Close

Form 8-K ADVANCED MICRO DEVICES For: Jul 21

FREE Breaking News Alerts from StreetInsider.com!

E-mail Address

StreetInsider.com Top Tickers, 4/24/2024

1. TSLA
2. ENPH
3. TXN
4. BA
5. SPOT
6. META
7. V
8. IBM
9. KMB
10. GM


July 21, 2016 4:18 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
July 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 July 21, 2016, Advanced Micro Devices, Inc. (the “Company”) announced its financial position and results of operations as of and for its fiscal quarter ended June 25, 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 June 25, 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 July 21, 2016
99.2
 
CFO Commentary on Results of Second Fiscal Quarter ended June 25, 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: July 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 Second Quarter Results



SUNNYVALE, Calif. — July 21, 2016 — AMD (NASDAQ: AMD) today announced revenue for the second quarter of 2016 of $1,027 million, operating loss of $8 million, and net income of $69 million, or $0.08 per diluted share. Non-GAAP (1) operating income was $3 million and non-GAAP (1) net loss was $40 million, or $0.05 per share.

GAAP Financial Results
 
  
Q2-16
 
Q1-16
 
Q2-15
Revenue
  
$1,027M
 
$832M
 
$942M
Operating loss
  
$(8)M
 
$(68)M
 
$(137)M
Net income (loss) / earnings (loss) per share
  
$69M/$0.08
  
$(109)M/$(0.14)
  
$(181)M/$(0.23)

Non-GAAP Financial Results(1) 
 
  
Q2-16
 
Q1-16
 
Q2-15
Revenue
  
$1,027M
 
$832M
 
$942M
Operating income (loss)
  
$3M
 
$(55)M
 
$(87)M
Net loss / loss per share
  
$(40)M/$(0.05)
  
$(96)M/$(0.12)
  
$(131)M/$(0.17)
    
“In the second quarter we accomplished a significant milestone as we returned to non-GAAP operating profitability based on solid execution and strong demand for our semi-custom and graphics products,” said Lisa Su, AMD president and CEO.  "Based on the strength of our semi-custom products and demand for our latest Radeon RX GPUs and 7th Generation A-Series APUs, we are well positioned to drive growth and market share gains in the second half of the year.”

1


Q2 2016 Results
•
Q2 2016, Q1 2016 and Q2 2015 were 13-week fiscal quarters.
•
Revenue of $1,027 million, up 23 percent sequentially and up 9 percent year-over-year primarily due to higher sales of semi-custom SoCs.
•
Gross margin of 31 percent, down 1 percentage point sequentially, due primarily to a higher mix of semi-custom SoC sales.
•
Operating expenses of $353 million, compared to $344 million for the prior quarter. Non-GAAP operating expenses of $342 million, compared to non-GAAP operating expenses of $332 million in Q1 2016, primarily due to increased marketing investments.
•
Operating loss of $8 million, compared to an operating loss of $68 million in Q1 2016. Non-GAAP(1) operating income of $3 million, compared to non-GAAP(1) operating loss of $55 million in Q1 2016, primarily due to higher sales.
•
Net income of $69 million, earnings per share of $0.08, and non-GAAP(1) net loss of $40 million, non-GAAP(1) loss per share of $0.05. This is compared to a 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 in Q1 2016. The GAAP sequential and year-over-year improvements were primarily due to a gain of $150 million related to the formation of our assembly, test, mark and pack (ATMP) joint venture (JV) with Nantong Fujitsu Microelectronics Co., Ltd. (NFME), partially offset by related taxes of $27 million. The non-GAAP sequential and year-over-year improvements were primarily due to higher sales and an IP licensing gain.
•
Cash and cash equivalents were $957 million at the end of the quarter, up $241 million from the end of the prior quarter, primarily due to net cash proceeds received from the ATMP JV transaction with NFME which closed in Q2 2016.
•
Total debt at the end of the quarter was $2.24 billion, flat from the prior quarter.




