Advanced Micro Devices Inc (AMD)

[KeithDust2000]

AMD Reports Third Quarter Results

Thursday October 16, 4:28 pm ET

Year over Year Sales Growth of 88 Percent on Sales of $954 Million Results in Substantially Reduced Net Loss of $0.09 Per Share


SUNNYVALE, Calif.--(BUSINESS WIRE)--Oct. 16, 2003--AMD (NYSE:AMD - News) today reported sales of $954 million and a net loss of $31 million for the quarter ended September 28, 2003. The net loss amounted to $0.09 per share. Third quarter 2003 results include the operating results of FASL LLC, which was formed effective June 30, 2003 and is owned 60 percent by AMD and 40 percent by Fujitsu Limited.
Third quarter sales increased by 88 percent from the third quarter of 2002, and increased by 48 percent from the second quarter of 2003. In the third quarter of 2002, AMD reported total sales of $508 million and a net loss of $254 million, or $0.74 per share. In the second quarter of 2003, AMD reported sales of $645 million and a net loss of $140 million, or $0.40 per share.

"We delivered strong sales growth in our microprocessor and Flash memory business lines while tightly managing our expense structure," said Robert J. Rivet, AMD's chief financial officer. "Sales were up on a global basis reflecting increased demand in each of our major businesses and all geographic regions."

"As a result of our sales growth and operational efficiencies, we reduced our third quarter operating loss by 76 percent to $30 million from $123 million last quarter. We more than doubled our positive EBITDA quarter-to-quarter to $277 million, generated positive cash flow from operations and ended the third quarter with a cash balance of $1.076 billion, up from $706 million in the second quarter."

"In September, we successfully launched the AMD Athlon(TM) 64 processor family, the world's first Windows®-compatible 64-bit PC processor. Initial demand has been very strong, particularly for the high-end AMD Athlon 64 FX model, targeted for the gaming, PC enthusiast and digital content creation markets. Similarly, demand for our AMD Opteron(TM) processor for servers and workstations continues to be strong. We believe these products strengthen our position to lead the industry's transition to 64-bit computing."

"With the successful launch of the Spansion(TM) Flash memory brand, we believe we are now the number one provider of NOR Flash memory solutions and are well positioned to achieve our strategic goal of being the number one provider of Flash memory solutions worldwide. We sampled the highest density monolithic NOR Flash memory product to date, the 512 Megabit Spansion Flash memory device. Customer acceptance of the Spansion brand has been outstanding, and the integration of AMD's and Fujitsu's Flash memory operations through FASL LLC are on a successful trajectory."

BUSINESS OVERVIEW

Computation Products Group sales, which consists of microprocessors and chipsets, of $503 million were up 91 percent year-over-year and increased by 24 percent from the $406 million in the second quarter of 2003. CPG generated a profit in the third quarter due to solid growth across all processor product lines, an improved product mix and increased sales to our largest OEM customers.

Demand is accelerating for the AMD64 platform. IBM introduced its first AMD Opteron processor-based server and announced an AMD Opteron processor-based workstation. Sun Microsystems announced Java support for the AMD64 platform and disclosed plans to develop a version of its Solaris operating system for the AMD64 platform. In addition, Fujitsu Siemens is expected to launch AMD Opteron-based systems in the fourth quarter.

Flash memory sales of $424 million for the third quarter more than doubled from the second quarter of 2003 and the third quarter of 2002. The growth in the third quarter of 2003 was attributable to the effect of the June 30, 2003 consolidation of FASL LLC results of operations as well as strong organic growth of AMD Flash sales. The memory group operated at a loss in the third quarter.

Demand for Spansion Flash memory continued to be strong, increasing our market share gains and reflecting our leadership in the wireless segment. Sales of Spansion products featuring MirrorBit(TM) technology achieved record growth in the third quarter, expanding beyond wireless and into other market segments.

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HIGHLIGHTS OF THE QUARTER

-- AMD introduced the AMD Athlon 64 FX processor and AMD Athlon
64 processors for desktop and notebook PCs, the world's first
and only Windows compatible 64-bit PC processors.

-- The AMD Athlon 64 FX processor, designed for gamers, PC
enthusiasts and digital content creators, is the most
technically advanced and highest performing PC processor
in the world. PCs based on the AMD Athlon 64 FX processor
enable a realistic, "cinematic computing" experience.

