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Cautionary Statement
This press release contains forward-looking statements concerning Advanced Micro Devices, Inc. (AMD) including, AMD's ability to deliver the strongest set of high-performance computing and graphics products in more than a decade; the features, functionality, timing, availability and expected benefits of AMD's new products and technologies; and AMD's expected first quarter 2017 revenue, 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 document are based on current beliefs, assumptions and expectations, speak only as of the date of this document and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Such statements are subject to certain known and unknown risks and uncertainties, many of which are difficult to predict and generally beyond AMD's control, that could cause actual results and other future events to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Material factors that could cause actual results to differ materially from current expectations include, without limitation, the following: Intel Corporation's dominance of the microprocessor market and its aggressive business practices may limit AMD's ability to compete effectively; AMD is party to a wafer supply agreement with GF with obligations to manufacture products at GF with certain exceptions. If GF is not able to satisfy AMD's manufacturing requirements, its business could be adversely impacted; AMD relies on third parties to manufacture its products, and if they are unable to do so on a timely basis in sufficient quantities and using competitive technologies, AMD's business could be materially adversely affected; failure to achieve expected manufacturing yields for AMD's products could negatively impact its financial results; the success of AMD's business is dependent upon its ability to introduce products on a timely basis with features and performance levels that provide value to its customers while supporting and coinciding with significant industry transitions; if AMD cannot generate sufficient revenue and operating cash flow or obtain external financing, it may face a cash shortfall and be unable to make all of its planned investments in research and development or other strategic investments; the loss of a significant customer may have a material adverse effect on AMD; AMD's receipt of revenue from its semi-custom SoC products is dependent upon its technology being designed into third-party products and the success of those products; global economic uncertainty may adversely impact AMD's business and operating results; the markets in which AMD's products are sold are highly competitive; AMD may not be able to generate sufficient cash to service its debt obligations or meet its working capital requirements; AMD has a substantial amount of indebtedness which could adversely affect its financial position and prevent it from implementing its strategy or fulfilling its contractual obligations; the agreements governing AMD's notes and the secured revolving line of credit impose restrictions on AMD that may adversely affect its ability to operate its business; uncertainties involving the ordering and shipment of AMD's products could materially adversely affect it; the demand for AMD's products depends in part on the market conditions in the industries into which they are sold. Fluctuations in demand for AMD's products or a market decline in any of these industries could have a material adverse effect on its results of operations; AMD's ability to design and introduce new products in a timely manner is dependent upon third-party intellectual property; AMD depends on third-party companies for the design, manufacture and supply of motherboards, software and other computer platform components to support its business; if AMD loses Microsoft Corporation's support for its products or other software vendors do not design and develop software to run on AMD's products, its ability to sell its products could be materially adversely affected; AMD's reliance on third-party distributors and AIB partners subjects it to certain risks; AMD's inability to continue to attract and retain qualified personnel may hinder its product development programs; AMD's issuance to West Coast Hitech L.P. of warrants to purchase 75 million shares of AMD's common stock, if and when exercised, will dilute the ownership interests of AMD's existing stockholders, and the conversion of the 2.125% Convertible Senior Notes due 2026 may dilute the ownership interest of AMD's existing stockholders, or may otherwise depress the price of AMD's common stock; in the event of a change of control, AMD may not be able to repurchase its outstanding debt as required by the applicable indentures and its secured revolving line of credit, which would result in a default under the indentures and its secured revolving line of credit; the semiconductor industry is highly cyclical and has experienced severe downturns that have materially adversely affected, and may continue to materially adversely affect its business in the future; acquisitions, divestitures and/or joint ventures could disrupt its business, harm its financial condition and operating results or dilute, or adversely affect the price of, its common stock; AMD's business is dependent upon the proper functioning of its internal business processes and information systems and modification or interruption of such systems may disrupt its business, processes and internal controls; data breaches and cyber-attacks could compromise AMD's intellectual property or other sensitive information, be costly to remediate and cause significant damage to its business and reputation; AMD's operating results are subject to quarterly and seasonal sales patterns; if essential equipment, materials or manufacturing processes are not available to manufacture its products, AMD could be materially adversely affected; if AMD's products are not compatible with some or all industry-standard software and hardware, it could be materially adversely affected; costs related to defective products could have a material adverse effect on AMD; if AMD fails to maintain the efficiency of its supply chain as it responds to changes in customer demand for its products, its business could be materially adversely affected; AMD outsources to third parties certain supply-chain logistics functions, including portions of its product distribution, transportation management and information technology support services; the completion and impact of the 2015 restructuring plan, its transformation initiatives and any future restructuring actions could adversely affect it; AMD may incur future impairments of goodwill; AMD's worldwide operations are subject to political, legal and economic risks and natural disasters, which could have a material adverse effect on it; worldwide political conditions may adversely affect demand for AMD's products; unfavorable currency exchange rate fluctuations could adversely affect AMD; AMD's inability to effectively control the sales of its products on the gray market could have a material adverse effect on it; if AMD cannot adequately protect its technology or other intellectual property in the United States and abroad, through patents, copyrights, trade secrets, trademarks and other measures, it may lose a competitive advantage and incur significant expenses; AMD is a party to litigation and may become a party to other claims or litigation that could cause it to incur substantial costs or pay substantial damages or prohibit it from selling its products; AMD's business is subject to potential tax liabilities; and AMD is subject to environmental laws, conflict minerals-related provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act as well as a variety of other laws or regulations that could result in additional costs and liabilities. Investors are urged to review in detail the risks and uncertainties in AMD's Securities and Exchange Commission filings, including but not limited to AMD's Quarterly Report on Form 10-Q for the quarter ended September 24, 2016.
