AMD Reports Fourth Quarter and Annual Results
- AMD increases sales by 35 percent and narrows operating loss from ongoing operations by approximately $100 million - - Sees record unit consumption of AMD PC processors -
SUNNYVALE, CA --
AMD (NYSE:AMD) today reported sales of $686,430,000 and a net loss of $854,740,000 for the quarter ended December 29, 2002. The net loss amounted to $2.49 per share. Excluding the effects of restructuring and other charges1
to show the company’s results from ongoing operations, the fourth quarter net loss was $235,145,000, or $0.68 per share.
Fourth quarter sales declined by 28 percent from the fourth quarter of 2001 and increased by 35 percent from the third quarter of 2002. In the fourth quarter of 2001, AMD reported sales of $951,873,000 and a net loss of $15,842,000, or $0.05 per share.
In the third quarter of 2002, AMD reported sales of $508,227,000 and a net loss of $254,171,000, or $0.74 per share.
For the full year ended December 29, 2002, sales declined by 31 percent from 2001. AMD reported sales of $2,697,029,000 and a net loss of $1,303,012,000, or $3.81 per share. AMD reported sales in 2001 of $3,891,754,000 and a net loss of $60,581,000, or $0.18 per share.
Excluding the effects of one-time charges1
in 2002 and 2001, the company recorded a net loss from ongoing operations of $683,417,000 or $2.00 per share in 2002, and net income of $28,924,000 or $0.09 per share in 2001. The fourth quarter 2002 operating loss, excluding one-time charges, was $217,370,000, down approximately $100 million or 31 percent, from the third quarter operating loss of $315,084,000. The fourth quarter 2001 operating loss was $18,059,000.
In the fourth quarter of 2002 the Company recorded one-time charges totaling $620 million, equivalent to $1.81 per share. These fourth quarter charges included:
- Restructuring and other special charges of $331 million primarily relating to severance for staff reductions, the consolidation of facilities and asset impairments.
- Other charges of $46 million primarily relating to a one-time research and development expense in connection with product development services received in the fourth quarter.
- Income tax expense charge of $243 million to establish a 100% valuation allowance against net deferred tax assets.
“As projected, we saw increased PC processor and Flash memory sales in the fourth quarter,” said Robert J. Rivet, AMD’s chief financial officer. “We executed on our plan to align AMD PC processor inventory in the supply chain.
“We had record PC processor unit consumption (OEM billings, plus OEM net inventory change, plus net distributor resales) in the fourth quarter.
“We bolstered our capital structure by securing approximately $400 million in proceeds from a successful convertible offering, ending the year with more than $1 billion in cash.
“In addition, we renegotiated our long-term debt associated with our Dresden fabrication facility and, as a result, reduced our 2003 cash requirements by $200 million.”
PC processor sales of $420 million for the quarter increased by 60 percent from the $262 million reported in the third quarter of 2002. This increase was driven by an increase in both processor units and ASPs.
AMD’s fourth quarter PC processor sales reflect a richer mix of product offerings supported by new AMD Athlon™ XP 2400+, 2600+, 2700+ and 2800+ desktop products. AMD increased its penetration in the mobile market with record unit sales in the fourth quarter, and introduced the mobile AMD Athlon XP processor 2200+. In addition, AMD aligned PC processor inventory in the supply chain resulting in record unit consumption of AMD PC processors.
AMD expects to continue to improve its position in the market with the February introduction of the AMD Athlon XP desktop processors based on the "Barton" core and the April introduction of the AMD Opteron™ processors for servers and workstations. With the transition of all PC processor wafer production to 130nm technology complete, in 2003 the company will be focusing on qualifying 90nm technology. AMD plans to complete the qualification and start production of 90nm technology in the fourth quarter of this year.
AMD memory sales of $217 million were up 15 percent from the $189 million in the third quarter of 2002. Based on AMD’s increased penetration in the mobile phone market, AMD Flash memory sales grew and bit shipments were a record for the third quarter in a row. The company commenced production of 130nm Flash memory in Fab 25 in Austin and JV3 in Aizu-Wakamatsu, Japan.
ADDITIONAL HIGHLIGHTS OF THE QUARTER
- AMD announced new versions of AMD Athlon XP processors, highlighted by the AMD Athlon XP processor 2800+ processor for the desktop and the mobile AMD Athlon XP processor 2200+.
