1. In this earnings press release, in addition to GAAP financial results, AMD has provided non-GAAP financial measures including non-GAAP operating income, non-GAAP net income (loss) and non-GAAP earnings (loss) per share. These non-GAAP financial measures reflect certain adjustments as presented in the tables in this earnings press release. AMD also provided Adjusted EBITDA and non-GAAP free cash flow as supplemental measures of its performance. These items are defined in the footnotes to the selected corporate data tables provided at the end of this earnings press release. AMD is providing these financial measures because it believes this non-GAAP presentation makes it easier for investors to compare its operating results for current and historical periods and also because AMD believes it assists investors in comparing AMD's performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance and for the other reasons described in the footnotes to the selected data tables. Refer to the data tables at the end of this earnings. 2. Compared to the previous generation of AMD FirePro professional graphics. 3. AMD FirePro S9150 max power is 235W and delivers up to 2.53 TFLOPS peak double and up to 5.07 peak single precision floating point performance. Nvidia's highest performing server cards in the market as of June 2014 are the Tesla K40, max power of 235W, with up to 1.43 TFLOPS peak double and up to 4.29 peak single, and the K10, max power 225W, with up to 4.58 TFLOPS peak single and 190 GFLOPS peak double precision. Visit www.nvidia.com/object/tesla-servers.html for Nvidia product specs. FP-97 ADVANCED MICRO DEVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Millions except per share amounts and percentages) Three Months Ended Nine Months Ended ---------------------------- ------------------ Sep. 27, Jun. 28, Sep. 28, Sep. 27, Sep. 28, 2014 2014 2013 2014 2013 -------- -------- -------- -------- -------- Net revenue $ 1,429 $ 1,441 $ 1,461 $ 4,267 $ 3,710 Cost of sales 935 943 940 $ 2,788 2,285 -------- -------- -------- -------- -------- Gross margin 494 498 521 1,479 1,425 Gross margin% 35% 35% 36% 35% 38% Research and development 278 277 288 834 908 Marketing, general and administrative 150 154 155 460 505 Amortization of acquired intangible assets 3 4 5 10 14 Restructuring and other special charges (gains), net - - (22) - 30 -------- -------- -------- -------- -------- Operating income (loss) 63 63 95 175 (32) Interest income 1 - 1 2 4 Interest expense (43) (46) (47) (136) (133) Other income (expense), net (2) (49) 2 (72) (3) -------- -------- -------- -------- -------- Income (loss) before income taxes 19 (32) 51 (31) (164) Provision for income taxes 2 4 3 8 8 -------- -------- -------- -------- -------- Net income (loss) $ 17 $ (36) $ 48 $ (39) $ (172) Net income (loss) per share Basic $ 0.02 $ (0.05) $ 0.06 $ (0.05) $ (0.23) Diluted $ 0.02 $ (0.05) $ 0.06 $ (0.05) $ (0.23) -------- -------- -------- -------- -------- Shares used in per share calculation Basic 770 764 757 765 753 Diluted 785 764 764 765 753 -------- -------- -------- -------- -------- ADVANCED MICRO DEVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Millions) Three Months Ended Nine Months Ended ---------------------------- ------------------ Sep. 27, Jun. 28, Sep. 28, Sep. 27, Sep. 28, 2014 2014 2013 2014 2013 -------- -------- -------- -------- -------- Total comprehensive income (loss) $ 15 $ (32) $ 52 $ (38) $ (171) -------- -------- -------- -------- -------- ADVANCED MICRO DEVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Millions) --------- --------- --------- Sep. 27, Jun. 28, Dec. 28, 2014 2014 2013 --------- --------- --------- Assets Current assets: Cash and cash equivalents $ 640 $ 503 $ 869 Marketable securities 298 445 228 Accounts receivable, net 973 872 832 Inventories, net 897 960 884 Prepaid expenses and other current assets 212 152 71 --------- --------- --------- Total current assets 3,020 2,932 2,884 Long-term marketable securities - - 90 Property, plant and equipment, net 328 329 346 Acquisition related intangible assets, net 69 72 78 Goodwill 553 553 553 Other assets 355 360 386 --------- --------- --------- Total Assets $ 4,325 $ 4,246 $ 4,337 ========= ========= ========= Liabilities and Stockholders' Equity Current liabilities: Short-term debt $ 102 $ 101 $ 60 Accounts payable 