Close

Form 8-K ADVANCED MICRO DEVICES For: Apr 21

FREE Breaking News Alerts from StreetInsider.com!

E-mail Address

StreetInsider.com Top Tickers, 4/19/2024

1. NFLX
2. TSM
3. ISRG
4. INFY
5. SNV
6. TSLA
7. SPY
8. SLB
9. PPG
10. JWN


April 21, 2016 4:19 PM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 21, 2016
Date of Report (Date of earliest event reported)
 
 
 
ADVANCED MICRO DEVICES, INC.
(Exact name of registrant as specified in its charter)

 
 
 

Delaware
 
001-07882
 
94-1692300
(State of
Incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification Number)

One AMD Place
P.O. Box 3453
Sunnyvale, California 94088-3453
(Address of principal executive offices) (Zip Code)
(408) 749-4000
(Registrant’s telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)

 
 
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))








Item 2.02 Results of Operations and Financial Condition.
Item 7.01 Regulation FD Disclosure.
The information in this report furnished pursuant to Items 2.02 and 7.01, including Exhibits 99.1 and 99.2 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Exchange Act or the Securities Act of 1933, as amended, if such subsequent filing specifically references the information furnished pursuant to Items 2.02 and 7.01 of this report.
On April 21, 2016, Advanced Micro Devices, Inc. (the “Company”) announced its financial position and results of operations as of and for its fiscal quarter ended March 26, 2016 in a press release that is attached hereto as Exhibit 99.1. Attached hereto as Exhibit 99.2 is financial information and commentary by Devinder Kumar, Senior Vice President, Chief Financial Officer and Treasurer of the Company, regarding the Company’s fiscal quarter ended March 26, 2016.
To supplement the Company’s financial results presented on a U.S. Generally Accepted Accounting Principles (“GAAP”) basis, the Company’s earnings press release and CFO commentary contain non-GAAP financial measures, including non-GAAP gross margin, non-GAAP operating expenses, non-GAAP research and development and marketing, general and administrative expenses, non-GAAP operating income (loss), non-GAAP net income (loss), non-GAAP earnings (loss) per share, Adjusted EBITDA and non-GAAP free cash flow. The Company believes that the supplemental non-GAAP financial measures assist investors in comparing its core performance by excluding items that it believes are not indicative of the Company’s underlying operating performance. The Company cautions investors to carefully evaluate the financial results calculated in accordance with GAAP and the supplemental non-GAAP financial measures and reconciliations. The Company’s non-GAAP financial measures are not intended to be considered in isolation and are not a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.

EXHIBIT INDEX

Exhibit No.
 
Description
 
 
 
99.1
 
Press release dated April 21, 2016
99.2
 
CFO Commentary on Results of First Fiscal Quarter ended March 26, 2016





SIGNATURE

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
 
 
 
Date: April 21, 2016
ADVANCED MICRO DEVICES, INC.
 
 
 
 
By:
/s/ Devinder Kumar
 
Name:
Devinder Kumar
 
Title:
Senior Vice President, Chief Financial Officer & Treasurer





Exhibit 99.1

NEWS RELEASE

Media Contact
Drew Prairie
512-602-4425

Investor Contact
Ruth Cotter
408-749-3887


AMD Reports 2016 First Quarter Results

•
Executed a meaningful step in IP monetization strategy to accelerate AMD’s growth
•
Assembly, Test, Mark and Pack (ATMP) Joint Venture (JV) transaction remains on track to close in Q2 2016

SUNNYVALE, Calif. — April 21, 2016 — AMD (NASDAQ: AMD) today announced revenue for the first quarter of 2016 of $832 million, operating loss of $68 million, and net loss of $109 million, or $0.14 per share. Non-GAAP (1) operating loss was $55 million and non-GAAP (1) net loss was $96 million, or $0.12 per share.
GAAP Financial Results
 
  
Q1-16
  
Q4-15
  
Q1-15
Revenue
  
$832M
  
$958M
  
$1.03B
Operating loss
  
$(68)M
  
$(49)M
  
$(137)M
Net loss / Loss per share
  
$(109)M/$(0.14)
  
$(102)M/$(0.13)
  
$(180)M/$(0.23)

Non-GAAP Financial Results1 
 
  
Q1-16
  
Q4-15
  
Q1-15
Revenue
  
$832M
  
$958M
  
$1.03B
Operating loss
  
$(55)M
  
$(39)M
  
$(30)M
Net loss / Loss per share
  
$(96)M/$(0.12)
  
$(79)M/$(0.10)
  
$(73)M/$(0.09)
    
“Our strategy to build a strong business foundation and improve financial performance through delivering great products is beginning to show benefits,” said Lisa Su, AMD president and CEO.  “We continued to strengthen the performance of our Computing and Graphics business as our customers and partners show a growing preference for AMD. We are optimistic about our growth prospects in the second half of the year across our businesses based on new product introductions and design wins.”

