Advanced Micro Devices Inc (AMD)

[dhellman]

SUNNYVALE, Calif., Apr 16, 2003 (BUSINESS WIRE) --

AMD (NYSE:AMD)
today reported sales of $715 million and a net loss of $146 million
for the quarter ended March 30, 2003. The net loss amounted to $0.42
per share.


First quarter sales declined by 21 percent from the first quarter
of 2002 and increased by four percent from the fourth quarter of 2002.
In the first quarter of 2002, AMD reported total sales of $902 million
and a net loss of $9 million, or $0.03 per share. In the fourth
quarter of 2002, AMD reported sales of $686 million and a net loss of
$855 million, or $2.49 per share. Excluding the effects of
restructuring and other charges(1) to show the company's results from
ongoing operations, the fourth quarter net loss was $235 million, or
$0.68 per share.


"In a tough market environment and in a quarter that is typically
seasonally down, we grew our revenue by four percent from the fourth
quarter of 2002," said Robert J. Rivet, chief financial officer. "We
believe we gained market share in both our PC processor and Flash
memory product lines. And we made significant operating improvements
that better position us for a return to profitability.


"Our enhanced AMD Athlon(TM) processor portfolio, along with
increased customer demand, led to a sequential increase of 11 percent
in PC processor sales. And despite a seasonal weakening of the global
market for flash memory solutions, the first quarter was our fourth
consecutive quarter of revenue growth and record bit shipments.


"As projected, we reduced our operating expenses significantly
compared to the fourth quarter of 2002. As a result of our improved
cost structure, along with the increase in sales, EBITDA was a
positive $84 million(1) and our operating loss improved by more than
$90 million(1) in the first quarter as compared with our pro forma
results of the fourth quarter 2002."


BUSINESS OVERVIEW


PC processor sales of $468 million for the quarter increased by 11
percent from the $420 million reported in the fourth quarter of 2002.
AMD showed a significant increase in both unit and dollar sales, based
on record mobile shipments and increased penetration into emerging
markets, led by China.


During the first quarter, AMD commenced production shipments of
AMD Opteron(TM) processors for the server and workstation markets. The
launch of the AMD Opteron processor family will occur in New York on
April 22.


Also in the first quarter, AMD introduced several new processor
offerings including the AMD Athlon XP processor 3000+, the highest
performing desktop PC microprocessor. In addition, AMD introduced 12
new mobile processors including the first AMD Athlon processors
targeted for thin-and-light notebooks. These are the first AMD Athlon
processors targeted for thin-and-light notebooks.


AMD memory sales of $218 million were up for the fourth
consecutive quarter, on increased unit sales driven by our product
portfolio for the cellular phone market and continued demand for
high-end, feature-rich phones.


AMD qualified production on 130 nanometer process technology in
AMD's Fab 25 Flash memory fab in the first quarter and will commence
volume production on 130 nanometer process technology in the second
quarter.


HIGHLIGHTS OF THE QUARTER

-- In March, AMD and Fujitsu Limited announced a Memorandum of
Understanding (MOU) to establish a new Flash memory
semiconductor company based on the integration of AMD and
Fujitsu's Flash memory operations, including their existing
FASL joint manufacturing venture.

-- In March, AMD entered the thin and light mobile PC market with
its newly launched line of new, low-voltage mobile AMD Athlon
XP-M processors.

-- In March, Gartner/Dataquest Worldwide Quarterly PC Statistics
for the fourth quarter of 2002 showed that AMD processor-based
desktop and mobile computers increased worldwide unit market
share to 19 percent among buyers of Windows(R) operating
system-based PCs in 2002.

-- In February, the AMD Athlon 64 processor won the
Microprocessor Report Analysts' Choice for Best PC Processor
at the prestigious Microprocessor Report's Analysts' Choice
Awards 2002.

-- In February, AMD introduced the AMD Athlon XP processor 3000+,
the world's highest performing desktop PC processor and
introduced the AMD Athlon MP processor 2600+, the highest
performing multiprocessor in its line of multiprocessors for
servers and workstations.

-- In January, AMD and IBM announced that the two companies had
entered into an agreement to jointly develop chip-making
technologies for use in future high-performance products.

-- In the first quarter, AMD added five infrastructure partners
to the more than 100 companies that have announced support of
AMD Opteron and AMD Athlon processors, including Microsoft,
IBM DB2, RedHat, SuSE, NVIDIA, Epic Games and CA Ingres.

