AMD
NYSE : AMD

AMD

July 13, 2005 16:35 ET

AMD Reports Second Quarter Results; EPS of $0.03 Driven by Sales of $1.260 Billion

SUNNYVALE, Calif.--(CCNMatthews - Jul 13, 2005) -

Microprocessor Business Establishes New All-time Quarterly Records in Total Sales, Server and Mobile Processor Sales, Gross Margin, and Operating Income

AMD (NYSE:AMD) today reported sales of $1.260 billion and net income of $11 million, amounting to $0.03 per diluted share, for the quarter ended June 26, 2005.

Second quarter sales were flat compared to the second quarter of 2004 and increased three percent from the first quarter of 2005. In the second quarter of 2004, AMD reported sales of $1.262 billion and net income of $32 million, or $0.09 per diluted share. In the first quarter of 2005, AMD reported sales of $1.227 billion and a net loss of $17 million, or $0.04 per share. The operating loss was $7 million as compared to operating income of $72 million in the second quarter of 2004 and an operating loss of $46 million in the first quarter of 2005.

"Our microprocessor business delivered another record quarter driven by increased demand for AMD server and mobile processors from our largest global OEM customers," said Robert J. Rivet, AMD's chief financial officer. "Once again we continued to gain momentum with microprocessor sales growth increasing 38 percent compared to the second quarter of 2004. The solid overall demand was enhanced by our newer processor offerings. Strong Dual-Core AMD Opteron™ processor sales contributed to an 89 percent revenue increase in our server products from the prior quarter. This demonstrates the acceptance of the AMD64 platform by enterprise customers. Likewise, the AMD Turion™64 processor captured more than 60 design wins and drove record mobile sales in the thin-and-light mobile PC category."

"Memory Products Group sales increased slightly in the quarter, driven by record MirrorBit™ Flash memory sales and overall higher unit demand."

Business Overview

Second quarter gross margin was 39 percent compared to 34 percent in the first quarter of 2005. The improvement was largely due to record Computation Products Group (CPG) gross margins.

Record CPG sales of $767 million increased 38 percent from the second quarter of 2004 and increased two percent from $750 million in the first quarter of 2005. CPG generated record operating income of $110 million in the second quarter, up from $92 million in the first quarter of 2005. CPG's second quarter sales growth was driven by record server and mobile processor sales, a six percent higher overall average selling price, and record sales to our largest global OEM customers. Geographically, sales were especially strong in China, North America and all of our high-growth markets.

Memory Products Group sales of $462 million decreased 31 percent from the second quarter of 2004 and increased three percent from $447 million in the first quarter or 2005. Memory Products Group incurred an operating loss of $90 million, as compared to an operating loss of $110 million in the first quarter of 2005. MirrorBit Flash memory sales accelerated to more than 20 percent of total Memory Products Group sales in the quarter, with increased wireless demand for second-generation, 110nm MirrorBit devices. Quarter-over-quarter, sales in Europe and the Americas increased and unit volume shipments were up twelve percent.

Additional Highlights of the Quarter

-- AMD shipped true Dual-Core technology with the AMD Athlon™ 64 X2 Dual-Core processors for desktop PCs and Dual-Core AMD Opteron™ processors for servers and workstations. Many of AMD's OEM customers announced Dual-Core systems, including Acer, HP, IBM, Lenovo, Sun, Supermicro Computer, Inc., Alienware, Cray, and Dawning.

-- Several of the largest global OEMs broadened their AMD product offerings for small to mid-size businesses and enterprise markets, including:

-- Sun Microsystems, Inc. introduced the Sun Ultra 20 Workstation and unveiled the Sun Fire V40z server, both powered by the Dual-Core AMD Opteron processor. Sun also announced that the versatile Solaris 10 Operating System supports servers based on the Dual-Core AMD Opteron processor.

-- HP launched the HP ProLiant BL45p 4P blade server, the HP dx5150 Business Desktop, and the AMD Turion 64 processor-powered HP Compaq nx6125 laptop for small to mid-size businesses.

-- IBM launched the AMD Opteron IBM LS20 2P blade server.

-- Fujitsu Siemens Computers introduced a new line of professional PCs featuring the AMD Athlon 64 processor, the ESPRIMO P and ESPRIMO E series for business users.

-- AMD, in conjunction with other industry partners, continued to deliver highly-differentiated, industry-first products, including:

-- HP and AMD, working closely with the Lance Armstrong Foundation (LAF), developed the HP Special Edition L2000 "LIVESTRONG" notebook featuring the AMD Turion 64 processor. This one-of-a-kind consumer PC bears the LIVESTRONG message and a reproduction of Lance Armstrong's autograph. Fifty U.S. dollars from each HP Special Edition L2000 Notebook PC will go to the LAF to help it fund its public health, advocacy, research and education initiatives for people with cancer.

-- Acer launched the AMD Turion 64 processor-powered Ferrari 4000, the world's first notebook to harness cutting-edge carbon fiber technology pioneered and perfected in the world of Formula One and in the aerospace industry.

