing processes for processors and 110nm manufacturing processes for Flash memory will not occur in the expected timeframe and that the company will not recognize the expected benefits from the technology transition; that the company will not be able to raise sufficient capital to enable it to establish leading-edge capacity to maintain its market leadership positions; and that solutions providers will not timely provide the infrastructure, including operating systems Operating systems can be categorized by technology, ownership, licensing, working state, usage, and by many other characteristics. In practice, many of these groupings may overlap. and applications, to support the company's AMD64 technology. 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 28, 2003, and the Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended June 27, 2004. ABOUT AMD AMD (NYSE:AMD) designs and produces innovative microprocessors This is a list of microprocessors. Intel
AMD, the AMD Arrow logo, AMD Athlon, AMD Opteron, AMD Sempron, and combinations thereof, are trademarks of Advanced Micro Devices, Inc. Spansion and MirrorBit are trademarks of Spansion LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . Microsoft and Windows are registered trademarks of Microsoft Corporation (company) Microsoft Corporation - The biggest supplier of operating systems and other software for IBM PC compatibles. Software products include MS-DOS, Microsoft Windows, Windows NT, Microsoft Access, LAN Manager, MS Client, SQL Server, Open Data Base Connectivity (ODBC), MS Mail, in the U.S. and/or other jurisdictions. Other names used are for identification purposes only and may be trademarks of their respective owners.
Advanced Micro Devices, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands except per share amounts)
Quarter Ended
------------------------------------
Sept. 26, Jun. 27, Sept. 28,
2004 2004 2003
(Unaudited) (Unaudited) (Unaudited)
----------- ----------- ------------
Net sales $1,239,459 $1,261,837 $953,759
Cost of sales 738,026 783,069 626,880
Research and development 230,896 224,821 213,997
Marketing, general and
administrative 202,179 178,993 151,111
Restructuring and other
special charges, net - 2,514 (8,000)
----------- ----------- -----------
1,171,101 1,189,397 983,988
----------- ----------- -----------
Operating income (loss) 68,358 72,440 (30,229)
Interest income and other, net 2,502 (2,203) 493
Interest expense (25,148) (27,956) (26,848)
----------- ----------- -----------
Income (loss) before minority
interest, income taxes, and equity
in net income of joint venture 45,712 42,281 (56,584)
Minority interest in (income)
loss of subsidiary 3,008 (6,527) 25,353
Provision for income taxes 4,872 3,574 -
Equity in net income of
joint venture - - -
----------- ----------- ----------
Net income (loss) 43,848 32,180 (31,231)
----------- ----------- ----------
Net income (loss) per common share
Basic $ 0.12 $ 0.09 $ (0.09)
Diluted $ 0.12 $ 0.09 $ (0.09)
----------- ----------- ----------
Shares used in per share calculation
- Basic 355,254 353,655 347,334
- Diluted 417,576 420,053 347,334
Nine Months Ended
-------------------------
Sept. 26, Sept. 28,
2004 2003
(Unaudited) (Unaudited)
----------- -----------
Net sales $3,737,729 $2,313,575
Cost of sales 2,289,935 1,548,556
Research and development 681,807 625,572
Marketing, general and
administrative 561,389 424,500
Restructuring and other
special charges, net 2,514 (5,854)
----------- -----------
3,535,645 2,592,774
----------- -----------
Operating income (loss) 202,084 (279,199)
Interest income and other, net 11,280 12,203
Interest expense (83,258) (79,017)
----------- -----------
Income (loss) before minority interest,
income taxes, and equity in net income
of joint venture 130,106 (346,013)
Minority interest in (income) loss of
subsidiary 1,832 25,353
Provision for income taxes 10,819 2,936
Equity in net income of
joint venture - 5,913
----------- -----------
Net income (loss) 121,119 (317,683)
----------- -----------
Net income (loss) per common share
Basic $ 0.34 $ (0.92)
Diluted $ 0.32 $ (0.92)
----------- -----------
Shares used in per share calculation
- Basic 353,412 346,222
- Diluted 418,531 346,222
Advanced Micro Devices, Inc.
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA
(Thousands)
Quarter Ended
Sept. 26, Jun. 27, Sept. 28,
2004 2004 2003
(Unaudited) (Unaudited) (Unaudited)
----------- ----------- -----------
Net income (loss) $ 43,848 $ 32,180 $(31,231)
Depreciation and amortization 304,731 292,393 285,030
Interest income (4,415) (3,529) (3,244)
Interest expense 25,148 27,956 26,848
Provision for income taxes 4,872 3,574 -
----------- ----------- -----------
EBITDA $374,184 $352,574 $277,403
Nine Months Ended
-----------------------
Sept. 26, Sept. 28,
2004 2003
(Unaudited) (Unaudited)
----------- -----------
Net income (loss) $ 121,119 $(317,683)
Depreciation and amortization 895,104 708,352
Interest income (10,122) (16,615)
Interest expense 83,258 79,017
Provision for income taxes 10,819 2,936
----------- -----------
EBITDA $1,100,178 $ 456,007
Advanced Micro Devices, Inc.