-- In January, AMD introduced the Am29PDL640G, a 64 Mbit
page-mode Flash memory device designed for wireless
applications such as mobile phones and other applications
including television set-top boxes. This Flash memory device
delivers a superior combination of high-performance, long
battery life and sophisticated security.

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. The company's current outlook for the second quarter is based
on the following projections:


-- AMD believes it will continue to gain share in the wireless
segment, and expects to achieve its fifth consecutive
quarterly increase in Flash memory revenues.

-- AMD believes that processor sales will be flat to up in the
historically weakest quarter seasonally, based on an improved
product mix and the anticipated benefits of a better-balanced
PC supply chain inventory.

-- AMD plans for cost reductions in the quarter sufficient to
achieve its target of reducing its overall quarterly cost
structure to below $800 million.

AMD TELECONFERENCE
AMD will hold a conference call for the financial community at
2:30 PM Pacific Time today to discuss first 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 second quarter of 2003; that Intel
Corporation 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 PC processor
sales plans; that demand for personal computers and, in turn, demand
for the company's PC processors will be lower than currently expected;
that the sales of AMD PC processors will follow seasonal patterns or
worse in the second quarter despite the availability of a richer mix
of the company's products; that demand for the company's Flash memory
products will be lower than currently expected, particularly in the
high-end cellular telephone sector; that the company will not achieve
sequential growth in sales of Flash memory devices; that the company
may not achieve its current product and technology introduction
schedules including the current schedule for introducing AMD Athlon XP
processors based on the "Barton" core or the AMD Opteron processor
based on AMD 64-bit technology, or the schedule for implementing 90nm
process technology in Fab 30; and that the company may not be able to
successfully implement the new proposed joint venture with Fujitsu,
Ltd. and sustain any benefit from such joint venture. 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.


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 are trademarks of Advanced Micro Devices, Inc. in the United
States and other jurisdictions.


Note:(1) As shown in the attached reconciliation of GAAP to
Pro-forma Non-GAAP Consolidated Net Loss.


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

Quarter Ended
----------------------------------------------------------------------
March 30, Dec. 29, March 31,
2003 2002 2002
(Unaudited) (Unaudited) (Unaudited)
----------------------------------------------------------------------

Net sales $ 714,555 $ 686,430 $ 902,073

Cost of sales 496,592 506,613 586,874
Research and development 203,062 244,848 171,882
Marketing, general and
administrative 138,228 194,389 156,860
Restructuring and other
special charges, net 2,146 330,575 --

----------------------------------------------------------------------
840,028 1,276,425 915,616

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

Operating loss (125,473) (589,995) (13,543)

Interest and other income, net 6,740 992 9,538
Interest expense (25,805) (22,296) (12,158)

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

Loss before income taxes and equity
in net income of joint venture (144,538) (611,299) (16,163)

Provision (benefit) for income taxes 2,936 243,470 (4,041)

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

Loss before equity in net income
of joint venture (147,474) (854,769) (12,122)

Equity in net income of joint venture 1,118 29 2,959

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

Net loss $(146,356) $ (854,740) $ (9,163)

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

Net loss per common share

Basic $ (0.42) $ (2.49) $ (0.03)

Diluted $ (0.42) $ (2.49) $ (0.03)

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

Shares used in per share calculation

-- Basic 345,012 343,949 340,806
-- Diluted 345,012 343,949 340,806


Advanced Micro Devices, Inc.
----------------------------------------------------------------------
RECONCILIATION OF GAAP TO PRO FORMA NON-GAAP CONSOLIDATED NET LOSS
----------------------------------------------------------------------
(Thousands)

Quarter Ended
----------------------------------------------------------------------
March 30, Dec. 29, March 31,
2003 2002 2002
----------------------------------------------------------------------

Net loss (GAAP) $(146,356) $(854,740) $ (9,163)
Adjustments:
Restructuring and other special charges 2,146 330,575 --
Impaired investments -- 3,550 --
R&D expense -- 42,000 --

----------------------------------------------------------------------
Net loss before income taxes (144,210) (478,615) (9,163)

Deferred tax asset write-off -- 243,470 --

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

Net loss (Pro Forma Non-GAAP) $(144,210) $(235,145) $ (9,163)

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


----------------------------------------------------------------------
RECONCILIATION OF EBITDA TO PRO FORMA EBITDA
----------------------------------------------------------------------
(Thousands)

Quarter Ended
----------------------------------------------------------------------
March 30, Dec. 29, March 31,
2003 2002 2002
----------------------------------------------------------------------

Operating loss $(125,473) $(589,995) $(13,543)
Depreciation and amortization
*** STORY TRUNCATED due to excessive length. ***
-