AMD Reports Second Quarter Results
SUNNYVALE, Calif.--(BUSINESS WIRE)--July 19, 2000--
AMD earns a record $207 million, or $1.21 per diluted share after taxes, on record quarterly sales up by 97 percent from second quarter of 1999
AMD today reported record sales of $1,170,437,000, record operating income of $250,197,000, and record net income of $207,142,000 for the quarter ended July 2, 2000. Operating income rose by 38 percent from the immediate-prior quarter. Net income amounted to $1.21 per diluted share after a 20 percent tax rate. (On an untaxed basis, second-quarter earnings per diluted share would have been $1.51, up by 31 percent from the first quarter when the tax rate was zero.)
Sales grew by 7 percent from the immediate-prior quarter, for which AMD reported sales of $1,092,029,000, operating income of $180,669,000, and net income of $189,349,000, or $1.15 per diluted share.
Sales nearly doubled from the second quarter of 1999, for which AMD reported sales of $595,109,000 and net income of $79,896,000, or $0.53 per diluted share. Revenues from PC processors and flash memory products each more than doubled from the comparable quarter of 1999. The results for the second quarter of 1999 included a one-time, after-tax gain of $259 million from the sale of Vantis Corporation, the company's former programmable logic subsidiary. The results from the second quarter of 1999 also included 11 weeks of operating results from Vantis prior to the effective date of the sale. In the second quarter of 1999, AMD incurred an operating loss of $172,542,000.
For the first six months of 2000, AMD reported total sales of $2,262,466,000 and net income of $396,491,000, or $2.36 per diluted share. For the same period of 1999, AMD reported total sales of $1,226,702,000 and a net loss of $48,471,000, or a loss of $0.33 per share, including the gain on the sale of Vantis and restructuring and other special charges.
"AMD had another great quarter," said Hector de J. Ruiz, president and chief operating officer of AMD. "Strong revenue growth in both of our principal product lines - PC processors and flash memory devices - again resulted in record sales and earnings."
In what is traditionally the weakest quarter for PC processors, the company reported that combined unit shipments of AMD Athlon, AMD Duron, and AMD K6-2(TM) processors remained near record levels at well in excess of 6 million units.
"During the quarter, AMD introduced two enhanced seventh-generation PC processors," said Ruiz. "The new AMD Athlon(TM) processor, formerly code-named `Thunderbird,' features 256K of on-die L2 cache memory and is targeted at the performance sector of the PC market. AMD also commenced shipments of the AMD Duron(TM) processor, formerly code-named `Spitfire,' featuring 64K of on-board L2 cache memory. The AMD Duron processor is targeted at the value segment of the PC market.
"Demand for AMD processors remains strong. Combined unit sales of AMD seventh-generation processors - the AMD Athlon and AMD Duron processors - increased by 52 percent over the immediate-prior quarter to more than 1.8 million units, meeting our previously stated goal. We are especially pleased at the strong support we have received from our infrastructure partners during the transition to the newest version of the AMD Athlon processor family. With the additional production capacity of our new Dresden facility, we believe we are on target to double unit shipments of AMD seventh-generation processors in each of the next two quarters to 3.6 million units in the third quarter and to 7.2 million units in the fourth quarter," said Ruiz.
Ruiz noted that AMD successfully met a number of important challenges in the just-completed quarter. "We achieved our goal of increasing AMD seventh-generation processor unit shipments by 52 percent sequentially while making a successful transition to our newest AMD Athlon and AMD Duron products. During the quarter, we converted all AMD Athlon processor production to the new version, featuring on-chip L2 cache memory. Fab 30 in Dresden transitioned to production status, completing an excellent start-up phase employing our most advanced process technology - 0.18-micron technology using copper interconnects. We are rapidly ramping production in Fab 30, and to date we have met or exceeded every milestone along the way," said Ruiz.
"Our progress in flash memory was equally successful. Memory Group sales grew by more than 10 percent over the immediate-prior quarter," Ruiz continued.
"During the quarter, AMD introduced two advanced flash memory products for high-end cellular telephones. Working closely with Nokia, AMD developed 32- and 64-megabit devices with simultaneous read-write architecture and 1.8-volt operation for extended battery life. These features are critical in adding new capabilities to cellular telephones, such as Internet connectivity, video streaming, and the functionality of handheld information appliances.
"Demand for AMD flash memory products continues to exceed our production capacity," said Ruiz. "We are adding capacity as rapidly as possible to support our customers. During the quarter Fujitsu AMD Semiconductor Limited (FASL) made initial shipments from a production facility in Iwate, Japan, and qualified production in additional facilities in Aizu-Wakamatsu and Gresham, Oregon. As announced earlier today, FASL broke ground for construction of a third megafab for flash memory production at Aizu-Wakamatsu, Japan. Initial production at this new facility, designated JV3, is planned to commence in the second half of 2001.
