AMD Reports Third Quarter 2017 Financial Results

Reve­nue Increa­sed 26 Per­cent Year-over-Year

SUNNYVALE, Calif. 10/24/2017

AMD (NASDAQ:AMD) today announ­ced reve­nue for the third quar­ter of 2017 of $1.64 bil­li­on, ope­ra­ting inco­me of $126 mil­li­on and net inco­me of $71 mil­li­on, and dilu­t­ed earnings per sha­re of $0.07. On a non-GAAP(1) basis, ope­ra­ting inco­me was $155 mil­li­on, net inco­me was $110 mil­li­on, and dilu­t­ed earnings per sha­re was $0.10.

 

Strong custo­mer adop­ti­on of our new high-per­for­mance pro­ducts dro­ve signi­fi­cant reve­nue growth and impro­ved finan­ci­al results from a year ago,” said Dr. Lisa Su, AMD pre­si­dent and CEO. “Our third quar­ter new pro­duct intro­duc­tions and finan­ci­al exe­cu­ti­on mark ano­t­her important milestone as we esta­blish AMD as a pre­mier growth com­pa­ny in the tech­no­lo­gy indus­try.”

Q3 2017 Results

  • Reve­nue was $1.64 bil­li­on, up 26 per­cent year-over-year, pri­ma­ri­ly dri­ven by hig­her reve­nue in the Com­pu­ting and Gra­phics seg­ment (CG). Reve­nue was up 34 per­cent sequen­ti­al­ly, dri­ven by the Enter­pri­se Embed­ded and Semi-Custom seg­ment (EESC) reve­nue sea­so­na­li­ty and hig­her reve­nue in CG. In the quar­ter, AMD clo­sed a patent licen­sing tran­sac­tion which posi­tively impac­ted reve­nue in the seg­ments.
  • On a GAAP basis, gross mar­gin was 35 per­cent, up 30 per­cen­ta­ge points year-over-year pri­ma­ri­ly due to a $340 mil­li­on char­ge rela­ted to our GLOBALFOUNDRIES Wafer Sup­ply Agree­ment (WSA) in the year ago peri­od (WSA char­ge). In addi­ti­on, the gross mar­gin increa­se was pri­ma­ri­ly dri­ven by the bene­fit from IP rela­ted reve­nue and a richer reve­nue mix from CG par­ti­al­ly off­set by costs asso­cia­ted with the WSA for cer­tain wafers purcha­sed at ano­t­her found­ry. Gross mar­gin was up 2 per­cen­ta­ge points sequen­ti­al­ly pri­ma­ri­ly dri­ven by the bene­fit from IP rela­ted reve­nue, par­ti­al­ly off­set by costs asso­cia­ted with the WSA for cer­tain wafers purcha­sed at ano­t­her found­ry. Ope­ra­ting inco­me was $126 mil­li­on com­pa­red to an ope­ra­ting loss of $293 mil­li­on a year ago and ope­ra­ting inco­me of $25 mil­li­on in the pri­or quar­ter. Net inco­me was $71 mil­li­on com­pa­red to net los­ses of $406 mil­li­on a year ago and $16 mil­li­on in the pri­or quar­ter. Dilu­t­ed earnings per sha­re was $0.07 com­pa­red to los­ses per sha­re of $0.50 a year ago and $0.02 in the pri­or quar­ter.
  • On a non-GAAP(1) basis, gross mar­gin was 35 per­cent, up 4 per­cen­ta­ge points year-over-year pri­ma­ri­ly dri­ven by the bene­fit from IP rela­ted reve­nue and a richer reve­nue mix from CG, par­ti­al­ly off­set by costs asso­cia­ted with the WSA for cer­tain wafers purcha­sed at ano­t­her found­ry. Gross mar­gin was up 2 per­cen­ta­ge points sequen­ti­al­ly pri­ma­ri­ly dri­ven by the bene­fit from IP rela­ted reve­nue, par­ti­al­ly off­set by costs asso­cia­ted with the WSA for cer­tain wafers purcha­sed at ano­t­her found­ry. Ope­ra­ting inco­me was $155 mil­li­on com­pa­red to $70 mil­li­on a year ago and $49 mil­li­on in the pri­or quar­ter. Net inco­me was $110 mil­li­on com­pa­red to $27 mil­li­on a year ago and $19 mil­li­on in the pri­or quar­ter. Dilu­t­ed earnings per sha­re was $0.10 com­pa­red to $0.03 a year ago and $0.02 in the pri­or quar­ter.
  • Cash, cash equi­va­lents, and mar­keta­ble secu­ri­ties were $879 mil­li­on at the end of the quar­ter, com­pa­red to $844 mil­li­on in the pri­or quar­ter.