-- Microsoft released a beta version of Windows XP 64-Bit
Edition, designed specifically to support the AMD64
platform.

-- Among 50 OEM system partners, Fujitsu, Fujitsu-Siemens, HP
and NEC-CI presented systems based on the AMD Athlon 64
processor for shipment in the fourth quarter.

-- AMD announced strong industry support and adoption of AMD
Opteron microprocessors for servers and workstations.

-- IBM selected the AMD Opteron processor Model 246 to power
its IBM eServer 325 line and IBM announced availability of
a 64-bit version of IBM DB2 for AMD Opteron processors.

-- Los Alamos National Laboratory selected the AMD Opteron
processor for two large-scale Linux clusters. The two
clusters are designed to include more than 3,300 AMD
Opteron processors.

-- The University of Utah selected AMD Opteron
processor-based systems for a new supercomputing cluster.

-- Dawning Information Industry Corp Ltd. announced plans to
launch a comprehensive series of AMD Opteron
processor-based 1- and 2-way servers.

-- Oracle announced plans for a 64-bit version Oracle9i
Database on the AMD64 platform.

-- H&R Block, a Fortune 500 company, announced it is
standardizing its desktop platform on AMD Athlon XP
processor-based systems from HP and plans to deploy more than
15,000 desktop systems companywide.

-- AMD and Fujitsu Limited combined their Flash memory operations
to form FASL LLC, which began marketing Flash memory solutions
globally under the Spansion brand name.

-- FASL LLC announced the sampling of a 512 Megabit Spansion
Flash memory device, the highest density monolithic NOR Flash
memory product to date.

-- AMD acquired the majority of assets of National
Semiconductor's Information Appliance (IA) business unit.
AMD's Personal Connectivity Solutions group now features the
Geode(TM) family of integrated silicon and system solutions
designed with embedded x86 processors for thin client, smart
display and set-top box markets among others.

CURRENT OUTLOOK

AMD's outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially. Economic and industry conditions remain uncertain and continue to make it particularly difficult to forecast product demand. AMD's current outlook for the fourth quarter of 2003 is based on the following projections.

-- AMD believes that sales in the fourth quarter will increase based
on the following:

-- AMD expects microprocessor sales to increase based on normal
industry seasonality and growing demand for the company's
enhanced portfolio of AMD64 processors.

-- AMD expects Flash memory sales to increase based on normal
seasonality and increasing customer acceptance of MirrorBit
technology.

-- AMD anticipates its fourth quarter operating costs to remain
approximately $1 billion depending on volume and mix.

AMD TELECONFERENCE

AMD will hold a conference call for the financial community at 2:30 PM Pacific Time today to discuss third quarter financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its web site at http://www.amd.com or http://www.StreetEvents.com. The web-cast will be available for ten days after the conference call.

CAUTIONARY STATEMENT

This release contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements in this release involve risks and uncertainty that could cause actual results to differ materially from current expectations. Risks include the possibility that global business and economic conditions will worsen resulting in lower than currently expected sales in the fourth quarter of 2003; that Intel Corporation's pricing, marketing programs, product bundling, new product introductions or other activities targeting the company's processor business will prevent attainment of the company's current processor sales plans; that demand for personal computers and, in turn, demand for the company's processors will be lower than currently expected; that the sales of AMD processors will not follow seasonal patterns that normally apply in the fourth quarter; that demand for the company's Flash memory products will be lower than currently expected, particularly in the high-end cellular telephone sector, and that we will not be able to increase our Flash memory market share; customer acceptance of MirrorBit technology will not continue to increase; that we will not continue to be successful integrating the Flash operations of FASL LLC, or be able to achieve or sustain any benefit from its creation; that the company may not achieve its current product and technology introduction schedules; and that solutions providers will not timely provide the infrastructure, including operating systems and applications, to support the Company's AMD64 technology. We urge investors to review in detail the risks and uncertainties in the company's Securities and Exchange Commission filings, including but not limited to the Annual Report on Form 10-K for the year ended December 29, 2002, and the Quarterly Report on Form 10-Q for the quarter ended June 29, 2003.