2


Financial Segment Summary
•
Computing and Graphics segment revenue of $435 million decreased 5 percent sequentially and increased 15 percent from Q2 2015. The sequential decrease was primarily due to decreased sales of client desktop processors and chipsets and the year-over-year increase was driven primarily by increased notebook processor and GPU sales.
◦
Operating loss was $81 million, compared with an operating loss of $70 million in Q1 2016 and an operating loss of $147 million in Q2 2015. The sequential increase was primarily due to lower revenue. The year-over-year improvement was primarily due to higher revenue and lower operating expenses.
◦
Client average selling price (ASP) increased sequentially driven by a higher desktop processor ASP and decreased year-over-year primarily due to lower notebook processor ASP.
◦
GPU ASP remained flat sequentially and decreased year-over-year. The year-over-year decrease was primarily driven by lower desktop GPU ASP.
•
Enterprise, Embedded and Semi-Custom segment revenue of $592 million increased 59 percent sequentially and increased 5 percent year-over-year due to higher sales of semi-custom SoCs.
◦
Operating income was $84 million compared with $16 million in Q1 2016 and $27 million in Q2 2015 primarily due to higher revenue from the sale of semi-custom SoC products and a $26 million IP licensing gain in Q2 2016 compared to $7 million in Q1 2016.
•
All Other category operating loss was $11 million compared with $14 million in Q1 2016 and $17 million in Q2 2015.






3


Recent Highlights

•
AMD and NFME created a joint venture offering differentiated ATMP capabilities to both AMD and a broader range of customers.
•
The AMD Board of Directors appointed Board member John Caldwell as Chairman.
•
AMD unveiled the Radeon™ RX GPU product lineup based on its new Polaris architecture based on 14nm FinFET technology, enabling generational leaps in energy efficiency and advancing the company’s work to bring virtual reality to mainstream consumers.
▪
AMD announced availability of the Radeon™ RX 480 graphics card, which is designed to deliver premium VR experiences to the largest segment of GPU buyers.
▪
AMD also announced the acquisition of software company HiAlgo Inc., a developer of unique PC gaming technologies, which will help drive future gaming innovation in Radeon Software that will benefit owners of Radeon™ RX Series GPUs and beyond.
•
AMD launched its 7th Generation A-Series APU mobile processors (“Bristol Ridge” and “Stoney Ridge”), designed for powerful productivity and entertainment performance.
▪
AMD 7th Generation APUs can be found today in the HP ENVY x360, with new notebook designs from Acer, Asus, Dell, HP, Lenovo, and others expected to become available throughout 2016.
•
AMD conducted the world’s first live public demonstration of its upcoming x86 “Zen” processor core architecture in the next-generation AM4 desktop processor (codenamed “Summit Ridge”).
•
AMD extended its leadership in gaming as Microsoft announced two new AMD-powered game consoles to its Xbox family that enable the next generation of immersive gaming experiences through support for new technologies like HDR, 4K and high fidelity VR.

4


The Xbox One S will go on sale in early August 2016, while the company’s next-generation Project Scorpio is scheduled to arrive for holiday 2017.
•
AMD continued to drive innovation in the professional graphics market with the introduction of the industry’s only hardware-virtualized GPU for blade servers (AMD FirePro™ S7100X) and the world’s first workstation graphics card with industry-leading 32GB memory support (AMD FirePro™ W9100 32GB).
•
AMD joined with ARM, Huawei, IBM, Mellanox, Qualcomm Technologies and Xilinx to establish a new, open specification for high-performance, coherent interconnect technology designed to significantly improve compute efficiency for servers running datacenter workloads.
•
AMD released its 21st annual corporate responsibility (CR) report detailing the company’s progress toward its social and environmental goals.

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 Q3 2016, AMD expects revenue to increase 18 percent sequentially, plus or minus 3 percent.
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 second 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)
 
Q2-16
 
Q1-16
 
Q2-15
GAAP Gross Margin
 
$
319

 
$
269

 
$
232

GAAP Gross Margin %
 
31
%
 
32
%
 
25
%
Technology node transition charge
 
—

 
—

 
33

Stock-based compensation
 
—

 
1

 
1

Non-GAAP Gross Margin
 
$
319

 
$
270

 
$
266

Non-GAAP Gross Margin %
 
31
%
 
32
%
 
28
%

Reconciliation of GAAP to Non-GAAP Operating Expenses
 
(Millions)
 
Q2-16
 
Q1-16
 
Q2-15
GAAP operating expenses
 
$
353

 
$
344

 
$
369

Restructuring and other special charges, net
 
(7
)
 
(3
)
 
—

Stock-based compensation
 
18

 
15

 
16

Non-GAAP operating expenses
 
$
342

 
$
332

 
$
353


Reconciliation of GAAP Operating loss to Non-GAAP Operating Income (loss)
(Millions)
 
Q2-16
 
Q1-16
 
Q2-15
GAAP operating loss
 
$
(8
)
 
$
(68
)
 
$
(137
)
Technology node transition charge
 
—

 
—

 
33

Restructuring and other special charges, net
 
(7
)
 
(3
)
 
—

Stock-based compensation
 
18

 
16

 
17

Non-GAAP operating income (loss)
 
$
3

 
$
(55
)
 