Quarterly Financial Segment Summary

  • Com­pu­ting and Gra­phics seg­ment reve­nue was $819 mil­li­on, up 74 per­cent year-over-year pri­ma­ri­ly dri­ven by strong sales of Rade­on™ gra­phics and Ryzen™ desk­top pro­ces­sors.
    • Cli­ent average sel­ling pri­ce (ASP) increa­sed signi­fi­cant­ly year-over-year, due to hig­her desk­top pro­ces­sor ASP dri­ven by Ryzen™ pro­ces­sor sales.
    • GPU ASP increa­sed signi­fi­cant­ly year-over-year.
    • Ope­ra­ting inco­me was $70 mil­li­on, com­pa­red to an ope­ra­ting loss of $66 mil­li­on a year ago. The year-over-year impro­ve­ment was pri­ma­ri­ly dri­ven by hig­her reve­nue.
  • Enter­pri­se, Embed­ded and Semi-Custom seg­ment reve­nue was $824 mil­li­on, appro­xi­mate­ly flat year-over-year pri­ma­ri­ly dri­ven by lower semi-custom SoC sales, most­ly off­set by IP rela­ted and EPYC™ pro­ces­sor reve­nue.
    • Ope­ra­ting inco­me was $84 mil­li­on, com­pa­red to $136 mil­li­on a year ago. The year-over-year decrea­se was pri­ma­ri­ly due to hig­her costs par­ti­al­ly off­set by the net bene­fit of IP rela­ted items.
  • All Other ope­ra­ting loss was $28 mil­li­on com­pa­red with an ope­ra­ting loss of $363 mil­li­on a year ago. The year-over-year dif­fe­rence in ope­ra­ting loss was pri­ma­ri­ly rela­ted to the WSA char­ge in the year ago peri­od.

Q3 2017 Highlights

  • AMD con­ti­nued dri­ving inno­va­ti­on and com­pe­ti­ti­on into the con­su­mer and com­mer­ci­al PC mar­kets with new Ryzen™ pro­ces­sors:
    • Ryzen™ Thre­ad­rip­per™ pro­ces­sors laun­ched for the High End Desk­top and work­sta­tion mar­kets. Avail­ab­le in 8-, 16- and 12-core vari­ants, Thre­ad­rip­per™ pro­ces­sors are avail­ab­le from over 90 retailers, OEMs, and sys­tem inte­gra­tors world­wi­de, inclu­ding in the Ali­en­wa­re Area-51 Thre­ad­rip­per™ Edi­ti­on gaming PCBOXX APEXX 4 6301 andNext­Com­pu­ting Edge TR work­sta­tions.
    • Ryzen™ 3 CPUs offer excep­tio­nal respon­si­veness and per­for­mance at main­stream pri­cing, com­ple­ting the Ryzen™ main­stream desk­top lin­eup.
    • Ryzen™ PRO desk­top solu­ti­ons have recei­ved broad sup­port from top glo­bal com­mer­ci­al PC sup­pliers, inclu­ding Dell, HP, and Leno­vo.
  • AMD expan­ded its gra­phics offe­rings with new con­su­mer, pro­fes­sio­nal, and embed­ded gra­phics solu­ti­ons:
    • Laun­ched the “Vega” archi­tec­tu­re-based Rade­on™ RX Vega fami­ly of GPUs, mar­king a return to the enthu­si­ast-class gaming seg­ment. The­se new “Vega” archi­tec­tu­re-based GPUs­com­bi­ne cut­ting-edge capa­bi­li­ties with 8GB of HBM2 memo­ry to deli­ver up to 13.7 TFLOPS of peak per­for­mance.
    • Laun­ched the Rade­on™ Pro WX 9100 pro­fes­sio­nal gra­phics card, deli­vering up to 12.3 TFLOPS of peak sin­gle pre­ci­si­on com­pu­te per­for­mance.
    • Laun­ched the Embed­ded Rade­on™ E9170 Series GPU, which deli­vers up to 3X the per­for­mance-per-watt over pre­vious gene­ra­ti­ons, and is tar­ge­ted at digi­tal casi­no games, thin cli­ents, medi­cal dis­plays, digi­tal and retail signa­ge, and indus­tri­al sys­tems(2).
  • With new announ­ce­ments from Ama­zon Web Ser­vices (AWS), and Ten­cent, AMD enter­pri­se solu­ti­ons have now been cho­sen by five of the “Super 7” dat­a­cen­ter and cloud ser­vices com­pa­nies. Pre­vious­ly announ­ced col­la­bo­ra­ti­ons inclu­deAli­ba­ba, Bai­du and Micro­soft Azu­re.
    • Ama­zon Web Ser­vices selec­ted AMD Rade­on™ Pro MxG­PU tech­no­lo­gy for the new Gra­phics Design ins­tan­ce type on Ama­zon AppStream 2.0, which allows users to run gra­phics-acce­le­ra­ted app­li­ca­ti­ons at a frac­tion of the cost of using gra­phics work­sta­tions.
    • Ten­cent announ­ced plans to use AMD EPYC™ 7000 series ser­ver pro­ces­sors in their dat­a­cen­ters.
  • Ata­ri dis­c­lo­sed that a custo­mi­zed AMD pro­ces­sor fea­turing Rade­on™ gra­phics tech­no­lo­gy will power the upco­m­ing Ata­ri­box game con­so­le, which is tar­ge­ted for glo­bal launch in spring 2018.