- In October, AMD announced that its high-performance mobile AMD Athlon XP processors will power the new Compaq Evo N1015v from HP, created specifically to meet the demanding mobility and productivity needs of business, government and education users.
- In October, AMD announced it signed a research and development joint venture with China Basic Education Software Company, Ltd. to address China’s large and expanding IT education market.
- Also in China in October, AMD announced the hire of Karen Guo as corporate vice president and general manager of AMD China. A Chinese national, Guo will be responsible for driving AMD’s connected business model in the region.
- In October, AMD announced that the upcoming AMD Opteron™ processor based on AMD 64-bit technology is planned to power a supercomputer developed by Cray, Inc for the Department of Energy’s Sandia National Laboratories in Albuquerque, New Mexico.
- In October, AMD announced the availability of the industry’s highest density NOR Flash memory device at 256 Mbit.
- In October, AMD announced the AMD Alchemy™ Solutions Driver Information Reference Design Kit (RDK), based on the AMD Alchemy Solutions Au1500™ processor and AMD’s Flash memory technology.
- In November, AMD announced it had selected “AMD Athlon 64” as the brand name for the industry’s first and only 64-bit, x86 PC processor for desktop and mobile computing.
- In November AMD announced the closing of its public offering of $402.5 million aggregate principal amount of 4.50% Convertible Notes due 2007, convertible into the company’s common stock.
- Also in November, AMD demonstrated a 64-bit developmental version of Unreal Tournament 2003 from Epic Games on a system based on the upcoming AMD Athlon™ 64 processor.
- In November, AMD announced that Northeast Utilities, a Fortune 500 diversified energy company, was deploying the AMD Athlon™ XP processor-based Compaq D315 Business PC from HP as its desktop platform.
AMD’s outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially. Economic and industry conditions remain uncertain, and continue to make it particularly difficult to forecast product demand. The company’s current outlook for the first quarter is based on the following projections:
- Although historical seasonal patterns suggest PC Processor sales will be down 5 – 8 percentage points from the fourth quarter levels, based on a richer product mix, AMD expects first quarter AMD processor revenue will increase and in aggregate the company sales will be flat to nominally up.
- We expect to realize the first benefits of our cost reductions in the first quarter, and remain on target to reduce our overall cost structure to below $800 million per quarter by the second quarter.
AMD will hold a conference call for the financial community at 2:30 PM Pacific Time today to discuss 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 http://www.amd.com
. The web-cast will be available for two weeks after the conference call.
This release contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act 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 resulting in lower than currently expected sales in the first quarter of 2003; that Intel Corporation pricing, marketing programs, product bundling, new product introductions or other activities targeting the company's processor business will prevent attainment of the company's current PC processor sales plans; that demand for personal computers and, in turn, demand for the company's PC processors will be lower than currently expected; that the sales of AMD PC processors will follow seasonal patterns or worse regardless of a richer mix of products; that demand for the company's Flash memory products will be lower than currently expected, particularly in the high-end cellular telephone sector; that the company will not achieve sequential growth in sales of Flash memory devices; and that the company may not achieve its current product and technology introduction schedules including the current schedule for introducing AMD Athlon XP processors based on the "Barton" core or the AMD Opteron processor based on AMD 64-bit technology, or the schedule for implementing 90nm process technology in Fab 30. 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 for the year ended December 30, 2001 and the report on Form 10-Q for the quarter ended September 29, 2002.
AMD is a global supplier of integrated circuits for the personal and networked computer and communications markets with manufacturing facilities in the United States, Europe, Japan, and Asia. AMD, a Fortune 500 and Standard & Poor’s 500 company, produces microprocessors, Flash memory devices, and support circuitry for communications and networking applications. Founded in 1969 and based in Sunnyvale, California, AMD had revenues of approximately $2.7 billion in 2002. (NYSE: AMD).
AMD, the AMD Arrow logo, AMD Athlon, AMD Opteron and combinations thereof, Alchemy and Au1500 are trademarks of Advanced Micro Devices, Inc. in the United States and other jurisdictions. Other product and company names referenced in this release may be trademarks of their respective companies.
As shown in the attached Reconciliation of GAAP to Pro-forma Non-GAAP Consolidated Statements of Operations.