498 511 519 Payable to GLOBALFOUNDRIES 317 295 364 Accrued and other current liabilities 555 480 530 Deferred income on shipments to distributors 94 118 145 --------- --------- --------- Total current liabilities 1,566 1,505 1,618 Long-term debt 2,106 2,109 1,998 Other long-term liabilities 118 131 177 Stockholders' equity: Capital stock: Common stock, par value 8 8 7 Additional paid-in capital 6,928 6,905 6,894 Treasury stock, at cost (118) (114) (112) Accumulated deficit (6,282) (6,299) (6,243) Accumulated other comprehensive income (loss) (1) 1 (2) --------- --------- --------- Total stockholders' equity 535 501 544 --------- --------- --------- Total Liabilities and Stockholders' Equity $ 4,325 $ 4,246 $ 4,337 ========= ========= ========= ADVANCED MICRO DEVICES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Millions) Three Months Ended Nine Months Ended ------------------ ------------------ Sep. 27, Sep. 27, 2014 2014 ------------------ ------------------ Cash flows from operating activities: Net Income (loss) $ 17 $ (39) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 49 155 Employee stock-based compensation expense 21 65 Non-cash interest expense 2 11 Loss on debt redemptions - 64 Other (6) (9) Changes in operating assets and liabilities: Accounts receivable (104) (144) Inventories 62 (14) Prepaid expenses and other assets (71) (156) Payable to GLOBALFOUNDRIES 22 (47) Accounts payable, accrued liabilities and other 26 (100) ------------------ ------------------ Net cash provided by (used in) operating activities $ 18 $ (214) ------------------ ------------------ Cash flows from investing activities: Purchases of property, plant and equipment (29) (73) Purchases of available-for-sale securities (28) (646) Proceeds from sale and maturity of available-for-sale securities 176 664 ------------------ ------------------ Net cash provided by (used in) investing activities $ 119 $ (55) ------------------ ------------------ Cash flows from financing activities: Net proceeds from foreign grants and allowances $ 3 $ 5 Proceeds from issuance of common stock 2 4 Proceeds from borrowings, net - 1,080 Repayments of long-term debt and capital lease obligations (1) (1,043) Other (4) (6) ------------------ ------------------ Net cash provided by financing activities $ - $ 40 ------------------ ------------------ Net increase (decrease) in cash and cash equivalents 137 (229) ------------------ ------------------ Cash and cash equivalents at beginning of period $ 503 $ 869 ------------------ ------------------ Cash and cash equivalents at end of period $ 640 $ 640 ------------------ ------------------ ADVANCED MICRO DEVICES, INC. SELECTED CORPORATE DATA (Millions except headcount) Three Months Ended Nine Months Ended ---------------------------------------------------- ------------------- Sep. 27, Jun. 28, Sep. 28, Sep. 27, Sep. 28, Segment and Category Information 2014 2014 2013 2014 2013 ---------------------------------------------------- ------------------- Computing and Graphics (1) Net revenue $ 781 $ 828 $ 925 $ 2,470 $ 2,832 Operating income (loss) $ (17) $ (6) $ 9 $ (20) $ (86) Enterprise, Embedded and Semi-Custom (2) Net revenue 648 613 536 1,797 878 Operating income 108 97 92 290 166 All Other (3) Operating loss (28) (28) (6) (95) (112) Total Net revenue $ 1,429 $ 1,441 $ 1,461 $ 4,267 $ 3,710 Operating income (loss) $ 63 $ 63 $ 95 $ 175 $ (32) ---------------------------------------------------- ------------------- Other Data Depreciation and amortization, excluding amortization of acquired intangible assets $ 46 $ 49 $ 52 $ 145 $ 168 Capital additions $ 29 $ 23 $ 15 $ 73 $ 63 Adjusted EBITDA (4) $ 133 $ 137 $ 153 $ 409 $ 247 Cash, cash equivalents and marketable securities, including long-term marketable securities $ 938 $ 948 $ 1,181 $ 938 $ 1,181 Non-GAAP free cash flow (5) $ (11) $ (51) $ 6 $ (287) $ (232) Total assets $ 4,325 $ 4,246 $ 4,317 $ 4,325 $ 4,317 Total debt $ 2,208 $ 2,210 $ 2,049 $ 2,208 $ 2,049 Headcount 10,149 10,300 10,330 10,149 10,330 ---------------------------------------------------- ------------------- (1) Computing and Graphics segment primarily includes desktop and notebook processors and chipsets, discrete graphics processing units (GPUs) and professional graphics. (2) Enterprise, Embedded and Semi-Custom segment primarily includes server and embedded