$
(87
)


Reconciliation of GAAP Net Income (Loss)/Income (Loss) per Share to Non-GAAP Net Loss/Loss per Share
(Millions except per share amounts)
 
Q2-16
 
Q1-16
 
Q2-15
GAAP net income (loss) /income (loss) per share
 
$
69

 
$
0.08

 
$
(109
)
 
$
(0.14
)
 
$
(181
)
 
$
(0.23
)
Technology node transition charge
 
—

 
—

 
—

 
—

 
33

 
0.04

Restructuring and other special charges, net
 
(7
)
 
(0.01
)
 
(3
)
 
—

 
—

 
—

Stock-based compensation
 
18

 
0.02

 
16

 
0.02

 
17

 
0.02

Gain on sale of 85% of ATMP JV
 
(150
)
 
(0.19
)
 
—

 
—

 
—

 
—

Equity in income (loss) of ATMP JV
 
3

 
—

 
—

 
—

 
—

 
—

Tax provision related to sale of 85% of ATMP JV
 
27

 
0.03

 
—

 
—

 
—

 
—

Non-GAAP net loss/loss per share
 
$
(40
)
 
$
(0.05
)
 
$
(96
)
 
$
(0.12
)
 
$
(131
)
 
$
(0.17
)

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

6


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.

7


Cautionary Statement

This press release contains forward-looking statements concerning Advanced Micro Devices, Inc. (“AMD” or the “Company”) including the demand of AMD’s semi-custom products, Radeon™ RX GPUs and 7th Generation A-Series APUs, the ability of AMD to position itself based on the strength of its products to drive growth and market share gains in the second half of the year; the features, functionality, timing and availability of AMD future products; and AMD’s expected third 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 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 impose restrictions on AMD that may adversely affect its ability to operate its business; the completion and impact of the 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; and a variety of environmental laws that AMD is subject to could result in additional

8


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 March 26, 2016.


-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 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.




9


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

 
 
Three Months Ended
 
Six Months Ended
 
 
June 25,
2016
 
March 26,
2016
 
June 27,
2015
 
June 25,
2016
 
June 27, 2015
Net revenue
 
$
1,027

 
$
832

 
$
942

 
$
1,859

 
$
1,972

Cost of sales
 
708

 
563

 
710

 
1,271

 
1,414

Gross margin
 
319

 
269

 
232

 
588

 
558

Gross margin %
 
31
%
 
32
%
 
25
%
 
32
%
 
28
%
Research and development
 
243

 
242

 
235

 
485

 
477

Marketing, general and administrative
 
117

 
105

 
134

 
222

 
265

Amortization of acquired intangible assets
 
—

 
—

 
—

 
—

 
3

Restructuring and other special charges, net
 
(7
)
 
(3
)
 
—

 
(10
)
 
87

Licensing gain
 
(26
)
 
(7
)
 
—

 
(33
)
 
—

Operating loss
 
(8
)
 
(68
)
 
(137
)
 
(76
)
 
(274
)
Interest expense
 
(41
)
 
(40
)
 
(40
)
 
(81
)
 
(80
)
Other income (expense), net
 
150

 
—

 
(3
)
 
150

 
(3
)
Income (loss) before equity loss and income taxes
 
101

 
(108
)
 
(180
)
 
(7
)
 
(357
)
Provision for income taxes
 
29

 
1

 
1

 
30

 
4

Equity in income (loss) of ATMP JV
 
(3
)
 
—

 
—

 
(3
)
 
—

Net income (loss)
 
$
69

 
$
(109
)
 
$
(181
)
 
$
(40
)
 
$
(361
)
Net income (loss) per share
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.09

 
$
(0.14
)
 
$
(0.23
)
 
$
(0.05
)
 
$
(0.46
)
Diluted
 
$
0.08

 
$
(0.14
)
 
$
(0.23
)
 
$
(0.05
)
 
$
(0.46
)
Shares used in per share calculation
 
 
 
 
 
 
 

 
 
Basic
 
794

 
793

 
778

 
794

 
778

Diluted
 
821

 
793

 
778

 
794

 
778

 
ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Millions)
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 25,
2016
 
March 26,
2016
 
June 27,
2015
 
June 25,
2016
 
June 27, 2015
Total comprehensive income (loss)
 
$
72

 
$
(107
)
 
$
(174
)
 
$
(35
)
 
$
(361
)

10


ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (1) (2) 
(Millions)
 
 
 