1


Q1 2016 Results
•
Q1 2016 was a 13-week fiscal quarter.
•
Revenue of $832 million, down 13 percent sequentially and down 19 percent year-over-year. The sequential decrease was primarily due to lower sales of semi-custom SoCs. The year-over-year decline was primarily due to lower sales of semi-custom SoCs and client notebook processors.
•
Gross margin of 32 percent, up 2 percentage points sequentially, due primarily to a richer product mix and mix of revenue between business segments.
•
Operating expenses of $344 million, compared to $332 million for the prior quarter. Non-GAAP operating expenses of $332 million, compared to non-GAAP operating expenses of $323 million in Q4 2015, primarily due to increased R&D expenses related to new products, partially offset by lower SG&A expenses.
•
Operating loss of $68 million, compared to an operating loss of $49 million for the prior quarter. Non-GAAP(1) operating loss of $55 million, compared to non-GAAP(1) operating loss of $39 million in Q4 2015, primarily due to lower sales.
•
Net loss of $109 million, loss per share of $0.14, and non-GAAP (1) net loss of $96 million, non-GAAP (1) loss per share of $0.12, compared to a net loss of $102 million, loss per share of $0.13 and non-GAAP (1) net loss of $79 million, non-GAAP (1) loss per share of $0.10 in Q4 2015.
•
Cash and cash equivalents were $716 million at the end of the quarter, down $69 million from the end of the prior quarter, due to lower sales and higher debt interest payments, partially offset by $52 million of cash received related to our newly announced IP licensing agreement.
•
Total debt at the end of the quarter was $2.24 billion, flat from the prior quarter.
Financial Segment Summary
•
Computing and Graphics segment revenue of $460 million decreased 2 percent sequentially and decreased 14 percent from Q1 2015. The sequential decrease was primarily due to decreased sales of client desktop processors and the year-over-year decrease was driven primarily by decreased sales of client notebook processors.
◦
Operating loss was $70 million, compared with an operating loss of $99 million in Q4 2015 and an operating loss of $75 million in Q1 2015. The sequential improvement was primarily driven by lower operating expenses. The year-over-year improvement was primarily driven by lower operating expenses.
◦
Client processor average selling price (ASP) decreased sequentially driven by a lower desktop processor ASP and decreased year-over-year primarily due to a lower notebook processor ASP.

2


◦
GPU ASP decreased sequentially driven by lower consumer GPU ASPs and increased year-over-year due to higher channel and professional graphics ASPs.
•
Enterprise, Embedded and Semi-Custom segment revenue of $372 million decreased 24 percent sequentially and 25 percent year-over-year. The decreases were primarily driven by lower sales of semi-custom SoCs.
◦
Operating income was $16 million compared with $59 million in Q4 2015 and $45 million in Q1 2015. The sequential and year-over-year decrease was primarily due to lower sales and higher R&D expenses associated with new product investments, partially offset by a $7 million IP licensing gain.
•
All Other category operating loss was $14 million compared with operating losses of $9 million in Q4 2015 and $107 million in Q1 2015. The year-over-year decrease was primarily due to the absence of restructuring and other special charges associated with the exit from the dense server systems business.
IP Licensing Agreement and JV with THATIC
AMD licensed high-performance processor and SoC technology to a newly-created JV it has formed with THATIC (Tianjin Haiguang Advanced Technology Investment Co., Ltd.) to develop SoCs tailored to the Chinese server market that will complement AMD’s own offerings. The $293 million licensing agreement is a meaningful step in AMD’s IP monetization strategy intended to accelerate the Company’s growth and better monetize its valuable assets.  Payments are contingent upon the JV achieving certain milestones.  AMD also expects to receive royalty payments from the JV’s future product sales.
“Our new licensing agreement is a great example of leveraging our strong IP portfolio to accelerate the adoption of our technologies more broadly,” said Dr. Su. “The joint venture with THATIC provides AMD with a differentiated approach to help gain share in the fastest growing region of the server market.”
Recent Highlights
•
AMD’s Assembly, Test, Mark and Pack (ATMP) JV transaction received approval from Nantong Fujitsu Microelectronics Co., Ltd. shareholders and the transaction remains on track to close in Q2 2016.
•
AMD momentum continued for its mobile client solutions and technologies, starting shipments of the 7th Generation AMD A-Series Processors (codenamed “Bristol Ridge”) and securing notable commercial and consumer design wins.
◦
AMD 7th Generation APUs are equipped with advanced video, graphics performance, security and energy efficiency features and will first appear in the HP ENVY x360, with

3


other ultrathin notebook, convertible, and all-in one OEM designs planned to launch throughout the year.
◦
AMD secured new HP notebook design wins and continued to expand in the commercial PC market with new large-scale enterprise deployments for its 6th Generation PRO A-Series mobile processors.
•
AMD launched new desktop component solutions, including the flagship AMD Wraith Cooler and its fastest APU ever, the AMD A10-7890K. Other new additions to the 2016 Desktop processor family include the new AMD A10-7870K and AMD A10-7860K APUs, and new AMD Athlon™ X4 880K and AMD Athlon™ X4 845 CPUs.
•
AMD disclosed its upcoming GPU architecture roadmap, including “Vega” featuring High Bandwidth Memory 2, which the company plans to follow with the release of “Navi” which will be designed with scalability and next-generation memory.
•
AMD demonstrated its “Polaris” 10 and 11 next-generation GPUs, with Polaris 11 targeting the notebook market and “Polaris” 10 aimed at the mainstream desktop and high-end gaming notebook segment. “Polaris” architecture-based GPUs are expected to deliver a 2x performance per watt improvement over current generation products and are designed for intensive workloads including 4K video playback and virtual reality (VR).
•
AMD continued to expand its leadership position in VR, unveiling new technologies and collaborations across a variety of sectors, including gaming, education, and media.
◦
AMD introduced the Radeon™ Pro Duo GPU, part of the world's most powerful platform for VR designed for creating and consuming VR content. AMD’s Radeon™ Pro Duo GPU with its LiquidVR™ SDK is a platform aimed at most all aspects of VR content creation: from entertainment to education, journalism, medicine, and cinema.
◦
20th Century Fox, New Regency, Ubisoft Motion Pictures, and VR development studio Practical Magic chose the AMD Radeon™ Pro Duo GPU featuring the AMD LiquidVR™ SDK to bring the upcoming ASSASSIN’S CREED movie VR experience to life.
◦
Sulon Technologies announced the Sulon Q, the world’s only all-in-one, tether-free "wear and play” headset for VR, Augmented Reality (AR) and spatial computing – powered by the AMD FX-8800P processor.
◦
AMD joined with The Associated Press to create a new VR experience channel to fuel next-generation journalism.
◦
AMD announced it is helping colleges and universities create dedicated AMD Radeon™ graphics-equipped VR labs as Crytek's exclusive technology partner for the VR First™ initiative.