"Today we are reaping the rewards of AMD's sustained commitment to investing in process technology, product development, and production capacity for both PC processors and flash memory products. AMD has the strongest product portfolio in its 31-year history, with industry-leading products for our target markets. We have excellent relationships with leading customers around the world, and we continue to operate in a favorable market environment. During my first six months at AMD, I have been very favorably impressed with the dedication of the AMD workforce and the total commitment to success that permeates the company," Ruiz concluded. Current Outlook
The company's outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially.
Despite the loss of revenues as a result of the sale of the Communication Products Division, AMD projects that sales will be higher in the third quarter than in the immediate-prior quarter. The company's current overall outlook is based on the following projections for its major product lines:
The company projects that combined unit shipments of AMD Athlon and Duron family processors will increase to 3.6 million units in the third quarter and to 7.2 million units in the fourth quarter, resulting in a richer mix and a higher blended average selling price and higher revenues for PC processors.
AMD projects that Memory Group sales will grow in the 10 percent range in the third quarter and will achieve a similar growth rate in the fourth quarter. The company projects that demand for flash memory products will continue to exceed supply. AMD Teleconference
AMD will hold a teleconference for the financial community at 2:30 PM Pacific Daylight 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 sit at amd.com or streetfusion.com. The webcast will be available for two weeks after the teleconference.
AMD will also provide a telephone recording of the teleconference, which will be available at approximately 4:30 PM PT today. Interested persons may listen to the playback of the teleconference by calling the following toll-free number: 1-800-633-8284 and entering the code number 15676264. 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. There can be no assurance that demand for the company's products will continue at current or greater levels, or that the company will continue to grow revenues, operating profits, or earnings.
There are also risks that the company will not be able to produce the AMD Athlon and AMD Duron processors in the volume, speed mix or with the feature set necessary to meet customer requirements and the company's plans and goals; that Intel Corporation pricing, marketing programs, new product introductions or other activities targeting the company's processors business will prevent attainment of the company's current processor sales plans; that third parties may not provide timely or adequate infrastructure solutions to support the AMD Athlon and AMD Duron processors; and that the company will not be able to grow demand for its PC processors sufficiently to utilize fully its processor production capacity. 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 26, 1999. 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 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 $2.9 billion in 1999. (NYSE: AMD).
WORLD WIDE WEB: Press announcements and other information about AMD are available on the Internet via the World Wide Web. Type amd.com at the URL prompt.
NOTE TO EDITOR: Readers may obtain additional information by calling 1-800-222-9323 or 408-749-3060. Technical Support Email: hw.support@amd.com
AMD, the AMD logo, and combinations thereof are trademarks of Advanced Micro Devices, Inc. in the United States and other jurisdictions.
Advanced Micro Devices, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands except per share amounts)
Quarter Ended
(Unaudited)
Jul. 2, Apr. 2, Jun. 27,
2000 2000 1999
Net sales $1,170,437 $1,092,029 $595,109
Cost of sales 612,567 605,757 458,339
Research and development 155,651 161,297 167,278
Marketing, general and
administrative 152,022 144,306 124,520
Restructuring and other
special charges -- -- 17,514
920,240 911,360 767,651
Operating income (loss) 250,197 180,669 (172,542)
Gain on sale of Vantis -- -- 432,059
Interest income and
other, net 19,935 21,128 7,252
Interest expense (11,244) (11,479) (18,087)
Income before income
taxes and equity in
joint venture 258,888 190,318 248,682
Provision for income
taxes 51,778 -- 172,823
Income (loss) before
equity in joint venture 207,110 190,318 75,859
Equity in net income
(loss) of joint venture 32 (969) 4,037
Net income (loss) $207,142 $189,349 $79,896
Net income (loss) per
common share
- Basic $1.34 $1.25 $0.54
- Diluted $1.21 $1.15 $0.53
Shares used in per share
calculation
- Basic 154,558 150,880 146,947
- Diluted 176,218 171,942 149,540
Six Months Ended
(Unaudited)
Jul. 2, Jun. 27,
2000 1999
Net sales $2,262,466 $1,226,702
Cost of sales 1,218,324 908,770
Research and development 316,948 327,224
Marketing, general and
administrative 296,328 251,830
Restructuring and other
special charges -- 32,530
1,831,600 1,520,354
Operating income (loss) 430,866 (293,652)
