AMD Reports Third Quarter Results; Year over Year Sales Growth of 88 Percent on Sales of $954 Million Results in Substantially Reduced Net Loss of $0.09 Per Share.Business Editors 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. 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 $954 million and a net loss of $31 million for the quarter ended September September: see month. 28, 2003. The net loss amounted to $0.09 per share. Third quarter 2003 results include the operating results of FASL FASL Feet Above Sea Level FASL Fujitsu Amd Semiconductor Limited FASL Fellow, Academic Society of London LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , which was formed effective June June: see month. 30, 2003 and is owned 60 percent by AMD and 40 percent by Fujitsu (company) Fujitsu - A Japanese elecronics corporation. Fujitsu owns ICL, Amdahl Corporation, and DMR. Home USA, Japan. Limited. Third quarter sales increased by 88 percent from the third quarter of 2002, and increased by 48 percent from the second quarter of 2003. In the third quarter of 2002, AMD reported total sales of $508 million and a net loss of $254 million, or $0.74 per share. In the second quarter of 2003, AMD reported sales of $645 million and a net loss of $140 million, or $0.40 per share. "We delivered strong sales growth in our microprocessor microprocessor, integrated circuit containing the arithmetic, logic, and control circuitry required to interpret and execute instructions from a computer program. and Flash memory business lines while tightly managing our expense structure," 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. "Sales were up on a global basis reflecting increased demand in each of our major businesses and all geographic regions." "As a result of our sales growth and operational efficiencies, we reduced our third quarter 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. by 76 percent to $30 million from $123 million last quarter. We more than doubled our positive 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 quarter-to-quarter to $277 million, generated positive cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and ended the third quarter with a cash balance of $1.076 billion, up from $706 million in the second quarter." "In September, we successfully launched the 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) 64 processor family, the world's first Windows(R)-compatible 64-bit PC processor. Initial demand has been very strong, particularly for the high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. AMD Athlon 64 FX model, targeted for the gaming, PC enthusiast A person who enjoys using computers and electronic equipment. Enthusiasts like technology and are willing to learn more of the ins and outs of a product than the average consumer, who just wants to use it. An enthusiast is more like a "prosumer." See consumer and prosumer. and digital content creation The development of newsworthy, educational and entertainment material for distribution over the Internet or other electronic media. See DAMS. markets. Similarly, demand for our 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) processor for servers and workstations continues to be strong. We believe these products strengthen our position to lead the industry's transition to 64-bit computing computing - computer ." "With the successful launch of the Spansion Spansion Inc. is a joint-venture between AMD and Fujitsu that trades on NASDAQ under the symbol SPSN. Spansion has 8,400 employees and is headquartered in Sunnyvale, California. History In 1993, AMD and Fujitsu formed a 50-50 joint venture called FASL. (TM) Flash memory brand, we believe we are now the number one provider of NOR Flash memory solutions and are well positioned to achieve our strategic goal of being the number one provider of Flash memory solutions worldwide. We sampled the highest density monolithic Single object. Self contained. One unit. NOR Flash memory product to date, the 512 Megabit One million bits. Also Mb, Mbit and M-bit. See mega and space/time. Spansion Flash memory device. Customer acceptance of the Spansion brand has been outstanding, and the integration of AMD's and Fujitsu's Flash memory operations through FASL LLC are on a successful trajectory Trajectory The curve described by a body moving through space, as of a meteor through the atmosphere, a planet around the Sun, a projectile fired from a gun, or a rocket in flight. ." BUSINESS OVERVIEW 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 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. , which consists of microprocessors This is a list of microprocessors. Intel
central pattern generators. generated a profit in the third quarter due to solid growth across all processor product lines, an improved product mix and increased sales to our largest OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and customers. Demand is accelerating for the AMD64 platform. 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) introduced its first AMD Opteron processor-based server and announced an AMD Opteron processor-based workstation. 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. announced Java support for the AMD64 platform and disclosed plans to develop a version of its Solaris 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. for the AMD64 platform. In addition, Fujitsu Siemens (Fujitsu Siemens Computers, Inc. (USA), Milpitas, CA, www.fujitsu-siemens.com) Fujitsu Siemens Computers USA is a wholly owned research and development subsidiary of Fujitsu Siemens Computers. is expected to launch AMD Opteron-based systems in the fourth quarter. Flash memory sales of $424 million for the third quarter more than doubled from the second quarter of 2003 and the third quarter of 2002. The growth in the third quarter of 2003 was attributable to the effect of the June 30, 2003 consolidation of FASL LLC results of operations as well as strong organic growth of AMD Flash sales. The memory group operated at a loss in the third quarter. Demand for Spansion Flash memory continued to be strong, increasing our market share gains and reflecting our leadership in the wireless segment. Sales of Spansion products featuring MirrorBit(TM) technology achieved record growth in the third quarter, expanding beyond wireless and into other market segments.