4


◦
AMD released the Radeon Software Crimson Edition 16.3.2 Driver with support for the Oculus Rift™ SDK v1.3 – offering AMD’s most stable and compatible driver for developing VR experiences on the Rift to-date.
•
AMD demonstrated its continued dedication to enabling gamers and game developers with the best possible graphics experiences.
◦
AMD’s performance leadership in DirectX® 12 was re-affirmed through the Ashes of the Singularity benchmark. AMD also announced its association with several DirectX 12 games including Hitman and Total War: Warhammer.
•
AMD further established its presence in the professional graphics market with the introduction of new technologies, design wins, and relationships.
◦
AMD revealed the world’s first hardware virtualized GPU products – AMD FirePro™ S-Series GPUs with Multiuser GPU (MxGPU) technology that enables a precise, secure, high performance, and enriched graphics user experience.
◦
AMD FirePro graphics were selected to drive fast, cost-effective GPU-compute installations for the Canadian Hydrogen Intensity Mapping Experiment, global geophysical services and equipment company CGG, and the Institute of System Research of the Russian Academy of Sciences.
Current Outlook
AMD’s outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under “Cautionary Statement” below.
For Q2 2016, AMD expects revenue to increase 15 percent, plus or minus 3 percent, sequentially.
For additional details regarding AMD’s results and outlook please see the CFO commentary posted at quarterlyearnings.amd.com.
AMD Teleconference
AMD will hold a conference call for the financial community at 2:00 p.m. PDT (5:00 p.m. EDT) today to discuss its first quarter financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at www.amd.com. The webcast will be available for 12 months after the conference call.

5


Reconciliation of GAAP to Non-GAAP Gross Margin
(Millions except percentages)
 
Q1-16
 
Q4-15
 
Q1-15
GAAP Gross Margin
 
$
269

 
$
283

 
$
326

GAAP Gross Margin %
 
32
%
 
30
%
 
32
%
Stock-based compensation
 
1

 
1

 
1

Non-GAAP Gross Margin
 
$
270

 
$
284

 
$
327

Non-GAAP Gross Margin %
 
32
%
 
30
%
 
32
%

Reconciliation of GAAP to Non-GAAP Loss
(Millions)
 
Q1-16
 
Q4-15
 
Q1-15
GAAP operating loss
 
$
(68
)
 
$
(49
)
 
$
(137
)
Restructuring and other special charges, net
 
(3
)
 
(6
)
 
87

Amortization of acquired intangible assets
 
—

 
—

 
3

Stock-based compensation
 
16

 
16

 
17

Non-GAAP operating loss
 
$
(55
)
 
$
(39
)
 
$
(30
)


Reconciliation of GAAP to Non-GAAP Net Loss/Loss per Share
(Millions except per share amounts)
 
Q1-16
 
Q4-15
 
Q1-15
GAAP net loss /loss per share
 
$
(109
)
 
$
(0.14
)
 
$
(102
)
 
$
(0.13
)
 
$
(180
)
 
$
(0.23
)
Restructuring and other special charges, net
 
(3
)
 
—

 
(6
)
 
(0.01
)
 
87

 
—

Tax settlement in foreign jurisdiction
 
—

 
—

 
13

 
0.02

 
—

 
—

Amortization of acquired intangible assets
 
—

 
—

 
—

 
—

 
3

 
—

Stock-based compensation
 
16

 
0.02

 
16

 
0.02

 
17

 
0.02

Non-GAAP net loss/loss per share
 
$
(96
)
 
$
(0.12
)
 
$
(79
)
 
$
(0.10
)
 
$
(73
)
 
$
(0.09
)

About AMD
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 (NASDAQ: AMD) website, blog, Facebook and Twitter pages.



6


Cautionary Statement

This press release contains forward-looking statements concerning Advanced Micro Devices, Inc. (“AMD” or the “Company”) including AMD’s ability to accelerate its growth and monetize its IP assets through its IP monetization strategy; the expected closing date for the proposed joint ventures between AMD and Nantong Fujitsu Microelectronics Co., Ltd.; AMD’s expected growth prospects in the second half of 2016; the expected amounts to be received by AMD under the IP licensing agreement and the expected royalty payments to be received from future product sales; the expected benefits from AMD’s joint ventures with THATIC; the features, functionality, timing and availability of AMD’s future products; and AMD’s expected second quarter 2016 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 relies on GLOBALFOUNDRIES Inc. (GF) to manufacture all of its microprocessor and APU products and a certain portion of its GPU products, 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; global economic uncertainty may adversely impact AMD’s business and operating results; 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 for a principal amount up to $500 million (Secured Revolving Line of Credit) impose restrictions on AMD that may adversely affect its ability to operate its business; the completion and impact of its 2015 restructuring plan, its transformation initiatives and any future restructuring actions could adversely affect it; the markets in which AMD’s products are sold are highly competitive; uncertainties involving the ordering and shipment of AMD’s products could materially adversely affect it; 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; 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; 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; 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

7


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; a variety of environmental laws that AMD is subject to could result in additional costs and liabilities; and higher health care costs and labor costs could adversely affect AMD’s business. 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 26, 2015.