processors, dense servers, semi-custom System-on-Chip (SoC) products, engineering services and royalties. (3) All Other category primarily includes certain expenses and credits that are not allocated to any of the operating segments. Also included in this category are amortization of acquired intangible assets and employee stock-based compensation expense. In addition, the Company also included the following adjustments for the indicated periods: for the nine months ended September 27, 2014, the Company included an adjustment for workforce rebalancing severance charges; and for the third quarter of 2013 and nine months ended September 28, 2013, the Company included an adjustment for net restructuring and other special charges (gains.) (4) Reconciliation of GAAP operating income (loss) to Adjusted EBITDA* Three Months Ended Nine Months Ended --------------------------- ----------------- Sep. 27, Jun. 28, Sep. 28, Sep. 27, Sep. 28, 2014 2014 2013 2014 2013 -------- -------- -------- -------- -------- GAAP operating income (loss) $ 63 $ 63 $ 95 $ 175 $ (32) Workforce rebalancing severance charges - - - 14 - Depreciation and amortization 46 49 52 145 168 Employee stock-based compensation expense 21 21 23 65 67 Amortization of acquired intangible assets 3 4 5 10 14 Restructuring and other special charges (gains), net - - (22) - 30 -------- -------- -------- -------- -------- Adjusted EBITDA $ 133 $ 137 $ 153 $ 409 $ 247 ======== ======== ======== ======== ======== (5) Non-GAAP free cash flow reconciliation** Three Months Ended Nine Months Ended --------------------------- ----------------- Sep. 27, Jun. 28, Sep. 28, Sep. 27, Sep. 28, 2014 2014 2013 2014 2013 -------- -------- -------- -------- -------- GAAP net cash provided by (used in) operating activities $ 18 $ (28) $ 21 $ (214) $ (169) Purchases of property, plant and equipment (29) (23) (15) (73) (63) -------- -------- -------- -------- -------- Non-GAAP free cash flow $ (11) $ (51) $ 6 $ (287) $ (232) ======== ======== ======== ======== ======== * The Company presents Adjusted EBITDA as a supplemental measure of its performance. Adjusted EBITDA for the Company is determined by adjusting operating income (loss) for depreciation and amortization, employee stock-based compensation expense and amortization of acquired intangible assets. In addition, the Company also included the following adjustments for the indicated periods: for the nine months ended September 27, 2014, the Company included an adjustment for workforce rebalancing severance charges; and for the third quarter of 2013 and nine months ended September 28, 2013, the Company included an adjustment for net restructuring and other special charges (gains). The Company calculates and communicates Adjusted EBITDA in the earnings press release because the Company's management believes it is of importance to investors and lenders in relation to its overall capital structure and its ability to borrow additional funds. In addition, the Company presents Adjusted EBITDA because it believes this measure assists investors in comparing its performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. The Company's calculation of Adjusted EBITDA may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view Adjusted EBITDA as an alternative to the GAAP operating measure of operating income (loss) or GAAP liquidity measures of cash flows from operating, investing and financing activities. In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows. ** The Company also presents non-GAAP free cash flow in the earnings press release as a supplemental measure of its performance. Non-GAAP free cash flow is determined by adjusting GAAP net cash used in operating activities for capital expenditures. The Company calculates and communicates non-GAAP free cash flow in the financial earnings press release because the Company's management believes it is of importance to investors to understand the nature of these cash flows. The Company's calculation of non-GAAP free cash flow may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view non-GAAP free cash flow as an alternative to GAAP liquidity measures of cash flows from operating activities. The Company has provided reconciliations within the earnings press release of these non-GAAP financial measures to the most directly comparable GAAP financial measures.