June 25,
2016
 
December 26,
2015
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
957

 
$
785

Accounts receivable, net
 
671

 
533

Inventories, net
 
743

 
678

Prepayment and other - GLOBALFOUNDRIES
 
12

 
33

Prepaid expenses
 
68

 
43

Other current assets
 
55

 
248

Total current assets
 
2,506

 
2,320

Property, plant and equipment, net
 
169

 
188

Goodwill
 
289

 
278

Investment in ATMP JV
 
62

 
—

Other assets
 
290

 
298

Total Assets
 
$
3,316

 
$
3,084

Liabilities and Stockholders' Equity (Deficit)
 
 
 
 
Current liabilities:
 
 
 
 
Short-term debt
 
$
226

 
$
230

Accounts payable
 
616

 
279

Payable to GLOBALFOUNDRIES
 
94

 
245

Payable to ATMP JV
 
150

 
—

Accrued liabilities
 
392

 
472

Other current liabilities
 
61

 
124

Deferred income on shipments to distributors
 
42

 
53

Total current liabilities
 
1,581

 
1,403

Long-term debt
 
2,012

 
2,007

Other long-term liabilities
 
136

 
86

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

 
8

Additional paid-in capital
 
7,053

 
7,017

Treasury stock, at cost
 
(125
)
 
(123
)
Accumulated deficit
 
(7,346
)
 
(7,306
)
Accumulated other comprehensive loss
 
(3
)
 
(8
)
Total Stockholders' equity (deficit)
 
(413
)
 
(412
)
Total Liabilities and Stockholders' Equity (Deficit)
 
$
3,316

 
$
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.


11


ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions)
 
 
 
Three Months
Ended
 
Six Months
Ended
 
 
June 25,
2016
 
June 25,
2016
Cash flows from operating activities:
 
 
 
 
Net income (loss)
 
$
69

 
$
(40
)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
 
 
 
 
Gain on sale of equity interests in ATMP JV
 
(150
)
 
(150
)
Equity in income (loss) of ATMP JV
 
(1
)
 
(1
)
Depreciation and amortization
 
33

 
66

Provision for deferred income taxes
 
11

 
11

Stock-based compensation expense
 
18

 
34

Non-cash interest expense
 
3

 
7

Other
 
(1
)
 
(6
)
Changes in operating assets and liabilities:
 
 
 
 
Accounts receivable
 
(164
)
 
(138
)
Inventories
 
(69
)
 
(66
)
Prepayment and other - GLOBALFOUNDRIES
 
14

 
21

Prepaid expenses and other assets
 
(139
)
 
(117
)
Payable to ATMP JV
 
150

 
150

Payable to GLOBALFOUNDRIES
 
(139
)
 
(151
)
Accounts payable, accrued liabilities and other
 
280

 
253

Net cash used in operating activities
 
$
(85
)
 
$
(127
)
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Purchases of property, plant and equipment
 
(21
)
 
(47
)
Proceeds from sale of equity interests in ATMP JV
 
351

 
351

Other
 
(1
)
 
(1
)
Net cash provided by investing activities
 
$
329

 
$
303

 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Proceeds from issuance of common stock
 
2

 
2

Repayments of borrowings, net
 
(4
)
 
(4
)
Other
 
(1
)
 
(2
)
Net cash used in financing activities
 
$
(3
)
 
$
(4
)
Net increase in cash and cash equivalents
 
241

 
172

Cash and cash equivalents at beginning of period
 
$
716

 
$
785

Cash and cash equivalents at end of period
 
$
957

 
$
957


12


ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA
(Millions except headcount)
 
 
Three Months Ended
 
Six Months Ended
 
 
June 25,
2016
 
March 26,
2016
 
June 27,
2015
 
June 25, 2016
 
June 27, 2015
Segment and Category Information
 
 
 
 
 
 
 
 
 
 
Computing and Graphics (1)
 
 
 
 
 
 
 
 
 
 
Net revenue
 
$
435

 
$
460

 
$
379

 
$
895

 
$
911

Operating loss
 
$
(81
)
 
$
(70
)
 
$
(147
)
 
$
(151
)
 
$
(222
)
Enterprise, Embedded and Semi-Custom (2)
 
 
 
 
 
 
 
 
 
 
Net revenue
 
592

 
372

 
563

 
964

 
1,061

Operating income
 
84

 
16

 
27

 
100

 
72

All Other (3)
 
 
 
 
 
 
 
 
 
 
Net revenue
 
—

 
—

 
—

 
—

 
—

Operating loss
 
(11
)
 
(14
)
 
(17
)
 
(25
)
 
(124
)
Total
 
 
 
 
 
 
 
—

 
 
Net revenue
 
$
1,027

 
$
832

 
$
942

 
$
1,859

 
$
1,972

Operating loss
 
$
(8
)
 
