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 AMD Reports Fourth Quarter Results

SUNNYVALE, Calif. 1/21/2010

AMD1 (NYSE:AMD) today reported revenue for the fourth quarter of 2009 of $1.646 billion, an increase of 18 percent compared to the previous quarter and 42 percent compared to the fourth quarter of 2008.

In the fourth quarter of 2009, AMD reported net income attributable to AMD common stockholders of $1.178 billion, or $1.52 per share, which includes a net favorable impact of $1.238 billion, or $1.57 per share. AMD reported operating income of $1.288 billion in the quarter, including a net favorable impact of $1.224 billion. The net favorable impacts were primarily from a legal settlement with Intel Corp2.

For the year ended Dec. 26, 2009, AMD reported revenue of $5.403 billion. Fiscal 2009 net income attributable to AMD common stockholders was $304 million. AMD reported revenue of $5.808 billion and a net loss attributable to AMD common stockholders of $3.129 billion for fiscal 2008.

As of the first quarter of 2010, AMD will report operating results for what was formerly referred to as AMD Product Company only and will no longer consolidate the financial results of GLOBALFOUNDRIES. AMD’s investment in GLOBALFOUNDRIES will be accounted for using the equity method.

“AMD’s quarter marks another milestone in our transformation and underscores our growing momentum,” said Dirk Meyer, AMD president and CEO. “We enter 2010 having completed the transition to a fabless business model, reached a historic antitrust settlement, and made significant progress strengthening our balance sheet. Our innovative strategy for designing the world’s most vivid digital experiences continues to generate demand.”

In the third quarter of 2009, AMD had revenue of $1.396 billion, a net loss attributable to AMD common stockholders of $128 million and an operating loss of $77 million. In the fourth quarter of 2008, AMD had revenue of $1.162 billion, a net loss attributable to AMD common stockholders of $1.436 billion and an operating loss of $1.274 billion.

In the fourth quarter of 2009, AMD Product Company reported non-GAAP net income of $80 million and non-GAAP operating income of $169 million. In the third quarter of 2009, AMD Product Company reported non-GAAP net income of $2 million and a non-GAAP operating income of $47 million3. AMD Product Company adjusted EBITDA for the fourth quarter was $282 million, up from $169 million in the prior quarter3.

Fourth quarter 2009 AMD gross margin was 45 percent compared to 42 percent in the prior quarter. Fourth quarter 2009 AMD Product Company non-GAAP gross margin was 41 percent compared to 38 percent in the prior quarter3.

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 and the factors set forth under the “Cautionary Statement” below.

AMD expects revenue to be down seasonally for the first quarter of 2010.

Additional Highlights

  • Intel and AMD announced a comprehensive agreement to end all outstanding legal disputes. Both companies obtained patent rights under a new cross-license agreement, Intel agreed to abide by a set of fair business practice provisions, and Intel paid AMD $1.25 billion.
  • AMD redeemed the remaining amount outstanding of its 7.75% Senior Notes due 2012 (approximately $390 million), reduced the aggregate amount outstanding of its 5.75% Convertible Senior Notes due 2012 by approximately $1 billion and issued $500 million of 8.125% Senior Notes due 2017. In the fourth quarter, AMD decreased its debt due in 2012 by nearly $1.4 billion, to $485 million.
  • Lenovo announced its first AMD-powered notebooks, including the Lenovo ThinkPad Edge and Lenovo ThinkPad X100e commercial notebooks based on VISION Pro Technology from AMD.
  • Acer, Dell, HP and Lenovo began selling consumer PCs based on the latest AMD Athlon™ II mainstream processors that offer low energy consumption and reduced heat and noise.
  • AMD powers four of the top five supercomputers in the world, including the world’s highest-performing supercomputer. AMD GPUs also power the world’s highest-performing supercomputer featuring graphics processors.
  • AMD extended its next-generation ATI Radeon™ HD 5000 graphics cards, bringing the industry’s only DirectX 11-capable cards to additional market segments and enabling new levels of graphics performance for the mobile market. AMD shipped more than two million DirectX 11 GPUs within three months of the launch of the initial products.