About AMD

Founded in 1969 and based in Sunnyvale, California, AMD is a global supplier of integrated circuits for the personal and networked computer and communications markets with manufacturing facilities in the United States, Europe, Japan, and Asia. AMD, a Standard & Poor's 500 company, produces microprocessors, Flash memory devices, and silicon-based solutions for communications and networking applications.

AMD, the AMD Arrow logo, AMD Athlon, AMD Opteron and combinations thereof, and Geode are trademarks of Advanced Micro Devices, Inc. Spansion and MirrorBit are trademarks of FASL LLC. Windows is a registered trademark of Microsoft Corporation in the U.S. and/or other jurisdictions. Other product and company names used in this publication are for identification purposes only and may be trademarks of their respective companies.

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Advanced Micro Devices, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands except per share amounts)

Quarter Ended Nine Months Ended
----------------------------------------------------------------------
Sept. 28, June 29, Sept. 29 Sept. 28, Sept. 29
2003 2003 2002 2003 2002
(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
----------------------------------------------------------------------

Net sales $ 953,759 $ 645,261 $ 508,227 $2,313,575 $2,010,599

Cost of sales 626,880 425,085 453,884 1,548,556 1,599,048
Research and
development 213,997 208,513 220,959 625,572 571,266
Marketing,
general and
administrative 151,111 135,161 158,568 424,500 475,676
Restructuring
and other special
charges, net (8,000) - - (5,854) -

----------------------------------------------------------------------
983,988 768,759 833,411 2,592,774 2,645,990

----------------------------------------------------------------------

Operating loss (30,229) (123,498) (325,184) (279,199) (635,391)

Interest and other
income, net 493 4,971 12,941 12,203 31,140
Interest expense (26,848) (26,364) (21,166) (79,017) (49,053)

----------------------------------------------------------------------

Loss before
minority interest,
income taxes, and
equity in net
income of
joint venture (56,584) (144,891) (333,409) (346,013) (653,304)

Minority Interest 25,353 - - 25,353 -
Provision (benefit)
for income taxes - - (73,350) 2,936 (198,884)
Equity in net income
of joint
venture and other - 4,795 5,888 5,913 6,148

----------------------------------------------------------------------

Net loss (31,231) (140,096) (254,171) (317,683) (448,272)

----------------------------------------------------------------------

Net loss per common share

Basic $ (0.09)$ (0.40)$ (0.74)$ (0.92)$ (1.31)

Diluted $ (0.09)$ (0.40)$ (0.74)$ (0.92)$ (1.31)

----------------------------------------------------------------------

Shares used in per share calculation

- Basic 347,334 346,320 342,780 346,222 341,796
- Diluted 347,334 346,320 342,780 346,222 341,796
----------------------------------------------------------------------


Advanced Micro Devices, Inc.

RECONCILIATION OF NET LOSS TO EBITDA
(Thousands)
----------------------------------------------------------------------
Quarter Ended Nine Months Ended
----------------------------------------------------------------------
Sept. 28, June 29, Sept. 29 Sept. 28, Sept. 29
2003 2003 2002 2003 2002
(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
----------------------------------------------------------------------

Net loss $ (31,231) $(140,096) $(254,171) $(317,683) $(448,272)
Depreciation and
amortization 285,030 213,568 199,089 706,728 556,302
Interest income (3,244) (5,354) (12,941) (16,615) (22,231)
Interest expense 26,848 26,364 21,166 79,017 49,053
Provision (benefit)
for income taxes - - (73,350) 2,936 (198,884)

----------------------------------------------------------------------
EBITDA 277,403 94,482 (120,207) 454,383 (64,032)

----------------------------------------------------------------------


Advanced Micro Devices, Inc.
CONSOLIDATED BALANCE SHEETS
(Thousands)

Sept. 28, June 29, Dec. 29,
2003 2003 2002*
----------------------------------------------------------------------
(unaudited) (unaudited)
Assets

Current assets:
Cash, cash equivalents and
short-term investments $1,075,939 $ 705,963 $1,006,655
Accounts receivable, net 543,444 351,834 395,828
Inventories 692,395 467,384 432,603
Prepaid expenses and other
current assets 206,202 189,860 184,592