-30-

AMD, the AMD Arrow logo, Catalyst, FirePro, Radeon, and combinations thereof, are trademarks of Advanced Micro Devices, Inc. ARM is a registered trademark of ARM Limited in the EU and other countries. DirectX, Microsoft and Windows are registered trademarks of Microsoft Corporation in the US and other jurisdictions. 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 operating expenses, non-GAAP research and development and marketing, general and administrative expenses, 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 CFO Commentary.




8


ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions except per share amounts and percentages)

 
 
Three Months Ended
 
 
March 26,
2016
 
December 26,
2015
 
March 28,
2015
Net revenue
 
$
832

 
$
958

 
$
1,030

Cost of sales
 
563

 
675

 
704

Gross margin
 
269

 
283

 
326

Gross margin %
 
32
%
 
30
%
 
32
%
Research and development
 
242

 
229

 
242

Marketing, general and administrative
 
105

 
109

 
131

Amortization of acquired intangible assets
 
—

 
—

 
3

Restructuring and other special charges, net
 
(3
)
 
(6
)
 
87

Licensing gain
 
(7
)
 
—

 
—

Operating loss
 
(68
)
 
(49
)
 
(137
)
Interest expense
 
(40
)
 
(41
)
 
(40
)
Other expense, net
 
—

 
(2
)
 
—

Loss before income taxes
 
(108
)
 
(92
)
 
(177
)
Provision for income taxes
 
1

 
10

 
3

Net loss
 
$
(109
)
 
$
(102
)
 
$
(180
)
Net loss per share
 
 
 
 
 
 
Basic
 
$
(0.14
)
 
$
(0.13
)
 
$
(0.23
)
Diluted
 
$
(0.14
)
 
$
(0.13
)
 
$
(0.23
)
Shares used in per share calculation
 
 
 
 
 
 
Basic
 
793

 
791

 
777

Diluted
 
793

 
791

 
777

 
ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Millions)
 
 
 
Three Months Ended
 
 
March 26,
2016
 
December 26,
2015
 
March 28,
2015
Total comprehensive loss
 
$
(107
)
 
$
(95
)
 
$
(187
)

9


ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions)
 
 
 
March 26,
2016
 
December 26,
2015
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
716

 
$
785

Accounts receivable, net
 
508

 
533

Inventories, net
 
675

 
678

Prepayment and other - GLOBALFOUNDRIES
 
26

 
33

Prepaid expenses
 
49

 
43

Other current assets
 
252

 
248

Total current assets
 
2,226

 
2,320

Property, plant and equipment, net
 
176

 
188

Goodwill
 
278

 
278

Other assets
 
301

 
298

Total Assets
 
$
2,981

 
$
3,084

Liabilities and Stockholders' Equity (Deficit)
 
 
 
 
Current liabilities:
 
 
 
 
Short-term debt
 
$
230

 
$
230

Accounts payable
 
324

 
279

Payable to GLOBALFOUNDRIES
 
233

 
245

Accrued liabilities
 
347

 
472

Other current liabilities
 
151

 
124

Deferred income on shipments to distributors
 
43

 
53

Total current liabilities
 
1,328

 
1,403

Long-term debt
 
2,006

 
2,007

Other long-term liabilities
 
150

 
86

Stockholders' equity (deficit):
 
 
 
 
Capital stock:
 
 
 
 
Common stock, par value
 
8

 
8

Additional paid-in capital
 
7,033

 
7,017

Treasury stock, at cost
 
(123
)
 
(123
)
Accumulated deficit
 
(7,415
)
 
(7,306
)
Accumulated other comprehensive loss
 
(6
)
 
(8
)
Total Stockholders' equity (deficit)
 
(503
)
 
(412
)
Total Liabilities and Stockholders' Equity (Deficit)
 
$
2,981

 
$
3,084

(1) Amounts reflected adoption of FASB ASU 2015-17, Balance Sheet Classification of Deferred Taxes in the first quarter of 2016.
(2) Amounts reflected adoption of FASB ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs in the first quarter of 2016.


10


ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions)
 
 
 
Three Months Ended
 
 
March 26,
2016
Cash flows from operating activities:
 
 
Net Loss
 
$
(109
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
Depreciation and amortization
 
33

Stock-based compensation expense
 
16

Non-cash interest expense
 
4

Other
 
(5
)
Changes in operating assets and liabilities:
 
 
Accounts receivable
 
26

Inventories
 
3

Prepayment and other - GLOBALFOUNDRIES
 
7

Prepaid expenses and other assets
 
22

Accounts payable, accrued liabilities and other
 
(27
)
Payable to GLOBALFOUNDRIES
 
(12
)
Net cash used in operating activities
 
$
(42
)
 
 
 
Cash flows from investing activities:
 
 
Purchases of property, plant and equipment
 
(26
)
Net cash used in investing activities
 
$
(26
)
 
 
 
Cash flows from financing activities:
 
 
Other
 
(1
)
Net cash used in financing activities
 
$
(1
)
Net decrease in cash and cash equivalents
 
(69
)
Cash and cash equivalents at beginning of period
 
$
785

Cash and cash equivalents at end of period
 
$
716


11


ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA
(Millions except headcount)
 