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 and the fac­tors set forth under “Cau­tio­na­ry State­ment” below.

For the fourth quar­ter of 2017, AMD expects reve­nue to decrea­se appro­xi­mate­ly 15 per­cent sequen­ti­al­ly, plus or minus 3 per­cent. The mid­point of gui­d­ance would result in fourth quar­ter 2017 reve­nue increa­sing appro­xi­mate­ly 26 per­cent year-over-year. AMD now expects annu­al 2017 reve­nue to increa­se by grea­ter than 20 per­cent, com­pa­red to pri­or gui­d­ance of mid-to-high teens per­cen­ta­ge.

For addi­tio­nal details regar­ding AMD’s results and out­look plea­se see the CFO com­men­ta­ry posted atquarterlyearnings.amd.com.

AMD Teleconference

AMD will hold a con­fe­rence call for the finan­ci­al com­mu­ni­ty at 2:00 p.m. PT (5:00 p.m. ET) today to dis­cuss its third quar­ter 2017 finan­ci­al results. AMD will pro­vi­de a real-time audio broad­cast of the telecon­fe­rence on the Inves­tor Rela­ti­ons page of its web­site at www.amd.com. The web­cast will be avail­ab­le for 12 mon­ths after the con­fe­rence call.

 

Q3 2017 GAAP dilu­t­ed earnings per sha­re cal­cu­la­ted based on 1,042 mil­li­on sha­res and non-GAAP dilu­t­ed earnings per sha­re is cal­cu­la­ted based on 1,143 mil­li­on sha­res, which inclu­des 100.6 mil­li­on sha­res rela­ted to the Company’s 2026 con­ver­ti­ble notes and also inclu­des a $5 mil­li­on cash inte­rest expen­se add-back to net inco­me under the “if con­ver­ted” method.

Q3 2016 GAAP basic net loss per sha­re is cal­cu­la­ted based on 815 mil­li­on sha­res and non-GAAP dilu­t­ed earnings per sha­re is cal­cu­la­ted based on 865 mil­li­on sha­res.

About AMD

For more than 45 years, AMD has dri­ven inno­va­ti­on in high-per­for­mance com­pu­ting, gra­phics, and visua­li­za­ti­on tech­no­lo­gies — the buil­ding blocks for gaming, immer­si­ve plat­forms, and the dat­a­cen­ter. Hund­reds of mil­li­ons of con­su­mers, lea­ding For­tu­ne 500 busi­nes­ses, and cut­ting-edge sci­en­ti­fic rese­arch faci­li­ties around the world rely on AMD tech­no­lo­gy dai­ly to impro­ve how they live, work, and play. AMD employees around the world are focu­sed on buil­ding gre­at pro­ducts that push the bounda­ries of what is pos­si­ble. For more infor­ma­ti­on about how AMD is enab­ling today and inspi­ring tomor­row, visit the AMD (NASDAQ: AMDweb­siteblogFace­book and Twit­ter pages.