$
(68
)
 
$
(137
)
 
$
(76
)
 
$
(274
)
Other Data
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization, excluding
amortization of acquired intangible assets
 
$
33

 
$
33

 
$
45

 
$
66

 
$
88

Capital additions
 
$
21

 
$
26

 
$
17

 
$
47

 
$
39

Adjusted EBITDA (4)
 
$
36

 
$
(22
)
 
$
(42
)
 
$
14

 
$
(29
)
Cash and cash equivalents
 
$
957

 
$
716

 
$
829

 
$
957

 
$
829

Non-GAAP free cash flow (5)
 
$
(106
)
 
$
(68
)
 
$
(74
)
 
$
(174
)
 
$
(268
)
Total assets
 
$
3,316

 
$
2,981

 
$
3,353

 
$
3,316

 
$
3,353

Total debt
 
$
2,238

 
$
2,236

 
$
2,241

 
$
2,238

 
$
2,241

Headcount
 
8,099

 
9,047

 
9,469

 
8,099

 
9,469

See footnotes on the next page

13


(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 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. In addition, the Company also included amortization of acquired intangible assets for six months ended June 27, 2015.
 
(4 
) 
Reconciliation of GAAP Operating Loss to Adjusted EBITDA*
 
 
Three Months Ended
 
Six Months Ended
 
 
June 25,
2016
 
March 26,
2016
 
June 27,
2015
 
June 25,
2016
 
June 27, 2015
GAAP operating loss
 
$
(8
)
 
$
(68
)
 
$
(137
)
 
$
(76
)
 
$
(274
)
Technology node transition charge
 
—

 
—

 
33

 
—

 
33

Restructuring and other special charges, net
 
(7
)
 
(3
)
 
—

 
(10
)
 
87

Stock-based compensation
 
18

 
16

 
17

 
34

 
34

Amortization of acquired intangible assets
 
—

 
—

 
—

 
—

 
3

Depreciation and amortization
 
33

 
33

 
45

 
66

 
88

Adjusted EBITDA
 
$
36

 
$
(22
)
 
$
(42
)
 
$
14

 
$
(29
)
 
(5)    Reconciliation of Non-GAAP free cash flow** 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 25,
2016
 
March 26,
2016
 
June 27,
2015
 
June 25, 2016
 
June 27, 2015
GAAP net cash used in operating activities
 
$
(85
)
 
$
(42
)
 
$
(57
)
 
$
(127
)
 
$
(229
)
Purchases of property, plant and equipment
 
(21
)
 
(26
)
 
(17
)
 
(47
)
 
(39
)
Non-GAAP free cash flow
 
$
(106
)
 
$
(68
)
 
$
(74
)
 
$
(174
)
 
$
(268
)

*
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 a technology node transition charge for the three months and six months ended June 27, 2015 and amortization of acquired intangible assets for the six months ended June 27, 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.


14
     

Exhibit 99.2
AMD Reports 2016 Second Quarter Results – CFO Commentary
July 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.

Q2 2016 Results
•
Revenue of $1,027 million, up 23% sequentially and 9% year-over-year.
•
Gross margin of 31%, down 1 percentage point sequentially.
•
Operating loss of $8 million, compared to an operating loss of $68 million in Q1 2016 and non-GAAP operating income of $3 million, compared to non-GAAP operating loss of $55 million in Q1 2016.
•
Net income of $69 million, earnings per share of $0.08, compared to a net loss of $109 million, loss per share of $0.14 in Q1 2016 and non-GAAP net loss of $40 million, loss per share of $0.05, compared to non-GAAP net loss of $96 million, loss per share of $0.12 in Q1 2016.
•
Received $351 million in net cash proceeds from the assembly, test, mark and pack (ATMP) joint venture (JV) transaction with Nantong Fujitsu Microelectronics Co., Ltd. (NFME) of which approximately $31 million is expected to be paid in taxes and expenses over the coming quarters.


Q2 2016 Commentary
Based on a 13-week quarter, revenue was $1,027 million, up 23% sequentially. Computing and Graphics segment revenue was down 5% from Q1 2016, primarily due to decreased sales of client desktop processors and chipsets. Enterprise, Embedded and Semi-Custom segment revenue was up 59% sequentially, primarily due to a higher semi-custom SoC sales.

Non-GAAP gross margin was 31%, down 1 percentage point sequentially, due primarily to higher mix of semi-custom SoC sales.

Operating expenses were $353 million and non-GAAP operating expenses were $342 million or 33% of revenue, up $10 million from the prior quarter’s non-GAAP operating expenses.