 
Three Months Ended
 
 
March 26,
2016
 
December 26,
2015
 
March 28,
2015
Segment and Category Information
 
 
 
 
 
 
Computing and Graphics (1)
 
 
 
 
 
 
Net revenue
 
$
460

 
$
470

 
$
532

Operating loss
 
$
(70
)
 
$
(99
)
 
$
(75
)
Enterprise, Embedded and Semi-Custom (2)
 
 
 
 
 
 
Net revenue
 
372

 
488

 
498

Operating income
 
16

 
59

 
45

All Other (3)
 
 
 
 
 
 
Net revenue
 
—

 
—

 
—

Operating loss
 
(14
)
 
(9
)
 
(107
)
Total
 
 
 
 
 
 
Net revenue
 
$
832

 
$
958

 
$
1,030

Operating loss
 
$
(68
)
 
$
(49
)
 
$
(137
)
Other Data
 
 
 
 
 
 
Depreciation and amortization, excluding
amortization of acquired intangible assets
 
$
33

 
$
34

 
$
43

Capital additions
 
$
26

 
$
32

 
$
22

Adjusted EBITDA (4)
 
$
(22
)
 
$
(5
)
 
$
13

Cash and cash equivalents
 
$
716

 
$
785

 
$
906

Non-GAAP free cash flow (5)
 
$
(68
)
 
$
27

 
$
(194
)
Total assets
 
$
2,981

 
$
3,084

 
$
3,399

Total debt
 
$
2,236

 
$
2,237

 
$
2,239

Headcount
 
9,047

 
9,139

 
9,583

See footnotes on the next page

12


(1 
) 
Computing and Graphics segment primarily includes desktop and notebook processors, chipsets, discrete graphics processing units (GPUs) and professional graphics.
(2 
) 
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 and licensing gain.
(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. In addition, the Company also included amortization of acquired intangible assets for the first quarter of 2015.
 
(4 
) 
Reconciliation of GAAP Operating Loss to Adjusted EBITDA*

 
 
Three Months Ended
 
 
March 26,
2016
 
December 26,
2015
 
March 28,
2015
GAAP operating loss
 
$
(68
)
 
$
(49
)
 
$
(137
)
Restructuring and other special charges, net
 
(3
)
 
(6
)
 
87

Stock-based compensation expense
 
16

 
16

 
17

Amortization of acquired intangible assets
 
—

 
—

 
3

Depreciation and amortization
 
33

 
34

 
43

Adjusted EBITDA
 
$
(22
)
 
$
(5
)
 
$
13

 
(5)    Non-GAAP free cash flow reconciliation** 
 
Three Months Ended
 
March 26,
2016
 
December 26,
2015
 
March 28,
2015
GAAP net cash provided by (used in) operating activities
$
(42
)
 
$
59

 
$
(172
)
Purchases of property, plant and equipment
(26
)
 
(32
)
 
(22
)
Non-GAAP free cash flow
$
(68
)
 
$
27

 
$
(194
)

*
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. In addition, the company excluded amortization of acquired intangible assets for the first quarter of 2015. 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.


13
     

Exhibit 99.2
  
AMD Reports 2016 First Quarter Results – CFO Commentary
April 21, 2016

Reconciliation for all non-GAAP financial measures discussed in this commentary to the most directly comparable GAAP financial measures is included below and in our financial tables that accompany our earnings press release available at quarterlyearnings.amd.com.
Q1 2016 Results and Recent Events
•
Revenue of $832 million, down 13% sequentially and 19% year-over-year.
•
Gross margin of 32%, up 2 percentage points sequentially.
•
Operating loss of $68 million, compared to an operating loss of $49 million in Q4 2015 and non-GAAP operating loss of $55 million, compared to non-GAAP operating loss of $39 million in Q4 2015.
•
Net loss of $109 million, loss per share of $0.14, compared to a net loss of $102 million, loss per share of $0.13 in Q4 2015 and non-GAAP net loss of $96 million, loss per share of $0.12, compared to non-GAAP net loss of $79 million, loss per share of $0.10 in Q4 2015.
•
Meaningful step in IP monetization strategy by licensing high-performance processor and SoC technology and forming joint venture (JV) with THATIC (Tianjin Haiguang Advanced Technology Investment Co., Ltd.), to develop SoCs that will complement AMD’s own offerings for the China server market.
Q1 2016 Commentary
Based on a 13-week quarter, revenue was $832 million, down 13% sequentially. Computing and Graphics segment revenue was down 2% from Q4 2015, primarily due to decreased sales of client desktop processors. Enterprise, Embedded and Semi-Custom segment revenue was down 24% sequentially, primarily due to lower semi-custom SoC sales.
Non-GAAP gross margin was 32%, up 2 percentage points sequentially, due primarily to a richer product mix and the mix of revenue between business segments. To derive non-GAAP gross margin, we exclude the impact of stock-based compensation.