Gain on sale of Vantis -- 432,059
Interest income and
other, net 41,063 18,020
Interest expense (22,723) (38,850)
Income before income
taxes and equity in
joint venture 449,206 117,577
Provision for income
taxes 51,778 167,350
Income (loss) before
equity in joint venture 397,428 (49,773)
Equity in net income
(loss) of joint venture (937) 1,302
Net income (loss) $396,491 $(48,471)
Net income (loss) per
common share
- Basic $2.60 $(0.33)
- Diluted $2.36 $(0.33)
Shares used in per share
calculation
- Basic 152,719 146,428
- Diluted 174,080 146,428
Advanced Micro Devices, Inc. INFORMATION ONLY
NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS(a)
(Includes Pre-Tax FASL Investment Equity (Income) loss in Operating
Income (Loss))
(Thousands except per share amounts)
Quarter Ended
(Unaudited)
Jul. 2, Apr. 2, Jun. 27,
2000 2000 1999
Net sales $1,170,437 $1,092,029 $595,109
Cost of sales 612,567 605,757 458,339
(Income)loss
from equity
investment in
FASL (54) 1,659 (6,869)
Research and
development 155,651 161,297 167,278
Marketing,
general and
administrative 152,022 144,306 124,520
Restructuring
and other
special charges -- -- 17,514
920,186 913,019 760,782
Operating income
(loss) 250,251 179,010 (165,673)
Gain on sale of
Vantis -- -- 432,059
Interest income
and other, net 19,935 21,128 7,252
Interest expense (11,244) (11,479) (18,087)
Income before
income taxes 258,942 188,659 255,551
Provision for
income taxes 51,778 -- 172,823
Provision
(benefit) for
taxes on equity
(income) loss
in FASL 22 (690) 2,832
Net income (loss) $207,142 $189,349 $79,896
Net income (loss)
per common share
- Basic $1.34 $1.25 $0.54
- Diluted $1.21 $1.15 $0.53
Shares used in
per share
calculation
- Basic 154,558 150,880 146,947
- Diluted 176,218 171,942 149,540
Six Months Ended
(Unaudited)
Jul. 2, Jun. 27,
2000 1999
Net sales $2,262,466 $1,226,702
Cost of sales 1,218,324 908,770
(Income)loss
from equity
investment in
FASL 1,605 (2,233)
Research and
development 316,948 327,224
Marketing,
general and
administrative 296,328 251,830
Restructuring
and other
special charges -- 32,530
1,833,205 1,518,121
Operating income
(loss) 429,261 (291,419)
Gain on sale of
Vantis -- 432,059
Interest income
and other, net 41,063 18,020
Interest expense (22,723) (38,850)
Income before
income taxes 447,601 119,810
Provision for
income taxes 51,778 167,350
Provision
(benefit) for
taxes on equity
(income) loss
in FASL (668) 931
Net income (loss) $396,491 $(48,471)
Net income (loss)
per common share
- Basic $2.60 $(0.33)
- Diluted $2.36 $(0.33)
Shares used in
per share
calculation
- Basic 152,719 146,428
- Diluted 174,080 146,428
(a) The above statements of operations are not in accordance with
generally accepted accounting principles (GAAP) in that the pre-tax
equity (income) loss of FASL has been reclassified and included in the
determination of operating income (loss). Net income (loss) and
related net income (loss) per common share amounts are the same as
those reported under GAAP.
Advanced Micro Devices, Inc.
CONSOLIDATED BALANCE SHEETS(b)
(Thousands)
July 2, Dec. 26,
2000 1999
Assets
Current assets:
Cash, cash equivalents and short-term
investments $ 1,079,893 $ 596,511
Accounts receivable, net 533,007 429,809
Inventories 255,579 198,213
Deferred income taxes 63,440 55,956
Prepaid expenses and other current assets 127,472 129,389
Total current assets 2,059,391 1,409,878
Property, plant and equipment, net 2,475,667 2,523,236
Investment in joint venture 267,448 273,608
Other assets 160,988 170,976
$ 4,963,494 $ 4,377,698
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 353,398 387,193
Accrued compensation and benefits 155,779 91,900
Accrued liabilities 233,256 273,689
Income tax payable 18,763 17,327
Deferred income on shipments to
distributors 99,590 92,917
Current portion of long-term debt,
capital lease obligations and other 75,951 47,626
Total current liabilities 936,737 910,652
Deferred income taxes 101,861 60,491
Long-term debt, capital lease obligations
and other, less current portion 1,481,725 1,427,282
Stockholders' equity:
Capital stock:
Common stock, par value 1,649 1,496
Capital in excess of par value 1,219,409 1,121,956
Retained earnings 1,269,726 873,235
Accumulated other comprehensive loss (47,613) (17,414)
Total stockholders' equity 2,443,171 1,979,273
$ 4,963,494 $ 4,377,698
(b) Amounts as of July 2, 2000 are unaudited. Amounts for December
26, 1999 are derived from the December 26, 1999 audited financial
statements.
AMD
Selected Corporate Data
(Unaudited)
Segment Breakdown Q2 '00 Q1 '00 Q2 '99
% Revenue % Revenue % Revenue
of of of
Sales Sales Sales
Core Products Segment:
Computation Products Group 57 $667M 59 $644M 59 $317M
Memory Group 31 362M 30 327M 28 166M
Communications Group Segment 10 117M 9 101M 12 70M
Other Segments 2 24M 2 20M 7 42M
Other Data Q2 '00 Q1 '00 Q2 '99
---------- ------ ------ ------
Depreciation
and Amortization $148M $128M $128M
Capital Additions $161M $129M 148M
Headcount 13,784 13,398 13,467
International Sales 61% 59% 58%
Research and Development $156M $161M $167M
EBITDA $398M $309M ($45M)
CONTACT: Strategic Communications
John Greenagel, 408/749-3310
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