Cautionary Statement
This document contains forward-looking statements concerning Advanced Micro Devices, Inc. (AMD) such as AMD's ability to drive significant growth in the second half of 2019; the features, functionality, performance, availability, timing and expected benefits of AMD products; the expected availability of motherboard models using AMD's X570 chipset for AMD Socket AMD4, the features, functionality and expectations of custom EPYC™ CPUs and Radeon™ Instinct GPUs based exascale system named Frontier; and AMD’s expected third quarter of 2019 and fiscal 2019 financial outlook, including revenue, as well as the expected drivers of such revenue, and non-GAAP gross margin, 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; the ability of GLOBALFOUNDRIES Inc. to satisfy AMD’s manufacturing requirements; the ability of third party manufacturers to manufacture AMD's products on a timely basis in sufficient quantities and using competitive technologies; the ability of third party manufacturers to achieve expected manufacturing yields for AMD’s products; AMD's 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; AMD's ability to generate sufficient revenue and operating cash flow or obtain external financing that may adversely impact planned investments in research and development or other strategic investments; the loss of a significant customer; AMD's ability to generate revenue from its semi-custom SoC products; global economic uncertainty may adversely impact AMD’s business and operating results; potential security vulnerabilities that could have a material adverse effect on AMD; potential IT outages, data loss, data breaches and cyber-attacks; AMD's ability to generate sufficient cash to service its debt obligations or meet its working capital requirements; AMD's large amount of indebtedness could adversely affect its financial position and prevent it from implementing its strategy or fulfilling its contractual obligations; the restrictions imposed by agreements governing AMD’s notes and the secured credit facility; the competitive markets in which AMD’s products are sold; AMD’s worldwide operations are subject to political, legal and economic risks and natural disasters; the potential dilutive effect if the 2.125% Convertible Senior Notes due 2026 are converted; uncertainties involving the ordering and shipment of AMD’s products; the market conditions of the industries in which AMD products are sold; AMD’s reliance on third-party intellectual property to design and introduce new products in a timely manner; AMD's reliance on third-party companies for the design, manufacture and supply of motherboards, software and other computer platform components; AMD's reliance on Microsoft Corporation and other software vendors' support to design and develop software to run on AMD’s products; AMD’s reliance on third-party distributors and add-in-board (AIB) partners; future impairments of goodwill and technology license purchases; AMD’s ability to attract and retain qualified personnel; AMD's ability to repurchase its outstanding debt in the event of a change of control; the cyclical nature of the semiconductor industry; future acquisitions, divestitures and/or joint ventures could adversely affect AMD's business; modification or interruption of AMD’s internal business processes and information systems may disrupt its business, processes and internal controls; the availability of essential equipment, materials or manufacturing processes; compatibility of AMD’s products with some or all industry-standard software and hardware; costs related to defective products; the efficiency of AMD's supply chain as it responds to changes in customer demand for its products; AMD's ability to rely on third party supply-chain logistics functions; AMD’s stock price volatility; worldwide political conditions may adversely affect demand for AMD’s products; unfavorable currency exchange rate fluctuations could adversely affect AMD; AMD’s ability to effectively control the sales of its products on the gray market; AMD's ability to adequately protect its technology or other intellectual property in the United States and abroad; current and future claims and litigation; and environmental laws, conflict minerals-related provisions and 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 March 30, 2019.
| * | In this earnings press release, in addition to GAAP financial results, AMD has provided non-GAAP financial measures including non-GAAP gross margin, non-GAAP operating expense, non-GAAP operating income, non-GAAP net income and non-GAAP earnings per share. These non-GAAP financial measures reflect certain adjustments as presented in the tables in this earnings press release. AMD has also provided adjusted EBITDA and free cash flow as supplemental non-GAAP measures of its performance. These items are defined in the footnotes to the selected corporate data tables provided at the end of this earnings press release. AMD is providing these financial measures because it believes this non-GAAP presentation makes it easier for investors to compare its operating results for current and historical periods and also because AMD believes it assists investors in comparing AMD’s performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance and for the other reasons described in the footnotes to the selected data tables. Refer to the data tables at the end of this earnings press release. |
AMD, the AMD Arrow logo, EPYC, Radeon, Ryzen, Athlon and combinations thereof, are trademarks of Advanced Micro Devices, Inc. Other names are for informational purposes only and used to identify companies and products and may be trademarks of their respective owner.
| ADVANCED MICRO DEVICES, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Millions except per share amounts and percentages) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 29,
2019 | March 30,
2019 | June 30,
2018 | June 29,
2019 | June 30,
2018 | ||||||||||||
| Net revenue | $ | 1,531 | $ | 1,272 | $ | 1,756 | $ | 2,803 | $ | 3,403 | ||||||
| Cost of sales | 910 | 751 | 1,104 | 1,661 | 2,154 | |||||||||||
| Gross margin | 621 | 521 | 652 | 1,142 | 1,249 | |||||||||||
| Gross margin % | 41 | % | 41 | % | 37 | % | 41 | % | 37 | % | ||||||
| Research and development | 373 | 373 | 357 | 746 | 700 | |||||||||||
| Marketing, general and administrative | 189 | 170 | 142 | 359 | 276 | |||||||||||
| Licensing gain | - | (60 | ) | - | (60 | ) | - | |||||||||
| Operating income | 59 | 38 | 153 | 97 | 273 | |||||||||||
| Interest expense | (25 | ) | (27 | ) | (31 | ) | (52 | ) | (62 | ) | ||||||
| Other income (expense), net | 3 | (7 | ) | 1 | (4 | ) | 2 | |||||||||
| Income before income taxes and equity loss | 37 | 4 | 123 | 41 | 213 | |||||||||||
| Provision (benefit) for income taxes | 2 | (13 | ) | 6 | (11 | ) | 14 | |||||||||
| Equity loss in investee | - | (1 | ) | (1 | ) | (1 | ) | (2 | ) | |||||||
| Net Income | $ | 35 | $ | 16 | $ | 116 | $ | 51 | $ | 197 | ||||||
| Earnings per share | ||||||||||||||||
| Basic | $ | 0.03 | $ | 0.01 | $ | 0.12 | $ | 0.05 | $ | 0.20 | ||||||
| Diluted | $ | 0.03 | $ | 0.01 | $ | 0.11 | $ | 0.05 | $ | 0.19 | ||||||
| Shares used in per share calculation | ||||||||||||||||
| Basic | 1,084 | 1,044 | 972 | 1,064 | 970 | |||||||||||
| Diluted | 1,109 | 1,094 | 1,147 | 1,102 | 1,043 | |||||||||||
