| (1) | The Computing and Graphics segment primarily includes desktop and notebook processors and chipsets, discrete and integrated graphics processing units (GPUs), data center and professional GPUs, and development services. 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. | ||||||||||||||||
| (4) | Reconciliation of GAAP Net Income to Adjusted EBITDA* | ||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||
| December 28,
2019 | September 28,
2019 | December 29,
2018 | December 28,
2019 | December 29,
2018 | |||||||||||||
| GAAP net income | $ | 170 | $ | 120 | $ | 38 | $ | 341 | $ | 337 | |||||||
| Interest expense | 18 | 24 | 29 | 94 | 121 | ||||||||||||
| Other (income) expense, net | 125 | 36 | (4 | ) | 165 | - | |||||||||||
| Provision (benefit) for income taxes | 35 | 7 | (35 | ) | 31 | (9 | ) | ||||||||||
| Equity (income) loss in investee | - | (1 | ) | - | - | 2 | |||||||||||
| Impairment of technology licenses | - | - | 45 | - | 45 | ||||||||||||
| Stock-based compensation | 57 | 54 | 36 | 197 | 137 | ||||||||||||
| Depreciation and amortization | 64 | 60 | 43 | 222 | 170 | ||||||||||||
| Loss contingency on legal matter | - | - | - | 12 | - | ||||||||||||
| Adjusted EBITDA | $ | 469 | $ | 300 | $ | 152 | $ | 1,062 | $ | 803 | |||||||
| (5) | Free Cash Flow Reconciliation** | ||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||
| December 28,
2019 | September 28,
2019 | December 29,
2018 | December 28,
2019 | December 29,
2018 | |||||||||||||
| GAAP net cash provided by operating activities | $ | 442 | $ | 234 | $ | 120 | $ | 493 | $ | 34 | |||||||
| Purchases of property and equipment | (42 | ) | (55 | ) | (41 | ) | (217 | ) | (163 | ) | |||||||
| Free cash flow | $ | 400 | $ | 179 | $ | 79 | $ | 276 | $ | (129 | ) | ||||||
| * | The Company presents “Adjusted EBITDA” as a supplemental measure of its performance. Adjusted EBITDA for the Company is determined by adjusting GAAP net income for interest expense, other income (expense), net, provision (benefit) for income taxes, equity income (loss) on investee, stock-based compensation, and depreciation and amortization expense. In addition, the Company included a loss contingency on legal matter in the year ended December 28, 2019 and an impairment of technology licenses in the three months and the year ended December 29, 2018. The Company calculates and presents Adjusted EBITDA because 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 income 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 that can affect cash flows. | ||||||||||||||||
| ** | The Company also presents free cash flow as a supplemental Non-GAAP measure of its performance. Free cash flow is determined by adjusting GAAP net cash provided by (used in) operating activities for capital expenditures. The Company calculates and communicates free cash flow in the financial earnings press release because management believes it is of importance to investors to understand the nature of these cash flows. The Company’s calculation of 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 free cash flow as an alternative to GAAP liquidity measures of cash flows from operating activities. All periods presented conform to the current period presentation. | ||||||||||||||||
| The Company has provided reconciliations within the earnings press release of these Non-GAAP financial measures to the most directly comparable GAAP financial measures. | |||||||||||||||||
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