HIGHLIGHTS OF THE QUARTER
-- AMD introduced the AMD Athlon 64 FX processor and AMD Athlon
64 processors for desktop and notebook PCs, the world's first
and only Windows compatible 64-bit PC processors.
-- The AMD Athlon 64 FX processor, designed for gamers, PC
enthusiasts and digital content creators, is the most
technically advanced and highest performing PC processor
in the world. PCs based on the AMD Athlon 64 FX processor
enable a realistic, "cinematic computing" experience.
-- Microsoft released a beta version of Windows XP 64-Bit
Edition, designed specifically to support the AMD64
platform.
-- Among 50 OEM system partners, Fujitsu, Fujitsu-Siemens, HP
and NEC-CI presented systems based on the AMD Athlon 64
processor for shipment in the fourth quarter.
-- AMD announced strong industry support and adoption of AMD
Opteron microprocessors for servers and workstations.
-- IBM selected the AMD Opteron processor Model 246 to power
its IBM eServer 325 line and IBM announced availability of
a 64-bit version of IBM DB2 for AMD Opteron processors.
-- Los Alamos National Laboratory selected the AMD Opteron
processor for two large-scale Linux clusters. The two
clusters are designed to include more than 3,300 AMD
Opteron processors.
-- The University of Utah selected AMD Opteron
processor-based systems for a new supercomputing cluster.
-- Dawning Information Industry Corp Ltd. announced plans to
launch a comprehensive series of AMD Opteron
processor-based 1- and 2-way servers.
-- Oracle announced plans for a 64-bit version Oracle9i
Database on the AMD64 platform.
-- H&R Block, a Fortune 500 company, announced it is
standardizing its desktop platform on AMD Athlon XP
processor-based systems from HP and plans to deploy more than
15,000 desktop systems companywide.
-- AMD and Fujitsu Limited combined their Flash memory operations
to form FASL LLC, which began marketing Flash memory solutions
globally under the Spansion brand name.
-- FASL LLC announced the sampling of a 512 Megabit Spansion
Flash memory device, the highest density monolithic NOR Flash
memory product to date.
-- AMD acquired the majority of assets of National
Semiconductor's Information Appliance (IA) business unit.
AMD's Personal Connectivity Solutions group now features the
Geode(TM) family of integrated silicon and system solutions
designed with embedded x86 processors for thin client, smart
display and set-top box markets among others.
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. AMD's current outlook for the fourth quarter of 2003 is based on the following projections.
-- AMD believes that sales in the fourth quarter will increase based
on the following:
-- AMD expects microprocessor sales to increase based on normal
industry seasonality and growing demand for the company's
enhanced portfolio of AMD64 processors.
-- AMD expects Flash memory sales to increase based on normal
seasonality and increasing customer acceptance of MirrorBit
technology.
-- AMD anticipates its fourth quarter operating costs to remain
approximately $1 billion depending on volume and mix.