AMD Q1-16 CFO Commentary
Page 1 
April 21, 2016
                            
     

Operating expenses were $344 million and non-GAAP operating expenses were $332 million or 40% of revenue, up $9 million from the prior quarter’s non-GAAP operating expenses primarily due to increased R&D expenses related to new products, partially offset by lower SG&A expenses.
•
R&D expenses were $242 million, non-GAAP R&D was $233 million or 28% of revenue.
•
SG&A expenses were $105 million, non-GAAP SG&A was $99 million or 12% of revenue.
To derive non-GAAP operating expenses, we exclude the impact of stock-based compensation and restructuring and other special charges, net.
Operating expenses:
 
Q1-16
 
Q4-15
 
Q3-15
 
Q2-15
 
Q1-15
GAAP
$344M
 
$332M
 
$397M
 
$369M
 
$463M
Non-GAAP
$332M
 
$323M
 
$336M
 
$353M
 
$357M
IP Licensing Agreement and Joint Venture (JV) with THATIC
AMD licensed high-performance processor and SoC technology to a newly-created JV it has formed with THATIC (Tianjin Haiguang Advanced Technology Investment Co., Ltd.) to develop SoCs tailored to the Chinese server market. The $293 million licensing agreement is a meaningful step in AMD’s IP monetization strategy intended to accelerate the Company’s growth and better monetize its valuable assets. Payments are contingent upon the JV achieving certain milestones. AMD also expects to receive royalty payments from the JV’s future product sales.
The JV’s product offerings are expected to complement AMD’s server offerings while accelerating the adoption of AMD technology as a part of driving the company’s return to the datacenter market.
AMD will account for this licensing agreement under the equity method of accounting. The JV consists of two separate legal entities where AMD has a majority stake in one and a minority stake in the other. AMD’s total exposure to JV losses is limited to its investment in the JV.  As of March 26, 2016 our investment in the JV was $0.
Non-GAAP operating loss was $55 million.
To derive non-GAAP operating loss, we exclude the impact of stock-based compensation and restructuring and other special charges, net.
Non-GAAP net loss was $96 million.
To derive non-GAAP net loss, we exclude the impact of stock-based compensation and restructuring and other special charges, net.

AMD Q1-16 CFO Commentary
Page 2 
April 21, 2016
                            
     

Depreciation and amortization, excluding amortization of acquired intangible assets, was $33 million, compared to $34 million in the prior quarter.
Interest expense was $40 million, compared to $41 million in the prior quarter.
Net interest expense, other expense and taxes were $41 million in the quarter, on a GAAP basis, down from $53 million in the prior quarter primarily due to a $13 million tax settlement in a foreign jurisdiction in Q4 2015.
Non-GAAP net loss per share was $0.12, calculated using 793 million shares.
Adjusted EBITDA was negative $22 million, compared to negative $5 million in the prior quarter.
Q1 2016 Segment Results
Computing and Graphics segment revenue was $460 million, down 2% sequentially, primarily due to decreased sales of client desktop processors.
•
Client desktop processor sales decreased sequentially and notebook processor and chipset sales increased sequentially.
•
Client average selling price (ASP) decreased sequentially driven by a lower desktop processor ASP and decreased year-over-year due to a lower notebook processor ASP.
•
GPU ASP decreased sequentially driven by lower consumer GPU ASPs and increased year-over-year, primarily due to higher channel and professional graphics ASPs.
Computing and Graphics operating loss was $70 million, compared to an operating loss of $99 million in Q4 2015, primarily due to lower operating expenses.
Enterprise, Embedded and Semi-Custom segment revenue was $372 million, down 24% compared to the prior quarter, primarily driven by lower sales of our semi-custom SoCs.
Enterprise, Embedded and Semi-Custom operating income was $16 million, down from operating income of $59 million in the prior quarter, primarily due to lower revenue and higher R&D expenses, partially offset by the Q1 2016 $7 million IP licensing gain.
GLOBALFOUNDRIES Wafer Supply Agreement (WSA)
Q1 2016 total wafer purchases from GLOBALFOUNDRIES were $183 million, including $155 million of wafer purchases related to the 2015 WSA amendment taken in Q1 2016. 
Balance Sheet

AMD Q1-16 CFO Commentary
Page 3 
April 21, 2016
                            
     

Cash and cash equivalents were $716 million at the end of Q1 2016, compared to $785 million at the end of the prior quarter, primarily driven by lower sales and semi-annual debt interest payments of $69 million in Q1 2016. Our Q1 results also include $52 million received, net of withholding tax, related to the IP licensing agreement.
Cash, cash equivalents and marketable securities at the end of the following quarters were:
Q1-16
 
Q4-15
 
Q3-15
 
Q2-15
 
Q1-15
$716M
 
$785M
 
$755M
 
$829M
 
$906M
Inventory was $675 million exiting the quarter, compared to $678 million at the end of Q4 2015.
Payable to GLOBALFOUNDRIES line item on the Balance Sheet of $233 million includes amounts due to GLOBALFOUNDRIES for wafer purchases.
Total debt at the end of the quarter was $2.24 billion, flat from the end of the prior quarter. As of the end of the quarter, the total borrowing against our secured revolving line of credit was $230 million, unchanged from the prior quarter. During Q1 2016, we retroactively adopted an accounting standard related to simplifying the presentation of debt issuance costs. As a result, certain financing costs were reclassified and our balance sheet reflects debt balances for Q1 2016 and Q4 2015 that are lower by $23 million and $25 million respectively.
Total Debt
(Millions)
 
Q1 2016
 
Q4 2015
6.75% Senior Notes due 2019
 
$
600

 
$
600

6.75% Senior Notes due 2019—Interest Rate Swap
 
4

 
7

7.75% Senior Notes due 2020
 
450

 
450

7.50% Senior Notes due 2022
 
475

 
475

7.00% Senior Notes due 2024
 
500

 
500

Borrowings from secured revolving line of credit, net
 
230

 
230

Total Debt (principal amount)
 
2,259

 
2,262

Unamortized financing Costs*
 
(23
)
 