AMD Q2-16 CFO Commentary
Page 1 
July 21, 2016
                            
     

•
R&D expenses were $243 million, non-GAAP R&D was $233 million or 23% of revenue.
•
SG&A expenses were $117 million, non-GAAP SG&A was $109 million or 11% 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:
 
Q2-16
 
Q1-16
 
Q2-15
GAAP
$353M
 
$344M
 
$369M
Non-GAAP
$342M
 
$332M
 
$353M

Restructuring and other special charges, net was a credit of $7 million primarily facilities related, compared to a $3 million net credit in the prior quarter.

Non-GAAP operating income was $3 million, compared to a non-GAAP operating loss of $55 million in Q1 2016. This is the first quarter in the past six quarters that AMD had non-GAAP operating profitability.
To derive non-GAAP operating income (loss), we exclude the impact of stock-based compensation and restructuring and other special charges, net.

Non-GAAP net loss was $40 million compared to a non-GAAP net loss of $96 million in Q1 2016.
To derive non-GAAP net loss, we exclude the impact of stock-based compensation, restructuring and other special charges, net, gain and related taxes on sale of 85% of ATMP JV and equity income (loss) of ATMP JV.

Depreciation and amortization, excluding amortization of acquired intangible assets, was $33 million, flat from the prior quarter.

Interest expense was $41 million, compared to $40 million in the prior quarter.

Other income was $150 million due to a pre-tax gain from the ATMP JV transaction.


AMD Q2-16 CFO Commentary
Page 2 
July 21, 2016
                            
     

Recorded an equity loss of ATMP JV of $3 million, a new line item on the P&L in Q2 2016.

Taxes were $29 million, compared to $1 million in the prior quarter, $27 million of which related to the close of the ATMP JV transaction.

GAAP net earnings per share was $0.08, calculated using 821 million diluted shares. Non-GAAP net loss per share was $0.05, calculated using 794 million basic shares.

Adjusted EBITDA was $36 million, compared to negative $22 million in the prior quarter.


Q2 2016 Segment Results
Computing and Graphics segment revenue was $435 million, down 5% sequentially, primarily due to decreased sales of client desktop processors and chipsets up 15% year-over-year largely driven by higher client notebook processor and graphics sales.
•
Notebook processor sales increased sequentially.
•
Client average selling price (ASP) increased sequentially driven by higher desktop processor ASP and decreased year-over-year primarily driven by lower notebook processor ASP.
•
GPU ASP remained flat sequentially and decreased year-over year. The year-over-year decrease was primarily driven by lower desktop GPU ASP.

Computing and Graphics operating loss was $81 million, compared to an operating loss of $70 million in Q1 2016, primarily due to lower revenue.

Enterprise, Embedded and Semi-Custom segment revenue was $592 million, up 59% compared to the prior quarter and 5% year-over-year, driven by higher sales of our semi-custom SoCs.

Enterprise, Embedded and Semi-Custom operating income was $84 million, up from $16 million in the prior quarter, primarily due to higher revenue and a $26 million IP licensing gain compared to a $7 million IP licensing gain in Q1 2016.

AMD Q2-16 CFO Commentary
Page 3 
July 21, 2016
                            
     

GLOBALFOUNDRIES Wafer Supply Agreement (WSA)
Q2 2016 total wafer purchases from GLOBALFOUNDRIES were $75 million and year to date we have purchased $259 million of wafer purchases of which $181 million related to the 2015 WSA amendment.

Balance Sheet
Cash and cash equivalents were $957 million at the end of Q2 2016, compared to $716 million at the end of the prior quarter, primarily driven by $351 million net cash proceeds received from the ATMP JV transaction of which approximately $31 million is expected to be paid in taxes and expenses over the coming quarters. This was partially offset by ongoing working capital needs in the quarter.

Cash and cash equivalents at the end of the following quarters were:
Q2-16
 
Q1-16
 
Q4-15
 
Q3-15
 
Q2-15
$957M
 
$716M
 
$785M
 
$755M
 
$829M
Inventory was $743 million exiting the quarter, compared to $675 million at the end of Q1 2016 in support of stronger expected semi-custom sales in the 2H 2016 as well as the build of new FinFET products.

Payable to GLOBALFOUNDRIES line item on the Balance Sheet of $94 million includes amounts due to GLOBALFOUNDRIES for wafer purchases.

Payable to ATMP JV line item on the Balance Sheet of $150 million includes amounts due to the JV for ATMP related services.

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 $226 million.