AMD TELECONFERENCE AMD will hold a conference call for the financial community at 2:30 PM Pacific 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 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 fourth quarter of 2003; 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 the sales of AMD processors will not follow seasonal patterns that normally apply in the fourth quarter; that demand for the company's Flash memory products will be lower than currently expected, particularly in the high-end cellular telephone sector, and that we will not be able to increase our Flash memory market share; customer acceptance of MirrorBit technology will not continue to increase; that we will not continue to be successful integrating the Flash operations of FASL LLC, or be able to achieve or sustain any benefit from its creation; that the company may not achieve its current product and technology introduction schedules; 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 29, 2002, and the Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended June 29, 2003. 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, Flash memory devices, and silicon-based solutions for communications and networking applications. AMD, the AMD Arrow logo, AMD Athlon, AMD Opteron and combinations thereof, and Geode are trademarks of Advanced Micro Devices, Inc. Spansion and MirrorBit are trademarks of FASL LLC. Windows is a registered trademark 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 product and company names used in this publication are for identification purposes only and may be trademarks of their respective companies.
Advanced Micro Devices, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands except per share amounts)
Quarter Ended Nine Months Ended
----------------------------------------------------------------------
Sept. 28, June 29, Sept. 29 Sept. 28, Sept. 29
2003 2003 2002 2003 2002
(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
----------------------------------------------------------------------
Net sales $ 953,759 $ 645,261 $ 508,227 $2,313,575 $2,010,599
Cost of sales 626,880 425,085 453,884 1,548,556 1,599,048
Research and
development 213,997 208,513 220,959 625,572 571,266
Marketing,
general and
administrative 151,111 135,161 158,568 424,500 475,676
Restructuring
and other special
charges, net (8,000) - - (5,854) -
----------------------------------------------------------------------
983,988 768,759 833,411 2,592,774 2,645,990
----------------------------------------------------------------------
Operating loss (30,229) (123,498) (325,184) (279,199) (635,391)
Interest and other
income, net 493 4,971 12,941 12,203 31,140
Interest expense (26,848) (26,364) (21,166) (79,017) (49,053)
----------------------------------------------------------------------
Loss before
minority interest,
income taxes, and
equity in net
income of
joint venture (56,584) (144,891) (333,409) (346,013) (653,304)
Minority Interest 25,353 - - 25,353 -
Provision (benefit)
for income taxes - - (73,350) 2,936 (198,884)
Equity in net income
of joint
venture and other - 4,795 5,888 5,913 6,148
----------------------------------------------------------------------
Net loss (31,231) (140,096) (254,171) (317,683) (448,272)
----------------------------------------------------------------------
Net loss per common share
Basic $ (0.09)$ (0.40)$ (0.74)$ (0.92)$ (1.31)
Diluted $ (0.09)$ (0.40)$ (0.74)$ (0.92)$ (1.31)
----------------------------------------------------------------------
Shares used in per share calculation
- Basic 347,334 346,320 342,780 346,222 341,796
- Diluted 347,334 346,320 342,780 346,222 341,796
----------------------------------------------------------------------
Advanced Micro Devices, Inc.
RECONCILIATION OF NET LOSS TO EBITDA
(Thousands)
----------------------------------------------------------------------
Quarter Ended Nine Months Ended
----------------------------------------------------------------------
Sept. 28, June 29, Sept. 29 Sept. 28, Sept. 29
2003 2003 2002 2003 2002
(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
----------------------------------------------------------------------
Net loss $ (31,231) $(140,096) $(254,171) $(317,683) $(448,272)
Depreciation and
amortization 285,030 213,568 199,089 706,728 556,302
Interest income (3,244) (5,354) (12,941) (16,615) (22,231)
Interest expense 26,848 26,364 21,166 79,017 49,053
Provision (benefit)
for income taxes - - (73,350) 2,936 (198,884)
----------------------------------------------------------------------
EBITDA 277,403 94,482 (120,207) 454,383 (64,032)
----------------------------------------------------------------------
Advanced Micro Devices, Inc.
