For more than 45 years, AMD has driven innovation in high-performance computing, graphics, and visualization technologies -- the building blocks for gaming, immersive platforms, and the datacenter. Hundreds of millions of consumers, leading Fortune 500 businesses, and cutting-edge scientific research facilities around the world rely on AMD technology daily to improve how they live, work, and play. AMD employees around the world are focused on building great products that push the boundaries of what is possible. For more information about how AMD is enabling today and inspiring tomorrow, visit the AMD (
Cautionary Statement
This document contains forward-looking statements concerning Advanced Micro Devices, Inc. (AMD) including AMD's ability to achieve future revenue growth and margin expansion; its ability to bring innovation, performance and choice to an expanding set of markets; the features, functionality, timing, availability and expected benefits of AMD's new products and technologies; and AMD's expected second 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 has a wafer supply agreement with GF with obligations to purchase all of its microprocessor and APU product requirements, and a certain portion of its GPU product requirements, from GLOBALFOUNDRIES Inc. (GF) with limited 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 business; AMD's issuance to West Coast Hitech L.P. (WCH) of warrants to purchase 75 million shares of its common stock, if and when exercised, will dilute the ownership interests of its existing stockholders, and the conversion of the 2.125% Convertible Senior Notes due 2026 may dilute the ownership interest of its existing stockholders, or may otherwise depress the price of its 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 AMD; AMD may incur future impairments of goodwill; AMD's stock price is subject to volatility; 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 Annual Report on Form 10-K for the year ended December 31, 2016.
AMD, the AMD Arrow logo, AMD Ryzen, 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
----------------------------------
April 1, December 31, March 26,
2017 2016 2016
--------- ------------ ---------
Net revenue $ 984 $ 1,106 $ 832
Cost of sales 653 755 563
--------- ------------ ---------
Gross margin 331 351 269
Gross margin % 34% 32% 32%
Research and development 266 264 242
Marketing, general and administrative 121 121 105
Restructuring and other special charges,
net - - (3)
Licensing gain (27) (31) (7)
--------- ------------ ---------
Operating loss (29) (3) (68)
Interest expense (32) (34) (40)
Other expense, net (5) (7) -
--------- ------------ ---------
Loss before equity loss and income taxes (66) (44) (108)
Provision for income taxes 5 5 1
Equity loss in investee (2) (2) -
--------- ------------ ---------
Net loss $ (73) $ (51) $ (109)
Net loss per share
Basic $ (0.08) $ (0.06) $ (0.14)
Diluted $ (0.08) $ (0.06) $ (0.14)
--------- ------------ ---------
Shares used in per share calculation
Basic 939 931 793
Diluted 939 931 793
--------- ------------ ---------
ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Millions)
Three Months Ended
----------------------------------
April 1, December 31, March 26,
2017 2016 2016
--------- ------------ ---------
Total comprehensive loss $ (72) $ (53) $ (107)
--------- ------------ ---------
ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions)
------------- -------------
April 1, December 31,
2017 2016
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 722 $ 1,264
Marketable securities 221 -
Accounts receivable, net 494 311
Inventories, net 839 751
Prepayment and other receivables - related
parties 31 32
Prepaid expenses 73 63
Other current assets 118 109
------------- -------------
Total current assets 2,498 2,530
Property, plant and equipment, net 180 164
Goodwill 289 289
Investment: equity method 58 59
Other assets 274 279
------------- -------------
Total Assets $ 3,299 $ 3,321
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 529 $ 440
Payables to related parties 329 383
Accrued liabilities 385 391
Other current liabilities 67 69
Deferred income on shipments to distributors 62 63
------------- -------------
Total current liabilities 1,372 1,346
Long-term debt, net 1,408 1,435
Other long-term liabilities 110 124
Stockholders' equity:
Capital stock:
Common stock, par value 9 9
Additional paid-in capital 8,379 8,334
Treasury stock, at cost (99) (119)
Accumulated deficit (7,876) (7,803)
Accumulated other comprehensive loss (4) (5)