AMD Teleconference

AMD will hold a conference call for the financial community at 2:00 p.m. PT (5:00 p.m. ET) today to discuss its fourth quarter financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its Web site at www.amd.com. The webcast will be available for 10 days after the conference call.

Reconciliation of GAAP Net Income (Loss) Attributable to AMD Common Stockholders
to AMD Product Company Non-GAAP Net Income (Loss) 1,2,3,4

(Millions except per share amounts)

Q4-09

Q3-09

Q4-08

2009

2008

GAAP net income (loss) attributable to AMD common stockholders / EPS

$ 1,178

$ 1.52

($ 128)

$ (0.18)

($ 1,436)

$ (2.36)

$ 304

$ 0.45

$ (3,129)

$ (5.17)

Loss from discontinued operations

(3)

-

-

-

(10)

(0.02)

(3)

-

(684)

(1.12)

Income (loss) attributable to AMD stockholders from continuing operations

$ 1, 181

$ 1.52

($128)

$ (0.18)

($ 1,426)

$ (2.34)

$ 307

$ 0.45

($ 2,445)

$ (4.03)

Process technology license revenue

-

-

-

-

-

-

-

-

191

0.31

Incremental write-down of inventory

-

-

-

-

(227)

(0.37)

-

-

(227)

(0.37)

Gross margin benefit from sales of inventory written down in Q4-08

-

 

9

0.01

 

 

171

0.25

 

 

Amortization of acquired intangibles

(18)

(0.02)

(17)

(0.02)

(30)

(0.05)

(70)

(0.10)

(137)

(0.23)

ATI impairment of goodwill and acquired intangible assets

-

-

-

-

(684)

(1.12)

-

-

(1,089)

(1.79)

Legal settlements

1,267

1.60

-

-

-

-

1,267

1.87

-

 

Restructuring charges

-

-

(4)

(0.01)

(50)

(0.08)

(65)

(0.10)

(90)

(0.15)

AMD Product Company formation costs associated with GLOBALFOUNDRIES

-

-

-

-

(23)

(0.04)

(21)

(0.03)

(23)

(0.04)

Gain on sale of 200 millimeter equipment

-

-

-

-

-

-

-

-

193

0.32

Investment net charges

-

-

-

-

(21)

(0.03)

(9)

(0.01)

(66)

(0.11)

Gain (loss) on debt redemption, net

(11)

(0.01)

66

0.10

33

0.05

169

0.25

33

0.05

Gain on sale of Handheld assets

-

-

-

-

-

-

28

0.04

-

-

Incremental tax provision related to the formation of GLOBALFOUNDRIES

-

-

-

-

-

-

(114)

(0.17)

-

-

Net favorable (unfavorable) impact subtotal

$ 1,238

$ 1.57

$ 54

$ 0.08

($ 1,002)

$ (1.65)

$ 1,356

$ 2.00

($ 1,215)

$ (2.00)

Non-GAAP net income (loss) attributable to AMD common stockholders

$ (57)

 

$ (182)

 

$ (424)

 

$ (1,049)

 

$ (1,230)

 

Net income (loss) from Foundry segment and intersegment eliminations

(138)

(0.17)

(191)

(0.28)

 

 

(823)

(1.21)

 

 

Incremental tax provision related to the formation of GLOBALFOUNDRIES

-

-

-

-

 

 

114

0.17

 

 

Net (income) loss attributable to noncontrolling interest

23

0.03

29

0.04

 

 

83

0.12

 

 

Class B preferred accretion

(22)

(0.03)

(22)

(0.03)

 

 

(72)

(0.11)

 

 

AMD Product Company non-GAAP net income (loss)

$ 80

 

$ 2

 

 

 

$ (351)

 

 

 

Reconciliation of GAAP to AMD Product Company Non-GAAP Operating Income (Loss) 1,2,3,4