CONSOLIDATED BALANCE SHEETS
(Thousands)
Sept. 28, June 29, Dec. 29,
2003 2003 2002*
----------------------------------------------------------------------
(unaudited) (unaudited)
Assets
Current assets:
Cash, cash equivalents and
short-term investments $1,075,939 $ 705,963 $1,006,655
Accounts receivable, net 543,444 351,834 395,828
Inventories 692,395 467,384 432,603
Prepaid expenses and other
current assets 206,202 189,860 184,592
----------------------------------------------------------------------
Total current assets 2,517,980 1,715,041 2,019,678
Property, plant and equipment,
net 3,808,567 2,894,127 2,880,809
Investment in joint venture - 390,069 382,942
Deferred income taxes 42,529 - -
Other assets 295,289 294,670 335,752
----------------------------------------------------------------------
$6,664,365 $5,293,907 $5,619,181
======================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ - $ - $ 913
Accounts payable 335,925 350,399 352,438
Accrued compensation and benefits 156,569 122,361 131,324
Accrued liabilities 310,861 269,561 435,657
Restructuring accruals 43,901 54,467 99,974
Income taxes payable 47,279 38,368 21,246
Deferred income on shipments to
distributors 89,329 65,412 57,184
Current portion of long-term debt
and capital lease obligations 200,717 77,693 71,339
Other current liabilities 84,458 85,732 89,437
----------------------------------------------------------------------
Total current liabilities 1,269,039 1,063,993 1,259,512
Deferred income taxes 95,345 - -
Long-term debt and capital lease
obligations 1,880,859 1,587,009 1,570,322
Other liabilities 425,282 359,625 322,082
Minority Interest 711,056 - -
Stockholders' equity:
Capital stock:
Common stock, par value 3,478 3,469 3,445
Capital in excess of par value 1,939,968 1,932,791 1,921,247
Retained earnings 174,700 205,931 492,668
Accumulated other comprehensive
income 164,638 141,089 49,905
----------------------------------------------------------------------
Total stockholders' equity 2,282,784 2,283,280 2,467,265
----------------------------------------------------------------------
$6,664,365 $5,293,907 $5,619,181
======================================================================
* Derived from the December 29, 2002 audited financial statements of
Advanced Micro Devices, Inc.
AMD
Selected Corporate Data
(Unaudited)
Quarter Ended Nine Months Ended
------------------------------------------------- -------------------
Sept. 28, June 29, Sept. 29, Sept. 28, Sept. 29,
Segment Information 2003* 2003 2002 2003* 2002
------------------------------------------------- -------------------
Computation
Products (1)
Revenue $503M $406M $264M $1,379M $1,335M
Operating Income
(Loss) 19M (52)M (317)M (86)M (503)M
Memory Products (2)
Revenue 424M 211M 189M 853M 524M
Operating Loss (49)M (74)M (14)M (187)M (101)M
All Other (3)
Revenue 26M 28M 56M 82M 152M
Operating Income
(Loss) 0M 2M 6M (6)M (31)M
Total AMD
Revenue 954M 645M 508M 2,314M 2,011M
Operating Loss (30)M (123)M (325)M (279)M (635)M
------------------------------------------------- -------------------
------------------------------------------------- -------------------
Sept. 28, June 29, Sept. 29, Sept. 28, Sept. 29,
Other Data 2003* 2003 2002 2003* 2002
------------------------------------------------- -------------------
Depreciation &
Amortization $285M $214M $199M $707M $556M
Capital Additions $138M $103M $196M $409M $567M
Headcount 14,380 11,723 13,218 14,380 13,218
------------------------------------------------- -------------------
International Sales 79% 73% 75% 75% 69%
Research and
Development $214M $209M $221M $625M $571M
EBITDA $277M $94M $(120)M $432M $(64)M
* Q3, 2003 information includes the results of FASL, LLC, AMD's
majority owned subsidiary. Prior periods do not include data for
FASL 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
FASL LLC.
(3) The All Other category includes Embedded Processors, Network
Products, and Foundry Services. Also included in the All Other
category is certain operating expenses that are not allocated to
the operating segments.
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