Cautionary Statement

This docu­ment con­ta­ins for­ward-loo­king state­ments con­cer­ning Advan­ced Micro Devices, Inc. (AMD) inclu­ding AMD’s abi­li­ty to beco­me a pre­mier growth com­pa­ny in the tech­no­lo­gy indus­try and AMD’s expec­ted fourth quar­ter 2017 reve­nue and annu­al 2017 reve­nue, which are made pur­suant to the Safe Har­bor pro­vi­si­ons of the Pri­va­te Secu­ri­ties Liti­ga­ti­on Reform Act of 1995. For­ward-loo­king state­ments are com­mon­ly iden­ti­fied by wor­ds such as “would,” “may,” “expects,” “belie­ves,” “plans,” “intends,” “pro­jects” and other terms with simi­lar mea­ning. Inves­tors are cau­tio­ned that the for­ward-loo­king state­ments in this docu­ment are based on cur­rent beliefs, assump­ti­ons and expec­ta­ti­ons, speak only as of the date of this docu­ment and invol­ve risks and uncer­tain­ties that could cau­se actu­al results to dif­fer mate­ri­al­ly from cur­rent expec­ta­ti­ons. Such state­ments are sub­ject to cer­tain known and unknown risks and uncer­tain­ties, many of which are dif­fi­cult to pre­dict and gene­ral­ly bey­ond AMD’s con­trol, that could cau­se actu­al results and other future events to dif­fer mate­ri­al­ly from tho­se expres­sed in, or implied or pro­jec­ted by, the for­ward-loo­king infor­ma­ti­on and state­ments. Mate­ri­al fac­tors that could cau­se actu­al results to dif­fer mate­ri­al­ly from cur­rent expec­ta­ti­ons inclu­de, without limi­ta­ti­on, the fol­lo­wing: Intel Corporation’s domi­nan­ce of the micropro­ces­sor mar­ket and its aggres­si­ve busi­ness prac­tices may limit AMD’s abi­li­ty to com­pe­te effec­tively; AMD has a wafer sup­ply agree­ment with GLOBALFOUNDRIES Inc. (GF) with obli­ga­ti­ons to purcha­se all of its micropro­ces­sor and APU pro­duct requi­re­ments, and a cer­tain por­ti­on of its GPU pro­duct requi­re­ments from GF with limi­ted excep­ti­ons. If GF is not able to satis­fy AMD’s manu­fac­tu­ring requi­re­ments, AMD’s busi­ness could be adver­se­ly impac­ted; AMD reli­es on third par­ties to manu­fac­tu­re its pro­ducts, and if they are unab­le to do so on a time­ly basis in suf­fi­ci­ent quan­ti­ties and using com­pe­ti­ti­ve tech­no­lo­gies, AMD’s busi­ness could be mate­ri­al­ly adver­se­ly affec­ted; fail­u­re to achie­ve expec­ted manu­fac­tu­ring yiel­ds for AMD’s pro­ducts could nega­tively impact its finan­ci­al results; the suc­cess of AMD’s busi­ness is depen­dent upon its abi­li­ty to intro­du­ce pro­ducts on a time­ly basis with fea­tures and per­for­mance levels that pro­vi­de value to its custo­mers while sup­porting and coin­ci­ding with signi­fi­cant indus­try tran­si­ti­ons; if AMD can­not gene­ra­te suf­fi­ci­ent reve­nue and ope­ra­ting cash flow or obtain exter­nal finan­cing, it may face a cash short­fall and be unab­le to make all of its plan­ned invest­ments in rese­arch and deve­lop­ment or other stra­te­gic invest­ments; the loss of a signi­fi­cant custo­mer may have a mate­ri­al adver­se effect on AMD; AMD’s rece­ipt of reve­nue from its semi-custom SoC pro­ducts is depen­dent upon its tech­no­lo­gy being desi­gned into third-par­ty pro­ducts and the suc­cess of tho­se pro­ducts; glo­bal eco­no­mic uncer­tain­ty may adver­se­ly impact AMD’s busi­ness and ope­ra­ting results; the mar­kets in which AMD’s pro­ducts are sold are high­ly com­pe­ti­ti­ve; AMD may not be able to gene­ra­te suf­fi­ci­ent cash to ser­vice its debt obli­ga­ti­ons or meet its working capi­tal requi­re­ments; AMD has a lar­ge amount of indeb­ted­ness which could adver­se­ly affect its finan­ci­al posi­ti­on and pre­vent it from imple­men­ting its stra­te­gy or ful­fil­ling its con­trac­tu­al obli­ga­ti­ons; the agree­ments gover­ning AMD’s notes and the Secu­red Revol­ving Line of Credit impo­se restric­tions on AMD that may adver­se­ly affect its abi­li­ty to ope­ra­te its busi­ness; AMD’s issu­an­ce to West Coast Hitech L.P. (WCH) of war­rants to purcha­se 75 mil­li­on sha­res of its com­mon stock, if and when exer­cis­ed, will dilu­te the ownership inte­rests of AMD’s exis­ting stock­hol­ders, and the con­ver­si­on of the 2.125% Con­ver­ti­ble Seni­or Notes due 2026 may dilu­te the ownership inte­rest of AMD’s exis­ting stock­hol­ders, or may other­wi­se depress the pri­ce of its com­mon stock; uncer­tain­ties invol­ving the orde­ring and ship­ment of AMD’s pro­ducts could mate­ri­al­ly adver­se­ly affect it; the demand for AMD’s pro­ducts depends in part on the mar­ket con­di­ti­ons in the indus­tries into which they are sold. Fluc­tua­ti­ons in demand for AMD’s pro­ducts or a mar­ket decli­ne in any of the­se