------------- -------------
Total Stockholders' equity 409 416
------------- -------------
Total Liabilities and Stockholders' Equity $ 3,299 $ 3,321
============= =============
ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions)
Three Months
Ended
-------------
April 1,
2017
-------------
Cash flows from operating activities:
Net loss $ (73)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 34
Stock-based compensation expense 23
Non-cash interest expense 9
Loss on debt redemption 4
Other 5
Changes in operating assets and liabilities:
Accounts receivable (183)
Inventories (88)
Prepayment and other receivables - related parties 1
Prepaid expenses and other assets (30)
Payables to related parties (54)
Accounts payable, accrued liabilities and other 53
-------------
Net cash used in operating activities $ (299)
-------------
Cash flows from investing activities:
Purchases of property, plant and equipment (23)
Purchases of available-for-sale securities (221)
Other (2)
-------------
Net cash used in investing activities $ (246)
-------------
Cash flows from financing activities:
Proceeds from issuance of common stock under stock-based
compensation equity plans 8
Other (5)
-------------
Net cash provided by financing activities $ 3
-------------
Net decrease in cash and cash equivalents (542)
-------------
Cash and cash equivalents at beginning of period $ 1,264
-------------
Cash and cash equivalents at end of period $ 722
-------------
ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA
(Millions)
Three Months Ended
----------------------------------------------------------------------------
April 1, December 31, March 26,
Segment and Category Information 2017 2016 2016
----------------------------------------------------------------------------
Computing and Graphics (1)
Net revenue $ 593 $ 600 $ 460
Operating loss $ (15) $ (21) $ (70)
Enterprise, Embedded and Semi-Custom
(2)
Net revenue $ 391 $ 506 $ 372
Operating income $ 9 $ 47 $ 16
All Other (3)
Net revenue - - -
Operating loss $ (23) $ (29) $ (14)
Total
Net revenue $ 984 $ 1,106 $ 832
Operating loss $ (29) $ (3) $ (68)
----------------------------------------------------------------------------
Other Data
Depreciation and amortization $ 34 $ 34 $ 33
Capital expenditures (4) $ 23 $ 21 $ 26
Adjusted EBITDA (5) $ 28 $ 60 $ (22)
Cash, cash equivalents and marketable
securities $ 943 $ 1,264 $ 716
Non-GAAP free cash flow (6) $ (322) $ 167 $ (68)
Total assets $ 3,299 $ 3,321 $ 2,981
Total debt $ 1,408 $ 1,435 $ 2,236
----------------------------------------------------------------------------
See footnotes on the next page
(1) The Computing and Graphics segment primarily includes desktop and
notebook processors and chipsets, discrete graphics processing units
(GPUs) and professional graphics.
(2) The Enterprise, Embedded and Semi-Custom segment primarily includes
server and embedded processors, semi-custom System-on-Chip (SoC)
products, development services, 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 are stock-based compensation expense and restructuring
and other special charges, net.
(4) Starting in Q1 2017, the Company classifies production mask sets as
property, plant and equipment.
(5) Reconciliation of GAAP Operating Loss to Adjusted EBITDA*
Three Months Ended
----------------------------------
April 1, December 31, March 26,
2017 2016 2016
--------- ------------ ---------
GAAP operating loss $ (29) $ (3) $ (68)
Restructuring and other special
charges, net - - (3)
Stock-based compensation 23 29 16
Depreciation and amortization 34 34 33
--------- ------------ ---------
Adjusted EBITDA $ 28 $ 60 $ (22)
========= ============ =========
(6) Non-GAAP Free Cash Flow Reconciliation**
Three Months Ended
----------------------------------
April 1, December 31, March 26,
2017 2016 2016
--------- ------------ ---------
GAAP net cash provided by (used in)
operating activities $ (299) $ 188 $ (42)
Purchases of property, plant and
equipment (23) (21) (26)
--------- ------------ ---------
Non-GAAP free cash flow $ (322) $ 167 $ (68)
========= ============ =========
* 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, stock-based
compensation expense and restructuring and other special charges, net.
The Company calculates and communicates Adjusted EBITDA 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 as a supplemental
measure of its performance. Non-GAAP free cash flow is determined by
adjusting GAAP net cash provided by (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.