(25
)
Total Debt
 
$
2,236

 
$
2,237

*AMD retrospectively adopted FASB ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs in Q116 and reclassified the financing costs from long term assets to long term debt.
Non-GAAP free cash flow was negative $68 million, with net cash used by operating activities of $42 million and capital expenditures of $26 million.
Assembly, Test, Mark and Pack (ATMP) Manufacturing Facilities Joint Venture

AMD Q1-16 CFO Commentary
Page 4 
April 21, 2016
                            
     

We continue to work toward closure of our JV with Nantong Fujitsu Microelectronics Co., Ltd. (NFME). Earlier this month, NFME’s shareholders approved the transaction and we are now in the final stages of obtaining regulatory approvals, and expect to close the transaction this quarter. From this transaction, we expect to receive approximately $320 million, net of taxes and other expenses.
Outlook
The following statements concerning AMD are forward-looking and actual results could differ materially from current expectations. Investors are urged to review in detail the risks and uncertainties in AMD’s Securities and Exchange Commission filings, including but not limited to the Annual Report on Form 10-K for the year ended December 26, 2015.
For Q2 2016, based on a 13 week quarter, we expect:
•
Revenue to increase 15% sequentially, +/- 3%, driven by strong demand for our semi-custom and graphics products.
•
Gross margin to be approximately 31%.
•
IP monetization licensing gain of approximately $25 million.
•
Non-GAAP operating expenses to be approximately $335 million.
•
Interest expense, taxes and other to be approximately $45 million, including approximately $3 million of taxes related to the IP licensing deal.
•
Cash and cash equivalents to be approximately $950 million, including approximately $320 million from ATMP joint venture net proceeds (after taxes and expenses) subject to regulatory and other approvals, and
•
Inventory to be slightly up from Q1 2016 levels.
Our fiscal year 2016 is based on 53 weeks and we will take the extra week in our fiscal fourth quarter.
For the full year 2016, we expect:
•
Revenue to grow year-over-year.
•
IP monetization licensing gain of approximately $52 million, with $7 million already recognized in Q1 2016.
•
Non-GAAP operating expenses to be approximately between $330 million and $350 million per quarter, as we continue to invest in leadership products.
•
Interest expense, taxes and other to be approximately $45 million per quarter.

AMD Q1-16 CFO Commentary
Page 5 
April 21, 2016
                            
     

•
Cash and cash equivalents balances to be in the optimal zone of $600 million to $1 billion.
•
Capital expenditures of approximately $80 million.
•
Inventory to be down year-over-year.
•
To return to non-GAAP operating profitability in 2H 2016.
•
To generate positive free cash flow from operations in 2016.

***********************************************

AMD Q1-16 CFO Commentary
Page 6 
April 21, 2016
                            
     

For more information, contact:
Investor Contact:
Ruth Cotter
408-749-3887

Media Contact:
Drew Prairie
512-602-4425


***********************************************



Non-GAAP Measures
To supplement the financial results of Advanced Micro Devices, Inc. (“AMD” or the “Company”) presented on a U.S. GAAP (“GAAP”) basis, this commentary contains non-GAAP financial measures, including non-GAAP gross margin, non-GAAP operating expenses, non-GAAP research and development and marketing, general and administrative expenses, non-GAAP operating income (loss), non-GAAP net income (loss), non-GAAP earnings (loss) per share, Adjusted EBITDA and non-GAAP free cash flow. These non-GAAP financial measures reflect certain adjustments, and the Company has presented a reconciliation of GAAP to non-GAAP financial measures in the tables below.
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. In addition, the Company excluded amortization of acquired intangible assets for the first quarter of 2015. 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.

AMD Q1-16 CFO Commentary
Page 7 
April 21, 2016
                            





The Company also presents non-GAAP free cash flow in this commentary as a supplemental measure of its performance. Non-GAAP free cash flow for the Company was determined by adjusting GAAP net cash provided by (used in) operating activities less capital expenditures. The Company calculates and communicates non-GAAP free cash flow because the Company’s management believes it is important to investors to understand the nature of this cash flow. 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 of these non-GAAP financial measures to the most directly comparable GAAP financial measures. The Company 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 the Company believes it assists investors in comparing the Company’s performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance.


AMD Q1-16 CFO Commentary
Page 8 
April 21, 2016
                            





Reconciliation of GAAP to Non-GAAP Gross Margin

(Millions except percentages)
 
Q1-16
 
Q4-15
 
Q1-15
GAAP Gross Margin
 
$
269

 
$
283

 
$
326

GAAP Gross Margin %
 
32
%
 
30
%
 
32
%
Stock-based compensation
 
1

 
1

 
1

Non-GAAP Gross Margin
 
$
270

 
$
284

 
$
327

Non-GAAP Gross Margin %
 
32
%
 
30
%
 
32
%

Reconciliation of GAAP to Non-GAAP Operating Expenses
 
(Millions)
 
Q1-16
 
Q4-15
 
Q3-15
 
Q2-15
 
Q1-15
GAAP operating expenses
 
$
344

 
$
332

 
$
397

 
$
369

 
$
463

Restructuring and other special charges, net
 
(3
)
 
(6
)
 
48

 
—

 
87

Amortization of acquired intangible assets
 
—

 
—

 
—

 
—

 
3

Stock-based compensation
 
15

 
15

 
13

 
16

 
16

Non-GAAP operating expenses
 
$
332

 
$
323

 
$
336

 
$
353

 
$
357


Reconciliation of GAAP to Non-GAAP Research and Development and Marketing, General and Administrative Expenses
(Millions)
 