CONSOLIDATED BALANCE SHEETS
(Thousands)
Sept. 26, Jun. 27, Dec. 28
2004 2004 2003(a)
------------- ------------- -------------
(unaudited) (unaudited)
Assets
Current assets:
Cash, cash equivalents and
short-term investments $1,185,177 $1,142,274 $1,313,367
Accounts receivable, net 790,750 696,403 564,884
Inventories 807,233 726,179 697,658
Prepaid expenses and other
current assets 156,628 148,909 177,145
Deferred income taxes 111,452 115,537 102,651
------------- ------------- -------------
Total current assets 3,051,240 2,829,302 2,855,705
Property, plant and
equipment, net 3,877,897 3,792,494 3,848,492
Other assets 353,302 339,521 345,575
------------- ------------- -------------
Total Assets $7,282,439 $6,961,317 $7,049,772
============= ============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $600,908 $540,404 $492,616
Accrued compensation and
benefits 190,625 165,788 160,644
Accrued liabilities 303,802 289,581 327,122
Restructuring accruals 18,641 20,160 29,770
Income taxes payable 23,715 14,560 41,370
Deferred income on
shipments to distributors 128,064 83,393 72,376
Current portion of
long-term debt and capital
lease obligations 515,779 246,642 193,266
Other current liabilities 102,147 102,637 90,533
------------- ------------- -------------
Total current
liabilities 1,883,681 1,463,165 1,407,697
Deferred income taxes 147,514 162,752 157,690
Long-term debt and capital
lease obligations 1,527,264 1,748,049 1,899,674
Other long-term liabilities 353,130 349,289 428,761
Minority interest in
subsidiary 799,403 718,216 717,640
Stockholders' equity:
Capital stock:
Common stock, par value 3,556 3,543 3,502
Capital in excess of
par value 2,017,784 2,004,362 1,958,833
Retained earnings 338,684 294,888 217,891
Accumulated other
comprehensive income 211,423 217,053 258,084
------------- ------------- -------------
Total stockholders'
equity 2,571,447 2,519,846 2,438,310
------------- ------------- -------------
Total Liabilities and
Stockholders' Equity $7,282,439 $6,961,317 $7,049,772
============= ============= =============
(a) Derived from the December 28, 2003 audited financial
statements of Advanced Micro Devices, Inc.
AMD
Selected Corporate Data
(Unaudited)
Quarter Ended
------------------------------------------
Sept. 26, Jun. 27, Sept. 28,
Segment Information 2004 2004 2003
------------------------------------------
Computation Products (1)
Revenue $ 673 M $ 554 M $ 503 M
Operating Income (Loss) 89 M 58 M 19 M
Memory Products (2)
Revenue 538 M 673 M 424 M
Operating Income (Loss) 15 M 45 M (49)M
All Other (3)
Revenue 29 M 34 M 26 M
Operating Income (Loss) (37)M (30)M 0 M
Total AMD
Revenue 1,239 M 1,262 M 954 M
Operating Income (Loss) 68 M 72 M (30)M
Sept. 26, Jun. 27, Sept. 28,
Other Data 2004 2004 2003
------------- ---------------------------------------
Depreciation & Amortization $ 305 M $ 292 M $ 285 M
Capital Additions $ 407 M $ 361 M $ 138 M
Headcount 15,451 14,690 14,380
--------------------------------------
International Sales (4) 77% 80% 81%
Research and Development $ 231 M $ 225 M $ 214 M
EBITDA $ 374 M $ 353 M $ 277 M
---------------------------------------
Nine Months Ended
----------------------
Sept. 26, Sept. 28,
Segment Information 2004 2003(a)
------------------- ----------------------
Computation Products (1)
Revenue $ 1,798 M $ 1,379 M
Operating Income (Loss) 214 M (86)M
Memory Products (2)
Revenue 1,839 M 853 M
Operating Income (Loss) 74 M (187)M
All Other (3)
Revenue 101 M 82 M
Operating Income (Loss) (87)M (6)M
Total AMD
Revenue 3,738 M 2,314 M
Operating Income (Loss) 202 M (279)M
Sept. 26, Sept. 28,
Other Data 2004 2003(a)
------------- ----------------------
Depreciation & Amortization $ 895 M $ 708 M
Capital Additions $ 970 M $ 409 M
Headcount 15,451 14,380
International Sales (4) 80% 77%
Research and Development $ 682 M $ 625 M
EBITDA $ 1,100 M $ 456 M
(a) Numbers do not include first six months of 2003 results for
Spansion LLC as the information is not available.
(1) Computation Products segment includes PC processors and Chipsets.
(2) Memory Products segment includes Flash memory products of AMD and
Spansion LLC.
(3) The All Other category includes Embedded Processors, Network
Products, Geode products, and Foundry Services. Also included in
the All Other category are certain operating expenses and credits
that are not allocated to the operating segments.
(4) For quarter and nine months ended September 28, 2003, percentages
were adjusted for sales to Latin America, which were previously
reflected as U.S. sales.
Note: Figures may not foot due to rounding
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