indus­tries could have a mate­ri­al adver­se effect on its results of ope­ra­ti­ons; AMD’s abi­li­ty to design and intro­du­ce new pro­ducts in a time­ly man­ner is depen­dent upon third-par­ty intel­lec­tu­al pro­per­ty; AMD depends on third-par­ty com­pa­nies for the design, manu­fac­tu­re and sup­ply of mother­boards, soft­ware and other com­pu­ter plat­form com­pon­ents to sup­port its busi­ness; if AMD loses Micro­soft Corporation’s sup­port for its pro­ducts or other soft­ware ven­dors do not design and deve­lop soft­ware to run on AMD’s pro­ducts, its abi­li­ty to sell its pro­ducts could be mate­ri­al­ly adver­se­ly affec­ted; AMD’s reli­an­ce on third-par­ty dis­tri­bu­tors and AIB part­ners sub­jects it to cer­tain risks; AMD’s ina­bi­li­ty to con­ti­nue to attract and retain qua­li­fied per­son­nel may hin­der its busi­ness; in the event of a chan­ge of con­trol, AMD may not be able to repurcha­se its out­stan­ding debt as requi­red by the app­li­ca­ble inden­tures and its Secu­red Revol­ving Line of Credit, which would result in a default under the inden­tures and its Secu­red Revol­ving Line of Credit; the semi­con­duc­tor indus­try is high­ly cycli­cal and has expe­ri­en­ced seve­re down­turns that have mate­ri­al­ly adver­se­ly affec­ted, and may con­ti­nue to mate­ri­al­ly adver­se­ly affect its busi­ness in the future; acqui­si­ti­ons, dive­s­ti­tures and/or joint ven­tures could dis­rupt its busi­ness, harm its finan­ci­al con­di­ti­on and ope­ra­ting results or dilu­te, or adver­se­ly affect the pri­ce of, its com­mon stock; AMD’s busi­ness is depen­dent upon the pro­per func­tio­n­ing of its inter­nal busi­ness pro­ces­ses and infor­ma­ti­on sys­tems and modi­fi­ca­ti­on or inter­rup­ti­on of such sys­tems may dis­rupt its busi­ness, pro­ces­ses and inter­nal con­trols; data bre­aches and cyber-attacks could com­pro­mi­se AMD’s intel­lec­tu­al pro­per­ty or other sen­si­ti­ve infor­ma­ti­on, be cost­ly to reme­dia­te and cau­se signi­fi­cant dama­ge to its busi­ness and repu­ta­ti­on; AMD’s ope­ra­ting results are sub­ject to quar­ter­ly and sea­so­nal sales pat­terns; if essen­ti­al equip­ment, mate­ri­als or manu­fac­tu­ring pro­ces­ses are not avail­ab­le to manu­fac­tu­re its pro­ducts, AMD could be mate­ri­al­ly adver­se­ly affec­ted; if AMD’s pro­ducts are not com­pa­ti­ble with some or all indus­try-stan­dard soft­ware and hard­ware, it could be mate­ri­al­ly adver­se­ly affec­ted; costs rela­ted to defec­tive pro­ducts could have a mate­ri­al adver­se effect on AMD; if AMD fails to main­tain the effi­ci­en­cy of its sup­ply chain as it responds to chan­ges in custo­mer demand for its pro­ducts, its busi­ness could be mate­ri­al­ly adver­se­ly affec­ted; AMD out­sour­ces to third par­ties cer­tain sup­ply-chain logistics func­tions, inclu­ding por­ti­ons of its pro­duct dis­tri­bu­ti­on, trans­por­ta­ti­on manage­ment and infor­ma­ti­on tech­no­lo­gy sup­port ser­vices; AMD may incur future impairments of good­will; AMD’s stock pri­ce is sub­ject to vola­ti­li­ty; AMD’s world­wi­de ope­ra­ti­ons are sub­ject to poli­ti­cal, legal and eco­no­mic risks and natu­ral dis­as­ters, which could have a mate­ri­al adver­se effect on it; world­wi­de poli­ti­cal con­di­ti­ons may adver­se­ly affect demand for AMD’s pro­ducts; unfa­vor­able cur­r­en­cy exchan­ge rate fluc­tua­ti­ons could adver­se­ly affect AMD; AMD’s ina­bi­li­ty to effec­tively con­trol the sales of its pro­ducts on the gray mar­ket could have a mate­ri­al adver­se effect on it; if AMD can­not ade­qua­te­ly pro­tect its tech­no­lo­gy or other intel­lec­tu­al pro­per­ty in the United Sta­tes and abroad, through patents, copy­rights, tra­de secrets, trade­marks and other mea­su­res, it may lose a com­pe­ti­ti­ve advan­ta­ge and incur signi­fi­cant expen­ses; AMD is a par­ty to liti­ga­ti­on and may beco­me a par­ty to other claims or liti­ga­ti­on that could cau­se it to incur sub­stan­ti­al costs or pay sub­stan­ti­al damages or pro­hi­bit it from sel­ling its pro­ducts; AMD’s busi­ness is sub­ject to poten­ti­al tax lia­bi­li­ties; and AMD is sub­ject to envi­ron­men­tal laws, con­flict mine­rals-rela­ted pro­vi­si­ons of the Dodd-Frank Wall Street Reform and Con­su­mer Pro­tec­tion Act as well as a varie­ty of other laws or regu­la­ti­ons that could result in addi­tio­nal costs and lia­bi­li­ties. Inves­tors are urged to review in detail the risks and uncer­tain­ties in AMD’s Secu­ri­ties and Exchan­ge Com­mis­si­on filings, inclu­ding but not limi­ted to AMD’s Quar­ter­ly Report on Form 10-Q for the quar­ter ended July 1, 2017.

