AMD Reports Second Quarter Results
Cites Weak PC Market Demand
Improving Flash Outlook
SUNNYVALE, Calif.--(BUSINESS WIRE)--July 17, 2002--AMD (NYSE:AMD - News) today reported sales of $600,299,000 and a net loss of $184,938,000, for the quarter ended June 30, 2002. The net loss amounted to $0.54 per share.
Second quarter sales declined by 39 percent from the second quarter of 2001 and by 33 percent from the first quarter of 2002. In the second quarter of 2001, AMD reported total sales of $985,264,000 and net income of $17,352,000, or $0.05 per diluted share. In the first quarter of 2002, AMD reported sales of $902,073,000 and a net loss of $9,163,000, or $0.03 per share.
For the first six months of 2002, sales declined by 31 percent from the first six months of 2001. AMD reported sales of $1,502,372,000 and a net loss of $194,101,000, or $0.57 per share. For the first six months of 2001, AMD reported sales of $2,174,011,000 and net income of $142,189,000, or $0.43 per diluted share.
"A weaker than expected PC market, particularly in North America and Europe, resulted in soft microprocessor demand in a highly competitive market," said Robert J. Rivet, AMD's chief financial officer. "Flash memory product sales improved in the second quarter based on the strength of the high-end mobile phone market, as consumers are buying feature-rich phones built with high-density, high performance flash memory. The successful introduction of AMD MirrorBit(TM) technology has given us competitive momentum."
BUSINESS OVERVIEW
PC processor sales of $380 million for the quarter fell by 35 percent compared to $588 million in the second quarter of 2001. Processor sales declined by 44 percent from the $684 million reported in the first quarter of 2002. Desktop unit sales were down while mobile processor unit sales were flat.
AMD lowered processor inventories in the PC supply chain in the second quarter to help better position its customers in the current market environment.
AMD has completed its conversion from 180-nanometer to 130-nanometer technology. The Company's Fab 30 plant in Dresden, Germany is now producing 100 percent of its wafer starts in 130-nanometer technology, and will have all wafer outs in 130-nanometer technology in the fourth quarter. AMD is the only microprocessor company with all of its microprocessor production in 130-nanometer technology.
Development roadmaps for AMD Athlon(TM) and AMD Opteron(TM) PC processors based on Hammer technology continue on schedule. AMD plans to begin production shipments of AMD Athlon PC processors based on Hammer technology in the fourth quarter.
Second quarter sales of AMD memory products were down 45 percent compared to the second quarter of 2001, and were up nine percent from the first quarter of 2002. Memory sales were $175 million in the second quarter compared with $316 million in second quarter of 2001 and $160 million in the first quarter of 2002. AMD flash memory unit shipments increased in the second quarter of 2002 and bit shipments were a record.
ADDITIONAL HIGHLIGHTS OF THE QUARTER
In April, AMD announced that it is collaborating with Microsoft to incorporate 64-bit support for AMD Athlon and AMD Opteron processors based on Hammer technology into the Windows® operating system. AMD demonstrated at its annual shareholders meeting an AMD Opteron dual processor-based server running a developmental 64-bit version of Windows.
In April, AMD announced the AMD Athlon XP mobile processor, manufactured on state-of-the-art 130-nanometer technology.
In April, AMD announced the introduction of the Alchemy(TM) Au1100(TM) processor, targeting the non-PC mobile Internet appliance market, such as web pads, telematics, and PDAs, offering an industry-leading combination of high performance, low power and high integration.
In May, AMD announced the Fab 25 manufacturing facility in Austin, Texas is in volume production of Flash memory devices utilizing 170-nanometer technology.
In May, AMD, Infineon Technologies AG and DuPont Photomasks, Inc. announced plans to establish and operate a new advanced photomask facility in Dresden, Germany.
Also in May, AMD announced that it will be providing assistance to UNETE (Union de Empresarios para la Tecnologia en la Educacion, A.C.), a private organization in Mexico dedicated to building computer labs in Mexican schools. Hector Ruiz, president and CEO of AMD, met with President Vicente Fox of Mexico where the two discussed AMD's desire to help bring computer technology to the classrooms of Mexico and AMD's increasing commitment to the IT industry in Mexico.
In June at Computex Taipei 2002, AMD demonstrated a four-way multiprocessor server, based on the AMD Opteron processor. The demonstration marked the first-ever public showing of a four-way multiprocessor platform by AMD, and illustrated AMD's growing performance and competitiveness in addressing the server market. Also at Computex Taipei, more than 35 leading hardware infrastructure vendors announced plans to support AMD Opteron and AMD Athlon processors based on Hammer technology.
In June, the AMD Athlon XP processor won the 2002 PC World World Class Award for Computer Product of the Year. In all, the AMD Athlon processor family and systems based on such processors have won more than 100 awards worldwide.
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 third quarter is based on the following projections:
The company expects sequential sales growth of flash memory devices.
The company expects unit sales of PC processors will follow seasonal patterns, which generally show sequential increases from second quarter levels.
AMD aggregate sales are currently expected to improve modestly in the third quarter compared to the second quarter. This forecast is dependent upon demand and PC processor pricing patterns in a weak PC market and the rate of growth in an improving flash memory market. At these sales levels, AMD expects to report a loss in the third quarter.
AMD Teleconference
AMD will hold a conference call for the financial community at 2:30 PM Pacific Time today to discuss second 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 two weeks 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 third quarter of 2002; 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 PC processors will not follow seasonal patterns and increase from second quarter levels; that the company will not continue to be successful in ramping production of the company's AMD Athlon XP processors on 130-nanometer technology in Fab 30 in Dresden, Germany, on the current schedule; that demand for the company's flash memory products will be lower than currently expected, particularly in the cellular telephone sector; that the company will not achieve sequential growth in sales of flash memory devices; and that the company may not achieve its current product and technology introduction schedules. 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 report on Form 10-K for the year ended December 30, 2001 and the report on Form 10-Q for the quarter ended March 31, 2002.
About AMD
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 Fortune 500 and Standard & Poor's 500 company, produces microprocessors, Flash memory devices, and support circuitry for communications and networking applications. Founded in 1969 and based in Sunnyvale, California, AMD had revenues of $3.9 billion in 2001. (NYSE: AMD - News).
AMD, the AMD Arrow logo, and combinations thereof are trademarks of Advanced Micro Devices, Inc. in the United States and other jurisdictions.
Advanced Micro Devices, Inc.
NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(Includes Pre-Tax FASL Equity Investment (Income) loss
in Operating Income (loss))
(Thousands except per share amounts)
Quarter Ended Six Months Ended
(Unaudited) (Unaudited)
June 30, March 31, July 1, June 30, July 1,
2002 2002 2001 2002 2001
-------------------------------------------------------
Net sales $ 600,299 $902,073 $985,264 $1,502,372 $2,174,011
Cost of sales 558,290 586,874 636,199 1,145,164 1,351,029
(Income) loss
from equity
investment
in FASL 4,630 (5,076) (12,521) (446) (35,133)
Research and
development 178,425 171,882 171,114 350,307 328,874
Marketing,
general and
administrative 160,248 156,860 156,291 317,108 305,429
-------------------------------------------------------
901,593 910,540 951,083 1,812,133 1,950,199
-------------------------------------------------------
Operating
income (loss) (301,294) (8,467) 34,181 (309,761) 223,812
Interest and
other income,
net 8,661 9,538 12,308 18,199 31,131
Interest
expense (15,729) (12,158) (20,199) (27,887) (41,844)
-------------------------------------------------------
Income (loss)
before income
taxes (308,362) (11,087) 26,290 (319,449) 213,099
Provision
(benefit) for
income taxes (121,493) (4,041) 3,717 (125,534) 56,260
Provision
(benefit) for
taxes on
equity
income (loss)
in FASL (1,931) 2,117 5,221 186 14,650
-------------------------------------------------------
Net income
(loss) $(184,938) $ (9,163) $ 17,352 $ (194,101) $ 142,189
-------------------------------------------------------
Net income
(loss) per
common share
Basic $ (0.54) $ (0.03) $ 0.05 $ (0.57) $ 0.44
Diluted $ (0.54) $ (0.03) $ 0.05 $ (0.57) $ 0.43
-------------------------------------------------------
Shares used in per share calculation
-- Basic 341,782 340,806 330,120 341,294 322,234
-- Diluted 341,782 340,806 340,533 341,294 332,183
-------------------------------------------------------
Advanced Micro Devices, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands except per share amounts)
Quarter Ended Six Months Ended
(Unaudited) (Unaudited)
June 30, March 31, July 1, June 30, July 1,
2002 2002 2001 2002 2001
------------------------------------------------------
Net sales $ 600,299 $902,073 $985,264 $1,502,372 $2,174,011
Cost of sales 558,290 586,874 636,199 1,145,164 1,351,029
Research and
development 178,425 171,882 171,114 350,307 328,874
Marketing,
general and
administrative 160,248 156,860 156,291 317,108 305,429
------------------------------------------------------
896,963 915,616 963,604 1,812,579 1,985,332
------------------------------------------------------
Operating income
(loss) (296,664) (13,543) 21,660 (310,207) 188,679
Interest and
other income,
net 8,661 9,538 12,308 18,199 31,131
Interest expense (15,729) (12,158) (20,199) (27,887) (41,844)
------------------------------------------------------
Income (loss)
before income
taxes and equity
in net income
(loss) of joint
venture (303,732) (16,163) 13,769 (319,895) 177,966
Provision
(benefit) for
income taxes (121,493) (4,041) 3,717 (125,534) 56,260
------------------------------------------------------
Income (loss)
before equity
in net income
(loss) of joint
venture (182,239) (12,122) 10,052 (194,361) 121,706
Equity in net
income (loss) of
joint venture (2,699) 2,959 7,300 260 20,483
------------------------------------------------------
Net income
(loss) $(184,938) $ (9,163) $ 17,352 $ (194,101) $ 142,189
------------------------------------------------------
Net income (loss) per common share
Basic:
Net income
(loss) $ (0.54) $ (0.03) $ 0.05 $ (0.57) $ 0.44
Diluted:
Net income
(loss) $ (0.54) $ (0.03) $ 0.05 $ (0.57) $ 0.43
------------------------------------------------------
Shares used in per share calculation
- Basic 341,782 340,806 330,120 341,294 322,234
- Diluted 341,782 340,806 340,533 341,294 332,183
------------------------------------------------------
Advanced Micro Devices, Inc.