-- More than 75 of the top 100 companies in the Forbes Global 2000 or their subsidiaries have adopted AMD64 technology. Airbus, Alcatel, Computer Sciences Corporation, CyberTrader, Inc., a Charles Schwab company, The D.E. Shaw Group, Unilever, Vodafone and 7-Eleven, Inc. represent the growing ranks of enterprises using AMD technology.

-- The AMD64 software ecosystem continued to gain momentum with Microsoft's release of Windows® Server 2003 x64 Edition and Windows XP Professional x64 Editions, both developed in close collaboration with AMD.

-- The Dual-Core AMD Opteron processor took "Best of TechEd 2005" honors conferred by Windows IT Pro and SQL Server Magazine at Microsoft TechEd 2005, and Network Magazine named the Dual-Core AMD Opteron processor "Breakthrough Product" for 2005 at the Network Magazine Innovation Awards.

-- SAGEM announced the SAGEM myX-8 mobile phone using the Spansion™ S29GL512N Flash memory device - the industry's only single-chip 512Mbit NOR Flash memory device in production.

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.

-- AMD expects microprocessor sales growth to exceed normal seasonal patterns.

-- Because of Spansion's SEC Form S-1 filing, AMD is not providing guidance for the Flash memory business.

AMD Teleconference

AMD will hold a conference call for the financial community at 2:30 p.m. PT today to discuss quarterly financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its Web site at www.amd.com or www.streetevents.com. The webcast will be available for 10 days after the conference call.

Cautionary Statement

This release contains forward-looking statements concerning the fiscal quarter ending September 25, 2005, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that the forward-looking statements in this release involve risks and uncertainties that could cause actual results to differ materially from the company's current expectations. Risks that the company considers to be the important factors that could cause actual results to differ materially from those set forth in the forward-looking statements include the possibility that global business and economic conditions will worsen resulting in lower than currently expected sales in the third quarter of 2005; 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 computers, and, in turn, demand for the company's processors will be lower than currently expected; that adoption of AMD64 products by OEMs will not continue to occur as expected; that demand for the company's Flash memory products will be lower than currently expected; that Intel Corporation's pricing, marketing programs, product bundling, new product introductions or other activities will negatively affect NOR Flash memory prices; that OEMs will increasingly choose NAND-based Flash memory products over NOR-based Flash memory products for their applications; that customer acceptance of MirrorBit technology will not continue to increase; that the company may not achieve its current product and technology introduction or implementation schedules; that the company will not be able to raise sufficient capital to enable it to establish leading-edge capacity to maintain its market leadership positions and that solutions providers will not timely provide the infrastructure 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 26, 2004 and the Quarterly Report on Form 10-Q for the quarter ended March 27, 2005.

About AMD

AMD (NYSE:AMD) designs and produces innovative microprocessors, Flash memory devices and low-power processor solutions for the computer, communications and consumer electronics industries. AMD is dedicated to delivering standards-based, customer-focused solutions for technology users, ranging from enterprises and governments to individual consumers. For more information visit www.amd.com.

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



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

Quarter Ended Six Months Ended
----------------------------------------------- ----------------------
Jun. 26 Mar. 27 Jun. 27 Jun. 26 Jun. 27
2005 2005 2004 2005 2004
(Unaudited)(Unaudited)(Unaudited) (Unaudited)(Unaudited)
----------------------------------------------- ----------------------

Net sales $1,259,918 $1,226,628 $1,261,837 $2,486,546 $2,498,270

Cost of sales 765,954 807,449 783,069 1,573,403 1,551,909
Research and
development 272,584 253,122 224,821 525,706 450,911
Marketing,
general and
administrative 228,511 211,714 178,993 440,225 359,210
Restructuring
and other
special
charges, net - - 2,514 - 2,514


----------------------------------------------- ----------------------
1,267,049 1,272,285 1,189,397 2,539,334 2,364,544

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

Operating
income (loss) (7,131) (45,657) 72,440 (52,788) 133,726

Interest
income and
other, net 3,098 3,974 (2,203) 7,072 8,778
Interest
expense (25,653) (24,245) (27,956) (49,898) (58,110)

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

Income (loss)
before minority
interest and
income taxes (29,686) (65,928) 42,281 (95,614) 84,394

Minority interest
in (income) loss
of subsidiaries 37,905 46,853 (6,527) 84,758 (1,176)
Provision
(benefit) for
income taxes (3,100) (1,652) 3,574 (4,752) 5,947

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

Net income (loss) 11,319 (17,423) 32,180 (6,104) 77,271

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

Net income (loss) per common share

Basic $ 0.03 $ (0.04) $ 0.09 $ (0.02) $ 0.22

Diluted $ 0.03 $ (0.04) $ 0.09 $ (0.02) $ 0.21

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

Shares used in per share calculation

- Basic 395,414 393,077 353,655 394,245 352,491
- Diluted 405,739 393,077 420,053 394,245 419,008

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


Advanced Micro Devices, Inc.