AMD, the AMD Arrow logo, AMD Opteron, AMD Radeon and combinations thereof, are trademarks of Advanced Micro Devices, Inc. Other names are for informational purposes only and used to identify companies and products and may be trademarks of their respective owner.
1. In this earnings press release, in addition to GAAP financial results,
AMD has provided non-GAAP financial measures including non-GAAP gross
margin, non-GAAP operating income (loss), 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 press release.
ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions except per share amounts and percentages)
Three Months Ended Year Ended
----------------------------- ------------------
December September December December December
31, 2016 24, 2016 26, 2015 31, 2016 26, 2015
-------- --------- -------- -------- --------
Net revenue $ 1,106 $ 1,307 $ 958 $ 4,272 $ 3,991
Cost of sales 755 1,248 675 3,274 2,911
-------- --------- -------- -------- --------
Gross margin 351 59 283 998 1,080
Gross margin % 32% 5% 30% 23% 27%
Research and development 264 259 229 1,008 947
Marketing, general and
administrative 121 117 109 460 482
Amortization of acquired
intangible assets - - - - 3
Restructuring and other
special charges, net - - (6) (10) 129
Licensing gain (31) (24) - (88) -
-------- --------- -------- -------- --------
Operating loss (3) (293) (49) (372) (481)
Interest expense (34) (41) (41) (156) (160)
Other income (expense),
net (7) (63) (2) 80 (5)
-------- --------- -------- -------- --------
Loss before income taxes (44) (397) (92) (448) (646)
Provision for income taxes 5 4 10 39 14
Equity in income (loss) of
ATMP JV (2) (5) - (10) -
-------- --------- -------- -------- --------
Net loss $ (51) $ (406) $ (102) $ (497) $ (660)
Net loss per share
Basic $ (0.06) $ (0.50) $ (0.13) $ (0.60) $ (0.84)
Diluted $ (0.06) $ (0.50) $ (0.13) $ (0.60) $ (0.84)
-------- --------- -------- -------- --------
Shares used in per share
calculation
Basic 931 815 791 835 783
Diluted 931 815 791 835 783
-------- --------- -------- -------- --------
ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Millions)
Three Months Ended Year Ended
----------------------------- ------------------
December September December December December
31, 2016 24, 2016 26, 2015 31, 2016 26, 2015
-------- --------- -------- -------- --------
Total comprehensive loss $ (53) $ (406) $ (95) $ (494) $ (663)
-------- --------- -------- -------- --------
ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (1)(2)
(Millions)
------------ ------------- ------------
December 31, September 24, December 26,
2016 2016 2015
------------ ------------- ------------
Assets
Current assets:
Cash and cash equivalents $ 1,264 $ 1,258 $ 785
Accounts receivable, net 311 640 533
Inventories, net 751 772 678
Prepayment and other -
GLOBALFOUNDRIES 32 13 33
Prepaid expenses 63 63 43
Other current assets 109 78 248
------------ ------------- ------------
Total current assets 2,530 2,824 2,320
Property, plant and equipment,
net 164 161 188
Goodwill 289 289 278
Investment in ATMP JV 59 60 -
Other assets 279 282 298
------------ ------------- ------------
Total Assets $ 3,321 $ 3,616 $ 3,084
============ ============= ============
Liabilities and Stockholders'
Equity (Deficit)
Current liabilities:
Short-term debt $ - $ - $ 230
Accounts payable 440 582 279
Payable to GLOBALFOUNDRIES 255 284 245
Payable to ATMP JV 128 144 -
Accrued liabilities 391 384 472
Other current liabilities 69 25 124
Deferred income on shipments to
distributors 63 54 53
------------ ------------- ------------
Total current liabilities 1,346 1,473 1,403
Long-term debt, net 1,435 1,632 2,007
Other long-term liabilities 124 126 86
Stockholders' equity (deficit):
Capital stock:
Common stock, par value 9 9 8
Additional paid-in capital 8,334 8,258 7,017
Treasury stock, at cost (119) (127) (123)
Accumulated deficit (7,803) (7,752) (7,306)
Accumulated other comprehensive
loss (5) (3) (8)
------------ ------------- ------------
Total Stockholders' equity
(deficit) 416 385 (412)
------------ ------------- ------------
Total Liabilities and
Stockholders' Equity (Deficit) $ 3,321 $ 3,616 $ 3,084
============ ============= ============
(1) Amounts reflected adoption of FASB ASU 2015-17, Balance Sheet
Classification of Deferred Taxes beginning in the first quarter of 2016.
(2) Amounts reflected adoption of FASB ASU 2015-03, Simplifying the
Presentation of Debt Issuance Costs beginning in the first quarter of
2016.