CONSOLIDATED BALANCE SHEETS
(Thousands)
June 30, March 31, Dec. 30,
2002 2002 2001(a)
------------------------------------
(unaudited) (unaudited)
Assets
Current assets:
Cash, cash equivalents and
short-term investments $1,099,943 $1,276,723 $ 869,997
Accounts receivable, net 534,929 692,165 659,783
Inventories 380,078 376,795 380,474
Deferred income taxes 236,152 162,820 155,898
Prepaid expenses and other
current assets 166,963 151,377 286,957
---------------------------------------------------------------------
Total current assets 2,418,065 2,659,880 2,353,109
Property, plant and equipment,
net 2,934,877 2,769,234 2,739,138
Investment in joint venture 378,164 353,352 363,611
Other assets 171,936 182,476 191,384
---------------------------------------------------------------------
$5,903,042 $5,964,942 $5,647,242
=====================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 258,641 $ 383,495 $ 304,990
Accrued compensation and
benefits 128,641 133,401 129,042
Accrued liabilities 343,289 321,953 443,995
Income taxes payable 37,824 56,113 56,234
Deferred income on shipments to
distributors 38,381 68,016 47,978
Current portion of long-term debt,
capital lease obligations
and other 367,360 264,029 331,698
---------------------------------------------------------------------
Total current liabilities 1,174,136 1,227,007 1,313,937
Deferred income taxes 75,438 104,661 105,305
Long-term debt, capital lease
obligations and other, less
current portion 1,141,060 1,123,671 672,945
Stockholders' equity:
Capital stock:
Common stock, par value 3,423 3,414 3,405
Capital in excess of par value 1,906,952 1,898,349 1,889,217
Retained earnings 1,601,580 1,786,517 1,795,680
Accumulated other comprehensive
income (loss) 453 (178,677) (133,247)
---------------------------------------------------------------------
Total stockholders' equity 3,512,408 3,509,603 3,555,055
---------------------------------------------------------------------
$5,903,042 $5,964,942 $5,647,242
=====================================================================
(a) Derived from the December 30, 2001 audited financial statements of
Advanced Micro Devices, Inc.
AMD
Selected Corporate Data
(Unaudited)
Segment Breakdown Q2 '02 Q1 '02 Q2 '01
% of % of % of
Sales Revenue Sales Revenue Sales Revenue
--------------------------------------------
Core Products segment:
PC Processor Products 63 $380M 76 $684M 60 $588M
Memory Products (Flash) 29 175M 18 160M 32 316M
Other IC Products 7 39M 5 46M 5 51M
Foundry Services segment 1 6M 1 12M 3 30M
----------------------------------------------------------------------
Other Data Q2 '02 Q1 '02 Q2 '01
--------------------------------------------
Depreciation and Amortization $183M $174M $159M
Capital Additions $172M $199M $215M
Headcount 13,730 14,442 15,088
----------------------------------------------------------------------
International Sales 72% 65% 61%
Research and Development $178M $172M $171M
EBITDA -$114M $161M $181M
EBITDA (Non-GAAP) -$118M $166M $194M
Segment Breakdown 2002 2001
% of % of
Sales Revenue Sales Revenue
-----------------------------------
Core Products segment:
PC Processor Products 71 $1,064M 58 $1,249M
Memory Products (Flash) 22 335M 33 727M
Other IC Products 6 85M 6 126M
Foundry Services segment 1 18M 3 72M
Other Data 2002 2001
----------------------------------
Depreciation and Amortization $357M $312M
Capital Additions $371M $378M
Headcount 13,730 15,088
----------------------------------------------------------------------
International Sales 68% 62%
Research and Development $350M $329M
EBITDA $47M $501M
EBITDA (Non-GAAP) $47M $536M
--------------------------------------------------------------------------------
Contact:
Advanced Micro Devices, Inc.
Morris Denton, 408/749-3310 (Corporate Public Relations)
email: morris.denton@amd.com
or
Mike Haase, 408/749-3124 (Investor Relations)
email: mike.haase@amd.com
http://biz.yahoo.com/bw/020717/170385_1.html
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