 
Q1-16
 

 

 
Q4-15
 

 

 
Q1-15
 


 
R&D
 
SG&A
 
Total
 
R&D
 
SG&A
 
Total
 
R&D
 
SG&A
 
Total
GAAP research and development and marketing, general and administrative expenses
 
$
242

 
$
105

 
$
347

 
$
229

 
$
109

 
$
338

 
$
242

 
$
131

 
$
373

Stock-based compensation
 
9

 
6

 
15

 
9

 
6

 
15

 
10

 
6

 
16

Non-GAAP research and development and marketing, general and administrative expenses
 
$
233

 
$
99

 
$
332

 
$
220

 
$
103

 
$
323

 
$
232

 
$
125

 
$
357

Reconciliation of GAAP to Non-GAAP Operating Loss
 
(Millions)
 
Q1-16
 
Q4-15
 
Q1-15
GAAP operating loss
 
$
(68
)
 
$
(49
)
 
$
(137
)
Restructuring and other special charges, net
 
(3
)
 
(6
)
 
87

Amortization of acquired intangible assets
 
—

 
—

 
3

Stock-based compensation
 
16

 
16

 
17

Non-GAAP operating loss
 
$
(55
)
 
$
(39
)
 
$
(30
)
 

AMD Q1-16 CFO Commentary
Page 9 
April 21, 2016
                            





Reconciliation of GAAP to Non-GAAP Net Loss/Loss per Share
 
(Millions except per share amounts)
 
Q1-16
 
Q4-15
 
Q1-15
GAAP net loss /loss per share
 
$
(109
)
 
$
(0.14
)
 
$
(102
)
 
$
(0.13
)
 
$
(180
)
 
$
(0.23
)
Restructuring and other special charges, net
 
(3
)
 
—

 
(6
)
 
(0.01
)
 
87

 
0.11

Tax settlement in foreign jurisdiction
 
—

 
—

 
13

 
0.02

 
—

 
—

Amortization of acquired intangible assets
 
—

 
—

 
—

 
—

 
3

 
0.00

Stock-based compensation
 
16

 
0.02

 
16

 
0.02

 
17

 
0.02

Non-GAAP net loss/loss per share
 
$
(96
)
 
$
(0.12
)
 
$
(79
)
 
$
(0.10
)
 
$
(73
)
 
$
(0.09
)

Reconciliation of GAAP Operating Loss to Adjusted EBITDA
 
 
 
Three Months Ended
 
 
March 26,
2016
 
December 26,
2015
 
March 28,
2015
GAAP operating loss
 
$
(68
)
 
$
(49
)
 
$
(137
)
Restructuring and other special charges, net
 
(3
)
 
(6
)
 
87

Stock-based compensation expense
 
16

 
16

 
17

Amortization of acquired intangible assets
 
—

 
—

 
3

Depreciation and amortization
 
33

 
34

 
43

Adjusted EBITDA
 
$
(22
)
 
$
(5
)
 
$
13


Non-GAAP free Cash Flow Reconciliation
 
 
Three Months Ended
 
March 26,
2016
 
December 26,
2015
 
March 28,
2015
GAAP net cash provided by (used in) operating activities
$
(42
)
 
$
59

 
$
(172
)
Purchases of property, plant and equipment
(26
)
 
(32
)
 
(22
)
Non-GAAP free cash flow
$
(68
)
 
$
27

 
$
(194
)
 


Cautionary Statement
This commentary contains forward-looking statements concerning AMD; its financial outlook for the second quarter of 2016 and fiscal 2016, including revenue, gross margin, the total of IP monetization licensing gain, non-GAAP operating expenses, the total of interest expense, taxes and other expense, inventory, capital expenditures, its optimal cash and cash equivalents balances, the expected amounts to be received by AMD under the IP licensing agreement, AMD’s ability to return to non-GAAP operating profitability in the second half of 2016 and AMD’s ability to generate positive free cash flow from operations in 2016; the expected benefits from AMD's joint venture with THATIC; AMD’s expected royalty payments from future product sales; and the expected closing date for the proposed joint ventures between AMD and Nantong Fujitsu Microelectronics Co. Ltd. and the expected cash proceeds AMD will receive at closing, 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 including “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “pro forma,” “estimates,” “anticipates,” or the negative of these words and phrases, other variations of these words and phrases or comparable terminology. Investors are cautioned that the forward-looking statements in this commentary 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. 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 relies on GLOBALFOUNDRIES Inc. (GF) to manufacture all of its microprocessor and APU products and a certain portion of

AMD Q1-16 CFO Commentary
Page 10 
April 21, 2016
                            





its GPU products, 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; global economic uncertainty may adversely impact AMD’s business and operating results; 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 for a principal amount up to $500 million (Secured Revolving Line of Credit) impose restrictions on AMD that may adversely affect its ability to operate its business; the completion and impact of its 2015 restructuring plan, its transformation initiatives and any future restructuring actions could adversely affect it; the markets in which AMD’s products are sold are highly competitive; uncertainties involving the ordering and shipment of AMD’s products could materially adversely affect it; 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; 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; 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; 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; a variety of environmental laws that AMD is subject to could result in additional costs and liabilities; and higher health

AMD Q1-16 CFO Commentary
Page 11 
April 21, 2016
                            





care costs and labor costs could adversely affect AMD’s business. 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 26, 2015.




AMD Q1-16 CFO Commentary
Page 12 
April 21, 2016
                            

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings