(1) In this release, in addition to GAAP financial results, AMD has provided non-GAAP financial measures, including non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP earnings (loss) per share. These non-GAAP financial measures reflect certain adjustments as presented in the data tables in this 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 data tables provided at the end of this release. AMD is providing these financial measures because it believes this non-GAAP presentation makes it easier for investors to compare its operating results for current and historical periods and also because AMD believes it assists investors in comparing AMD's performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance and for the other reasons described in the footnotes to the selected data tables. Refer to the data tables at the end of this release for additional AMD data. ADVANCED MICRO DEVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Millions except per share amounts and percentages) Quarter Ended --------------------------------------- March 29, Dec 28, Mar. 30, 2014 2013 2013 ----------- ----------- ----------- Net revenue $ 1,397 $ 1,589 $ 1,088 Cost of sales 910 1,036 643 ----------- ----------- ----------- Gross margin 487 553 445 Gross margin % 35% 35% 41% Research and development 279 293 312 Marketing, general and administrative 156 169 179 Amortization of acquired intangible assets 3 4 5 Restructuring and other special charges, net - - 47 Legal settlements, net - (48) - ----------- ----------- ----------- Operating income (loss) 49 135 (98) Interest income 1 1 1 Interest expense (47) (44) (44) Other expense, net (21) (2) (3) ----------- ----------- ----------- Income (loss) before income taxes (18) 90 (144) Provision for income taxes 2 1 2 ----------- ----------- ----------- Net income (loss) $ (20) $ 89 $ (146) Net income (loss) per share Basic $ (0.03) $ 0.12 $ (0.19) Diluted $ (0.03) $ 0.12 $ (0.19) ----------- ----------- ----------- Shares used in per share calculation Basic 761 759 749 Diluted 761 766 749 ----------- ----------- ----------- ADVANCED MICRO DEVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Millions) Quarter Ended --------------------------------------- March 29, Dec 28, Mar. 30, 2014 2013 2013 ----------- ----------- ----------- Total comprehensive income (loss) $ (21) $ 89 $ (147) ----------- ----------- ----------- ADVANCED MICRO DEVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Millions) ----------- ----------- ----------- March 29, Dec 28, Mar. 30, 2014 2013 2013 ----------- ----------- ----------- Assets Current assets: Cash and cash equivalents $ 554 $ 869 $ 441 Marketable securities 348 228 562 Accounts receivable, net 840 832 645 Inventories, net 869 884 613 Prepaid expenses and other current assets 79 71 77 ----------- ----------- ----------- Total current assets 2,690 2,884 2,338 Long-term marketable securities 80 90 180 Property, plant and equipment, net 337 346 411 Acquisition related intangible assets, net 75 78 92 Goodwill 553 553 553 Other assets 373 386 223 ----------- ----------- ----------- Total Assets $ 4,108 $ 4,337 $ 3,797 =========== =========== =========== Liabilities and Stockholders' Equity Current liabilities: Short-term debt $ 60 $ 60 $ 5 Accounts payable 483 519 301 Payable to GLOBALFOUNDRIES 213 364 379 Accrued and other current liabilities 482 530 504 Deferred income on shipments to distributors 146 145 132 ----------- ----------- ----------- Total current liabilities 1,384 1,618 1,321 Long-term debt 2,078 1,998 2,039 Other long-term liabilities 135 177 22 Stockholders' equity: Capital stock: Common stock, par value 8 7 7 Additional paid-in capital 6,883 6,894 6,827 Treasury stock, at cost (114) (112) (109) Accumulated deficit (6,263) (6,243) (6,306) Accumulated other comprehensive loss (3) (2) (4) ----------- ----------- ----------- Total stockholders' equity 511 544 415 ----------- ----------- ----------- Total Liabilities and Stockholders' Equity $ 4,108 $ 4,337 $ 3,797 =========== =========== =========== ADVANCED MICRO DEVICES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Millions) Quarter Ended -------------- March 29, 2014 -------------- Cash flows from operating activities: Net loss $ (20) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 53 Employee stock-based compensation expense 23 Non-cash interest expense 6 Loss on debt redemption 15 Other (4) Changes in operating assets and liabilities: Accounts receivable (8) Inventories 14 Prepaid expenses and other assets (8) Payable to GLOBALFOUNDRIES (151) Accounts payable, accrued liabilities and other (124) -------------- Net cash used in operating activities $ (204) -------------- Cash flows from investing activities: Purchases of property, plant and equipment (21) Purchases of available-for-sale securities (310) Proceeds from sale and maturity of available-for-sale securities 200 -------------- Net cash used in investing activities $ (131) -------------- Cash flows from financing activities: Proceeds from issuance of common stock 1 Proceeds from borrowings, net 589 Repayments of long-term debt and capital lease obligations (569) Other (1) -------------- Net cash provided by financing activities $ 20 -------------- Net decrease in cash and cash equivalents (315) -------------- Cash and cash equivalents at beginning of period $ 869 -------------- Cash and cash equivalents at end of period $ 554 -------------- ADVANCED MICRO DEVICES, INC. SELECTED CORPORATE DATA (Millions except headcount) Quarter Ended ---------------------------------------------------------------------------- March 29, Dec 28, Mar. 30, Segment and Category Information 2014 2013 2013 ---------------------------------------------------------------------------- Computing Solutions (1) Net revenue $ 663 $ 722 $ 751 Operating loss $ (3) $ (7) $ (39) Graphics and Visual Solutions (2) Net revenue 734 865 337 Operating income 91 121 16 All Other (3) Net revenue - 2 - Operating income (loss) (39) 21 (75) Total Net revenue $ 1,397 $ 1,589 $ 1,088 Operating income (loss) $ 49 $ 135 $ (98) ---------------------------------------------------------------------------- Other Data Depreciation and amortization, excluding amortization of acquired intangible assets $ 50 $ 50 $ 62 Capital additions $ 21 $ 21 $ 20 Adjusted EBITDA (4) $ 139 $ 165 $ 40 Cash, cash equivalents and marketable securities, including long-term marketable securities $ 982 $ 1,187 $ 1,183 Non-GAAP free cash flow (5) $ (225) $ 0 $ (175) Total assets $ 4,108 $ 4,337 $ 3,797 Total debt $ 2,138 $ 2,058 $ 2,044 Headcount 10,397 10,671 9,844 ---------------------------------------------------------------------------- (1) Computing Solutions segment primarily includes x86 microprocessors, as standalone devices or as incorporated as an accelerated processing unit (APU), chipsets, embedded processors and dense servers. (2) Graphics and Visual Solutions segment primarily includes graphics processing units (GPU), including professional graphics, semi-custom System-on-Chip (SOC) products, development services and technology for game consoles. (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 amortization of acquired intangible assets and employee stock-based compensation expense. In addition, the Company also included the following adjustments for the indicated periods: for the first quarter of 2014, the Company included workforce rebalancing severance charges; for the fourth quarter of 2013, the Company included net legal settlements; and for the first quarter of 2013, the Company included net restructuring and other special charges. The Company also reports the results of former businesses in the All Other category because the operating results were not material. (4) Reconciliation of GAAP operating income (loss) to Adjusted EBITDA* Quarter Ended --------------------------------------- March 29, Dec 28, Mar. 30, 2014 2013 2013 ----------- ----------- ----------- GAAP operating income (loss) $ 49 $ 135 $ (98) Workforce rebalancing severance charges 14 - - Legal settlements, net - (48) - Depreciation and amortization 50 50 62 Employee stock-based compensation expense 23 24 24 Amortization of acquired intangible assets 3 4 5 Restructuring and other special charges, net - - 47 ----------- ----------- ----------- Adjusted EBITDA $ 139 $ 165 $ 40 =========== =========== =========== (5) Non-GAAP free cash flow reconciliation** Quarter Ended --------------------------------------- March 29, Dec 28, Mar. 30, 2014 2013 2013 ----------- ----------- ----------- GAAP net cash provided by (used in) operating activities $ (204) $ 21 $ (155) Purchases of property, plant and equipment (21) (21) (20) ----------- ----------- ----------- Non-GAAP free cash flow $ (225) $ 0 $ (175) =========== =========== =========== * 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, employee stock-based compensation expense and amortization of acquired intangible assets. In addition, the Company also included the following adjustments for the indicated periods: for the first quarter of 2014, the Company included an adjustment for workforce rebalancing severance charges; for the fourth quarter of 2013, the Company included an adjustment for net legal settlements; and for the first quarter of 2013, the Company included net restructuring and other special charges. The Company calculates and communicates Adjusted EBITDA in the financial earnings press release 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 the earnings press release 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 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 press earnings release and financial tables of these non-GAAP financial measures to the most directly comparable GAAP financial measures.