----------------------------------------------------------------------
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA
(Thousands)
----------------------------------------------------------------------
Quarter Ended Six Months Ended
----------------------------------------------- ----------------------
Jun. 26, Mar. 27, Jun. 27, Jun. 26, Jun. 27,
2005 2005 2004 2005 2004
(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
----------------------------------------------------------------------

Net income
(loss) $ 11,319 $ (17,423) $ 32,180 $ (6,104) $ 77,271
Depreciation
and
amortization 318,455 332,881 292,393 651,336 590,373
Interest income (7,194) (6,885) (3,531) (14,079) (7,205)
Interest expense 25,653 24,245 27,956 49,898 58,110
Provision
(benefit) for
income taxes (3,100) (1,652) 3,574 (4,752) 5,947

----------------------------------------------- ----------------------
EBITDA $ 345,133 $ 331,166 $ 352,572 $ 676,299 $ 724,496

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


Advanced Micro Devices, Inc.
CONSOLIDATED BALANCE SHEETS
(Thousands)
Jun. 26, Dec. 26,
2005 2004(a)
----------------------------------------------------------------------
(unaudited)
Assets

Current assets:
Cash, cash equivalents and short-term
investments $ 1,220,064 $ 1,195,559
Accounts receivable, net 735,687 719,572
Inventories 911,163 874,790
Prepaid expenses and other current assets 309,491 350,240
Deferred income taxes 71,656 87,836

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

Total current assets 3,248,061 3,227,997

Property, plant and equipment, net 4,145,483 4,233,807
Other assets 379,018 382,406

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

Total Assets $ 7,772,562 $ 7,844,210
======================================================================

Liabilities and Stockholders' Equity

Current liabilities:
Notes payable $ 50,412 $ -
Accounts payable 757,274 655,123
Accrued compensation and benefits 163,063 191,431
Accrued liabilities 461,651 445,341
Restructuring accruals 20,077 18,997
Income taxes payable 17,971 47,145
Deferred income on shipments to
distributors 148,625 141,738
Current portion of long-term debt and
capital lease obligations 254,233 230,828
Other current liabilities 124,378 115,773
----------------------------------------------------------------------

Total current liabilities 1,997,684 1,846,376

Deferred income taxes 68,131 104,246
Long-term debt and capital lease obligations 1,591,584 1,628,268
Other long-term liabilities 462,314 414,626
Minority interest in subsidiaries 806,240 840,641

Stockholders' equity:
Capital stock:
Common stock, par value 3,963 3,917
Capital in excess of par value 2,370,339 2,316,669
Retained earnings 302,206 308,497
Accumulated other comprehensive income 170,101 380,970
----------------------------------------------------------------------

Total stockholders' equity 2,846,609 3,010,053

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

Total Liabilities and Stockholders' Equity $ 7,772,562 $ 7,844,210
======================================================================

(a)Derived from the December 26, 2004 audited financial statements of
Advanced Micro Devices, Inc.



AMD
Selected Corporate Data
(Unaudited)
Quarter Ended Six Months Ended
--------------------------------------------------- ------------------
Jun. 26, Mar. 27, Jun. 27, Jun. 26, Jun. 27,
Segment Information 2005 2005 2004 2005 2004
-----------------------

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

Computation Products Group (1)
Revenue $767 M $750 M $554 M $1,517 M $1,125 M
Operating Income 110 M 92 M 58 M 202 M 125 M

Memory Products Group (2)
Revenue 462 M 447 M 673 M 910 M 1,301 M
Operating Income (Loss) (90)M (110)M 45 M (199)M 59 M

Personal Connectivity Solutions Group (3)
Revenue 30 M 30 M 34 M 60 M 72 M
Operating Loss (14)M (17)M (14)M (31)M (21)M

All Other (4)
Revenue 0 M 0 M 0 M 0 M 0 M
Operating Loss (13)M (10)M (16)M (24)M (29)M

Total AMD
Revenue 1,260 M 1,227 M 1,262 M 2,487 M 2,498 M
Operating Income (Loss) (7)M (46)M 72 M (53)M 134 M

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

--------------------------------------------------- ------------------
Jun. 26, Mar. 27, Jun. 27, Jun. 26, Jun. 27,
Other Data 2005 2005 2004 2005 2004
-----------------------

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

Depreciation &
Amortization $318 M $333 M $292 M $651 M $590 M

Capital Additions $303 M $518 M $361 M $822 M $563 M

Headcount 16,694 16,144 14,690 16,694 14,690

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

International Sales 76% 78% 80% 77% 81%

Research and Development $273 M $253 M $225 M $526 M $451 M

EBITDA $345 M $331 M $353 M $676 M $724 M

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


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

(2) Memory Products Group includes Flash memory products of AMD and
Spansion LLC.

(3) The Personal Connectivity Solutions Group includes Embedded
Processors and products for global commercial and consumer markets.

(4) The All Other category includes certain operating expenses and
credits that are not allocated to the operating segments.

Note: Figures may not foot due to rounding



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