 

 

 

 

(1) The Com­pu­ting and Gra­phics seg­ment pri­ma­ri­ly inclu­des desk­top and note­book pro­ces­sors and chip­sets, dis­cre­te gra­phics pro­ces­sing units (GPUs) and pro­fes­sio­nal gra­phics pro­ces­sors. The Com­pa­ny also licen­ses por­ti­ons of its intel­lec­tu­al pro­per­ty port­fo­lio.

(2) The Enter­pri­se, Embed­ded and Semi-Custom seg­ment pri­ma­ri­ly inclu­des ser­ver and embed­ded pro­ces­sors, semi-custom Sys­tem-on-Chip (SoC) pro­ducts, deve­lop­ment ser­vices and tech­no­lo­gy for game con­so­les. The Com­pa­ny also licen­ses por­ti­ons of its intel­lec­tu­al pro­per­ty port­fo­lio.

(3) All Other cate­go­ry pri­ma­ri­ly inclu­des cer­tain expen­ses and credits that are not allo­ca­ted to any of the ope­ra­ting seg­ments. Also inclu­ded in this cate­go­ry is stock-based com­pen­sa­ti­on expen­se. In addi­ti­on, the Com­pa­ny also inclu­ded a char­ge rela­ted to the sixth amend­ment to the WSA with GF for the three and nine mon­ths ended Sep­tem­ber 24, 2016 and rest­ruc­tu­ring and other spe­cial char­ges, net for the nine mon­ths ended Sep­tem­ber 24, 2016.

