| (1 | ) | The Computing and Graphics segment primarily includes desktop and notebook processors and chipsets, discrete graphics processing units (GPUs) and professional graphics processors. The Company also licenses portions of its intellectual property portfolio. |
| (2 | ) | The Enterprise, Embedded and Semi-Custom segment primarily includes server and embedded processors, semi-custom System-on-Chip (SoC) products, development services and technology for game consoles. The Company also licenses portions of its intellectual property portfolio. |
| (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 is stock-based compensation expense. In addition, the Company also included a charge related to the sixth amendment to the WSA with GF for the three and nine months ended September 24, 2016 and restructuring and other special charges, net for the nine months ended September 24, 2016.
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| (4 | ) | Starting in Q1 2017, the Company classifies production mask sets as property, plant and equipment on its balance sheet. |
| (5 | ) | Reconciliation of GAAP Operating Income (Loss) to Adjusted EBITDA* |
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30,
2017 | July 1,
2017 | September 24,
2016 | September 30,
2017 | September 24,
2016 | ||||||||||||||||
| GAAP operating income (loss) | $ | 126 | $ | 25 | $ | (293 | ) | $ | 122 | $ | (369 | ) | ||||||||
| Charge related to the sixth amendment to the WSA with GF | — | — | 340 | — | 340 | |||||||||||||||
| Restructuring and other special charges, net | — | — | — | — | (10 | ) | ||||||||||||||
| Stock-based compensation | 29 | 24 | 23 | 76 | 57 | |||||||||||||||
| Depreciation and amortization | 36 | 35 | 33 | 105 | 99 | |||||||||||||||
| Adjusted EBITDA | 191 | 84 | 103 | 303 | 117 | |||||||||||||||
(6) Free cash flow reconciliation**
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30,
2017 | July 1,
2017 | September 24,
2016 | September 30,
2017 | September 24,
2016 | ||||||||||||||||
| GAAP net cash provided by (used in) operating activities | $ | 66 | $ | (82 | ) | $ | 29 | $ | (315 | ) | $ | (98 | ) | |||||||
| Purchases of property, plant and equipment | (34 | ) | (12 | ) | (9 | ) | (69 | ) | (56 | ) | ||||||||||
| Free cash flow | $ | 32 | $ | (94 | ) | $ | 20 | $ | (384 | ) | $ | (154 | ) | |||||||