----------------------------------------------------------------------

Total current assets 2,517,980 1,715,041 2,019,678

Property, plant and equipment,
net 3,808,567 2,894,127 2,880,809
Investment in joint venture - 390,069 382,942
Deferred income taxes 42,529 - -
Other assets 295,289 294,670 335,752

----------------------------------------------------------------------

$6,664,365 $5,293,907 $5,619,181
======================================================================

Liabilities and Stockholders' Equity

Current liabilities:
Notes payable $ - $ - $ 913
Accounts payable 335,925 350,399 352,438
Accrued compensation and benefits 156,569 122,361 131,324
Accrued liabilities 310,861 269,561 435,657
Restructuring accruals 43,901 54,467 99,974
Income taxes payable 47,279 38,368 21,246
Deferred income on shipments to
distributors 89,329 65,412 57,184
Current portion of long-term debt
and capital lease obligations 200,717 77,693 71,339
Other current liabilities 84,458 85,732 89,437
----------------------------------------------------------------------

Total current liabilities 1,269,039 1,063,993 1,259,512

Deferred income taxes 95,345 - -
Long-term debt and capital lease
obligations 1,880,859 1,587,009 1,570,322
Other liabilities 425,282 359,625 322,082
Minority Interest 711,056 - -

Stockholders' equity:
Capital stock:
Common stock, par value 3,478 3,469 3,445
Capital in excess of par value 1,939,968 1,932,791 1,921,247
Retained earnings 174,700 205,931 492,668
Accumulated other comprehensive
income 164,638 141,089 49,905
----------------------------------------------------------------------

Total stockholders' equity 2,282,784 2,283,280 2,467,265

----------------------------------------------------------------------

$6,664,365 $5,293,907 $5,619,181
======================================================================

* Derived from the December 29, 2002 audited financial statements of
Advanced Micro Devices, Inc.


AMD
Selected Corporate Data
(Unaudited)

Quarter Ended Nine Months Ended
------------------------------------------------- -------------------
Sept. 28, June 29, Sept. 29, Sept. 28, Sept. 29,
Segment Information 2003* 2003 2002 2003* 2002
------------------------------------------------- -------------------

Computation
Products (1)
Revenue $503M $406M $264M $1,379M $1,335M
Operating Income
(Loss) 19M (52)M (317)M (86)M (503)M

Memory Products (2)
Revenue 424M 211M 189M 853M 524M
Operating Loss (49)M (74)M (14)M (187)M (101)M

All Other (3)
Revenue 26M 28M 56M 82M 152M
Operating Income
(Loss) 0M 2M 6M (6)M (31)M

Total AMD
Revenue 954M 645M 508M 2,314M 2,011M
Operating Loss (30)M (123)M (325)M (279)M (635)M

------------------------------------------------- -------------------

------------------------------------------------- -------------------
Sept. 28, June 29, Sept. 29, Sept. 28, Sept. 29,
Other Data 2003* 2003 2002 2003* 2002
------------------------------------------------- -------------------

Depreciation &
Amortization $285M $214M $199M $707M $556M

Capital Additions $138M $103M $196M $409M $567M

Headcount 14,380 11,723 13,218 14,380 13,218

------------------------------------------------- -------------------

International Sales 79% 73% 75% 75% 69%

Research and
Development $214M $209M $221M $625M $571M

EBITDA $277M $94M $(120)M $432M $(64)M


* Q3, 2003 information includes the results of FASL, LLC, AMD's
majority owned subsidiary. Prior periods do not include data for
FASL LLC as the information is not available.

(1) Computation Products segment includes PC processors and Chipsets.

(2) Memory Products segment includes Flash memory products of AMD and
FASL LLC.

(3) The All Other category includes Embedded Processors, Network
Products, and Foundry Services. Also included in the All Other
category is certain operating expenses that are not allocated to
the operating segments.



--------------------------------------------------------------------------------
Contact:
AMD
Corporate Public Relations:
Morris Denton, 512-602-2685 or 512-751-8416 (mobile)
[e-mail]
Dave Kroll, 408-749-3310 or 408-981-1690 (mobile)
[e-mail]
or
Investor Relations:
Mike Haase, 408-749-3124
[e-mail]
Ruth Cotter, 408-749-3887
[e-mail]



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Source: AMD