(4) Star­ting in Q1 2017, the Com­pa­ny clas­si­fies pro­duc­tion mask sets as pro­per­ty, plant and equip­ment on its balan­ce sheet.

(5) Recon­ci­lia­ti­on of GAAP Ope­ra­ting Inco­me (Loss) to Adjus­ted EBITDA*

  

(6) Free cash flow recon­ci­lia­ti­on**

 

* The Com­pa­ny pres­ents “Adjus­ted EBITDA” as a sup­ple­men­tal mea­su­re of its per­for­mance. Adjus­ted EBITDA for the Com­pa­ny is deter­mi­ned by adjus­ting ope­ra­ting inco­me (loss) for depre­cia­ti­on and amor­tiza­ti­on and stock-based com­pen­sa­ti­on expen­se. In addi­ti­on, the Com­pa­ny exclu­ded a char­ge rela­ted to the sixth amend­ment to the WSA with GF for the three and nine mon­ths ended Sep­tem­ber 24, 2016 and rest­ruc­tu­ring and other spe­cial char­ges, net for the nine mon­ths ended Sep­tem­ber 24, 2016. The Com­pa­ny cal­cu­la­tes and pres­ents Adjus­ted EBITDA becau­se manage­ment belie­ves it is of impor­t­an­ce to inves­tors and len­ders in rela­ti­on to its over­all capi­tal struc­tu­re and its abi­li­ty to bor­row addi­tio­nal funds. In addi­ti­on, the Com­pa­ny pres­ents Adjus­ted EBITDA becau­se it belie­ves this mea­su­re assists inves­tors in com­pa­ring its per­for­mance across reporting peri­ods on a con­sis­tent basis by exclu­ding items that the Com­pa­ny does not belie­ve are indi­ca­ti­ve of its core ope­ra­ting per­for­mance. The Company’s cal­cu­la­ti­on of Adjus­ted EBITDA may or may not be con­sis­tent with the cal­cu­la­ti­on of this mea­su­re by other com­pa­nies in the same indus­try. Inves­tors should not view Adjus­ted EBITDA as an alter­na­ti­ve to the GAAP ope­ra­ting mea­su­re of ope­ra­ting inco­me (loss) or GAAP liqui­di­ty mea­su­res of cash flows from ope­ra­ting, inves­ting and finan­cing activi­ties. In addi­ti­on, Adjus­ted EBITDA does not take into account chan­ges in cer­tain assets and lia­bi­li­ties as well as inte­rest inco­me and expen­se and inco­me taxes that can affect cash flows.

** The Com­pa­ny also pres­ents free cash flow as a sup­ple­men­tal Non-GAAP mea­su­re of its per­for­mance. Free cash flow is deter­mi­ned by adjus­ting GAAP net cash pro­vi­ded by (used in) ope­ra­ting activi­ties for capi­tal expen­dit­ures. The Com­pa­ny cal­cu­la­tes and com­mu­ni­ca­tes free cash flow in the finan­ci­al earnings press release becau­se manage­ment belie­ves it is of impor­t­an­ce to inves­tors to under­stand the natu­re of the­se cash flows. The Company’s cal­cu­la­ti­on of free cash flow may or may not be con­sis­tent with the cal­cu­la­ti­on of this mea­su­re by other com­pa­nies in the same indus­try. Inves­tors should not view free cash flow as an alter­na­ti­ve to GAAP liqui­di­ty mea­su­res of cash flows from ope­ra­ting activi­ties.

The Com­pa­ny has pro­vi­ded recon­ci­lia­ti­ons wit­hin the earnings press release of the­se non-GAAP finan­ci­al mea­su­res to the most direct­ly com­pa­ra­ble GAAP finan­ci­al mea­su­res.

Con­tact Infor­ma­ti­on
Drew Prai­rie
Media Con­tact
512–602-4425
drew.prairie@amd.com
Con­tact Infor­ma­ti­on
Lau­ra Gra­ves
Inves­tor Con­tact
408–749-5467
laura.graves@amd.com