AMD Q2-16 CFO Commentary
Page 4 
July 21, 2016
                            
     

Total Debt
(Millions)
 
Q2-16
 
Q1-16
6.75% Senior Notes due 2019
 
$
600

 
$
600

6.75% Senior Notes due 2019—Interest Rate Swap
 
10

 
4

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
 
226

 
230

Total Debt (principal amount)
 
2,261

 
2,259

Unamortized Financing Costs*
 
(23
)
 
(23
)
Total Debt
 
$
2,238

 
$
2,236

*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 $106 million, compared to a negative $68 million in Q1 2016, primarily due to inventory build in support of stronger 2H 2016. Net cash used by operating activities was $85 million and capital expenditure was $21 million.

Assembly, Test, Mark and Pack (ATMP) Manufacturing Facilities Joint Venture (JV)
•
On April 29, 2016, AMD completed the sale of 85% of the equity interests in AMD Technologies (China) Co., Ltd. and Advanced Micro Devices Export Sdn. Bhd.
•
NFME (Nantong Fujitsu Microelectronics Co., Ltd.) owns 85% of the equity interests in each JV, while AMD owns the remaining 15%.
•
AMD received $351 million in net cash proceeds from the transaction in Q2 2016 of which approximately $31 million is expected to be paid in taxes and expenses over coming quarters.
•
AMD recognized a pre-tax gain of $150 million in Q2 2016 and recorded $27 million of taxes related to the transaction.
•
AMD recorded $3 million of equity losses related to the ATMP JV in Q2 2016.
•
The JV provides ATMP services to AMD.

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 “Risk Factors” section in AMD’s Quarterly Report on Form 10-Q for the quarter ended March 26, 2016.



AMD Q2-16 CFO Commentary
Page 5 
July 21, 2016
                            
     

For Q3 2016, based on a 13 week quarter, we expect:
•
Revenue to increase 18% sequentially, +/- 3%, primarily driven by our semi-custom and graphics products, including new semi-custom business,
•
Gross margin to be approximately 31%,
•
Non-GAAP operating expenses to be approximately $350 million due to an increase in R&D investments,
•
IP monetization licensing gain of approximately $22 million,
•
Maintain non-GAAP operating profitability,
•
Interest expense, taxes and other to be approximately $45 million,
•
Cash and cash equivalents balances to be approximately flat quarter over quarter,
•
Inventory to be approximately $700 million.

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 low single digit percentage year-over-year,
•
IP monetization gain of approximately $75 million, with $33 million already recognized in 1H 2016,
•
Non-GAAP operating expenses to be approximately between $330 million and $350 million per quarter, as we continue to invest in leadership products,
•
Achieve non-GAAP operating profitability in 2H 2016,
•
Interest expense, taxes and other to be approximately $45 million per quarter in 2H 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 generate positive free cash flow in 2016.

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

AMD Q2-16 CFO Commentary
Page 6 
July 21, 2016
                            
     

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

Media Contact:
Drew Prairie
512-602-4425


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




AMD Q2-16 CFO Commentary
Page 7 
July 21, 2016
                            





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 a technology node transition charge for the three and six months ended June 27, 2015 and amortization of acquired intangible assets for the six months ended June 27, 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 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 Q2-16 CFO Commentary
Page 8 
July 21, 2016
                            





Reconciliation of GAAP to Non-GAAP Gross Margin

(Millions except percentages)
 
Q2-16
 
Q1-16
 
Q2-15
GAAP Gross Margin
 
$
319

 
$
269

 
$
232

GAAP Gross Margin %
 
31
%
 
32
%
 
25
%
Technology node transition charge
 
—

 
—

 
33

Stock-based compensation
 
—

 
1

 
1

Non-GAAP Gross Margin
 
$
319

 
$
270

 
$
266

Non-GAAP Gross Margin %
 
31
%
 
32
%
 
28
%

Reconciliation of GAAP to Non-GAAP Operating Expenses
 
(Millions)
 
Q2-16
 
Q1-16
 
Q2-15
GAAP operating expenses
 
$
353

 
$
344

 
$
369

Restructuring and other special charges, net
 
(7
)
 
(3
)
 
—

Stock-based compensation
 
18

 
15

 
16

Non-GAAP operating expenses
 
$
342

 
$
332

 
$
353


Reconciliation of GAAP to Non-GAAP Research and Development (R&D) and Marketing, General and Administrative Expenses (SG&A)
(Millions)
 

 
Q2-16
 

 

 
Q1-16
 

 