(Millions) Q4-09 Q3-09 Q4-08 2009 2008
GAAP operating income (loss) $ 1,288 $ (77) $ (1,274) $ 664 $ (1,955)
Process technology license revenue  -   -   -   -  191
Incremental write-down of inventory  -   -  (227)  -  (227)
Gross margin benefit from sales of inventory written down in Q4-08  -  9  -  171  - 
Amortization of acquired intangibles (18) (17) (30) (70) (137)
ATI impairment of goodwill and acquired intangible assets  -   -  (684)  -  (1,089)
Legal settlement (Intel) 1,242  -   -  1,242  - 
Restructuring charges  -  (4) (50) (65) (90)
AMD Product Company formation costs associated with GLOBALFOUNDRIES  -   -  (23) (21) (23)
Gain on sale of 200 millimeter equipment  -   -   -   -  193
Non-GAAP operating income (loss) $ 64 $ (65) $ (260) $ (593) $ (773)
Operating income (loss) from Foundry segment and intersegment eliminations (105) (112)   (481)  
AMD Product Company non-GAAP operating income (loss) $ 169 $ 47   $ (112)  

Reconciliation of GAAP to AMD Product Company Non-GAAP Gross Margin 1,2,3,4

(Millions, except percentages) Q4-09 Q3-09 Q4-08 2009 2008
GAAP Gross Margin $ 735 $ 585  $ 272 $ 2,272 $ 2,320
GAAP Gross Margin % 45% 42% 23% 42% 40%
Process technology license revenue  -   -   -   -  191
Incremental write-down of inventory  -   -  (227)  -   - 
Gross margin benefit from sales of inventory written down in Q4-08  -  9  -  171  - 
Non-GAAP Gross Margin $ 735 $ 576 $ 499 $ 2,101 $ 2,129
Non-GAAP Gross Margin % 45% 41% 43% 39% 38%
Gross margin from Foundry segment and intersegment eliminations 56 49   159  
AMD Product Company non-GAAP Gross Margin $ 679 $ 527   $ 1,942  
AMD Product Company non-GAAP Gross Margin % 41% 38%   36%  

Select Segment Information 4

(Millions, except percentages) Q4-09 vs Q3-09 vs Q4-08 2009 vs 2008
Computing Solutions           
Revenue  $ 1,214 14% 39% $ 4,131 -9%
Microprocessor Units   up up   up
Microprocessor Average Selling Prices (ASP)   up down   down
Graphics           
Revenue $ 427 40% 58% $ 1,206 4%
Graphic Processor Units   up up   up
Graphic Processor Average Selling Prices (ASP)   up down   down

About AMD

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

Cautionary Statement

This release contains forward-looking statements concerning AMD, including its first quarter 2010 revenue and anticipated future demand for its products which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as “would,” “may,” “expects,” “believes,” “plans,” “intends,” “projects,” and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this release are based on current beliefs, assumptions and expectations, speak only as of the date of this release and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Risks include the possibility that Intel Corporation’s pricing, marketing and rebating programs, product bundling, standard setting, new product introductions or other activities targeting the company’s business will prevent attainment of the company’s current plans; global business and economic conditions will worsen resulting in lower than currently expected revenue in the first quarter of 2010 and beyond; demand for computers and consumer electronics products and, in turn, demand for the company’s products will be lower than currently expected; customers stop buying the company’s products or materially reduce their demand for its products; the company will require additional funding and may not be able to raise funds on favorable terms or at all; the company will be unable to develop, launch and ramp new products and technologies in the volumes and mix required by the market and at mature yields on a timely basis; there will be unexpected variations in market growth and demand for the company’s products and technologies in light of the product mix that it may have available at any particular time or a decline in demand; the company will be unable to transition its products to advanced manufacturing process technologies in a timely and effective way; the company will be unable to maintain the level of investment in research and development and capacity that is required to remain competitive; and the company will be unable to obtain sufficient manufacturing capacity or components to meet demand for its products or will under-utilize its commitment with respect to GLOBALFOUNDRIES’ microprocessor manufacturing facilities. Investors are urged to review in detail the risks and uncertainties in the company’s Securities and Exchange Commission filings, including but not limited to the Quarterly Report on Form 10-Q for the quarter ended September 26, 2009.

Footnotes