 
Q2-15
 


 
R&D
 
SG&A
 
Total
 
R&D
 
SG&A
 
Total
 
R&D
 
SG&A
 
Total
GAAP R&D & SG&A
 
$
243

 
$
117

 
$
360

 
$
242

 
$
105

 
$
347

 
$
235

 
$
134

 
$
369

Stock-based compensation
 
10

 
8

 
18

 
9

 
6

 
15

 
10

 
6

 
16

Non-GAAP R&D & SG&A
 
$
233

 
$
109

 
$
342

 
$
233

 
$
99

 
$
332

 
$
225

 
$
128

 
$
353

Reconciliation of GAAP Operating loss to Non-GAAP Operating Income (loss)
 
(Millions)
 
Q2-16
 
Q1-16
 
Q2-15
GAAP operating loss
 
$
(8
)
 
$
(68
)
 
$
(137
)
Technology node transition charge
 
—

 
—

 
33

Restructuring and other special charges, net
 
(7
)
 
(3
)
 
—

Stock-based compensation
 
18

 
16

 
17

Non-GAAP operating income (loss)
 
$
3

 
$
(55
)
 
$
(87
)
 

AMD Q2-16 CFO Commentary
Page 9 
July 21, 2016
                            





Reconciliation of GAAP Net Income (Loss)/Income (Loss) per Share to Non-GAAP Net Loss/Loss per Share
 
(Millions except per share amounts)
 
Q2-16
 
Q1-16
 
Q2-15
GAAP net income (loss) /income (loss) per share
 
$
69

 
$
0.08

 
$
(109
)
 
$
(0.14
)
 
$
(181
)
 
$
(0.23
)
Technology node transition charge
 
—

 
—

 
—

 
—

 
33

 
0.04

Restructuring and other special charges, net
 
(7
)
 
(0.01
)
 
(3
)
 
—

 
—

 
—

Stock-based compensation
 
18

 
0.02

 
16

 
0.02

 
17

 
0.02

Gain on sale of 85% of ATMP JV
 
(150
)
 
(0.19
)
 
—

 
—

 
—

 
—

Equity in income (loss) of ATMP JV
 
3

 
—

 
—

 
—

 
—

 
—

Tax provision related to sale of 85% of ATMP JV
 
27

 
0.03

 
—

 
—

 
—

 
—

Non-GAAP net loss/loss per share
 
$
(40
)
 
$
(0.05
)
 
$
(96
)
 
$
(0.12
)
 
$
(131
)
 
$
(0.17
)

Reconciliation of GAAP Operating Loss to Adjusted EBITDA
 
 
 
Q2-16
 
Q1-16
 
Q2-15
GAAP operating loss
 
$
(8
)
 
$
(68
)
 
$
(137
)
Technology node transition charge
 
—

 
—

 
33

Restructuring and other special charges, net
 
(7
)
 
(3
)
 
—

Stock-based compensation
 
18

 
16

 
17

Depreciation and amortization
 
33

 
33

 
45

Adjusted EBITDA
 
$
36

 
$
(22
)
 
$
(42
)

Reconciliation of Non-GAAP free Cash Flow
 
 
Q2-16
 
Q1-16
 
Q2-15
GAAP net cash used in operating activities
$
(85
)
 
$
(42
)
 
$
(57
)
Purchases of property, plant and equipment
(21
)
 
(26
)
 
(17
)
Non-GAAP free cash flow
$
(106
)
 
$
(68
)
 
$
(74
)
 


Cautionary Statement
This commentary contains forward-looking statements concerning Advanced Micro Devices, Inc. (“AMD or the “Company”), including its financial outlook for the third quarter of 2016 and fiscal 2016, including revenue, gross margin, non-GAAP operating expenses, the total of IP monetization licensing gain, the total of interest expense, taxes and other expense, inventory, capital expenditures, its optimal cash and cash equivalents balances, the taxes and expenses expected to be paid over the coming quarters in connection with the net cash proceeds received in connection with the ATMP JV transaction, AMD’s ability to maintain non-GAAP operating profitability in the second half of 2016 and AMD’s ability to generate positive free cash flow from operations in 2016, 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 forward-looking terminology including, “would,” “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “projects,” “plans,” “pro forma,” “estimates,” “anticipates,” or the negative of these words and phrases, other variations of these words or 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. 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

AMD Q2-16 CFO Commentary
Page 10 
July 21, 2016
                            





Corporation’s dominance of the microprocessor market and its aggressive business practices may limit AMD’s ability to compete effectively; AMD relies on 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, AMD’s 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 line of credit (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, AMD’s 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; and a variety of environmental laws that AMD is subject to 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 March 26, 2016.



AMD Q2-16 CFO Commentary
Page 11 
July 21, 2016
                            

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

You May Also Be Interested In





Related Categories

SEC Filings