Financial: AMD Achieves Record Sales and Bookings as it Returns to Profitability - Company Financial Information

Edge: Work-Group Computing Report, Oct 12, 1998

Led by substantial growth in sales of AMD-K6-2 processors with 3DNow! technology, AMD Tuesday reported record sales of $685,927,000 during its third quarter, ended September 27, 1998, which resulted in net income of $1,006,000, or $0.01 per share.

Sales increased by 30 percent from the immediate-prior quarter, and by 15 percent from the like period of 1997.

In the immediate-prior quarter, AMD reported a net loss of $64,560,000 on sales of $526,538,000, which resulted in a net loss of $0.45 per share. In the like period of 1997, AMD reported a net loss of $31,675,000 on sales of $596,644,000. The net loss amounted to $0.22 per share.

For the first nine months of 1998, the company reported total sales of $1,753,321,000, which resulted in a net loss of $126,281,000, or $0.88 per share. For the first nine months of 1997, AMD reported total sales of $1,743,204,000, which resulted in a net loss of $8,756,000, or $0.06 per share.

"AMD achieved record sales and returned to nominal profitability on rapid market acceptance of our AMD-K6-2 processor with 3DNow! technology," said W.J. Sanders III, chairman and chief executive officer. "This product, introduced on May 28, 1998, was the largest contributor to the substantial increase in sales of our Microsoft Windows compatible AMD-K6 processor family.

"Shipments of AMD-K6 family processors increased by more than one million units to 3.8 million units, and AMD-K6 family processor sales increased by 70 percent over the immediate-prior quarter. Excellent manufacturing and sales execution enabled AMD to return to profitability one quarter ahead of expectations.

"We are extremely pleased by the strong demand in the retail channel for personal computers powered by AMD-K6-2 processors," Sanders continued. "According to PC Data, systems powered by AMD-K6 family processors captured 31 percent of the total U.S. retail market for desktop systems in August, the latest period for which data are available. In the rapidly growing market for sub-$1,000 systems, PCs powered by AMD-K6 family processors captured a 54 percent market share -- the highest penetration we have achieved to date. The highest-volume desktop system sold in the United States retail channel in August was a system powered by an AMD-K6-2 processor with 3DNow! technology, even surpassing sales of Apple Computer's successful iMac system.

"During the quarter, we introduced and shipped hundreds of thousands of our 350MHz AMD-K6-2 processors," Sanders continued. "With the availability of these higher-performance devices, AMD now has very attractive products for the mainstream desktop market: systems priced at $1,500 and below, which comprise 80 percent of the U.S. retail desktop personal computer market.

"During the quarter we also introduced a 300MHz AMD-K6 processor for mobile applications. The AMD-K6/300 has a clock speed matching the highest-speed mobile processor on the market.

"In the face of continuing intense price pressures and weak overall industry demand, we were able to maintain flat sales compared to the immediate-prior quarter in the aggregate for our Communications Group, our Memory Group, and Vantis, our programmable logic subsidiary," said Sanders.

"On the strength of demand for AMD-K6 family processors, total third-quarter company bookings achieved a record level," Sanders concluded.

AMD is a global supplier of integrated circuits for the personal and networked computer and communications markets. AMD produces processors, flash memories, programmable logic devices, and products for communications and networking applications. Founded in 1969 and based in Sunnyvale, California, AMD had revenues of $2.4 billion in 1997.

Advanced Micro Devices, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands except per share amounts)
                  Quarters Ended             Nine Months Ended
                   (Unaudited)                  (Unaudited)
          Sept. 27,  June 28,   Sept. 28,   Sept. 27,   Sept. 28,
             1998      1998       1997        1998         1997
Net sales $ 685,927 $ 526,538 $  596,644  $ 1,753,321  $ 1,743,204
Cost of
sales      422,985   390,140    428,240    1,236,716    1,149,582
Research and
development143,665   139,158    125,917      410,943      340,846
Marketing,
general and
administra-
tive       109,768   101,198    100,915      299,180      298,417
           676,418   630,496    655,072    1,946,839    1,788,845
Operating
income
(loss)       9,509  (103,958)   (58,428)    (193,518)     (45,641)
Litigation
settlement      --        --         --      (11,500)          --
Interest
income and
other, net  10,071     8,518      5,532       24,170       28,572
Interest
expense    (21,182)  (17,663)   (14,151)     (51,317)     (33,519)
Loss before
income taxes
and equity in
joint ventur(1,602) (113,103)   (67,047)    (232,165)     (50,588)
Benefit for
income taxes  (635)  (44,110)   (30,072)     (91,742)     (25,294)
Loss before
equity in
joint venture (967)  (68,993)   (36,975)    (140,423)     (25,294)
Equity in net
income of
joint venture1,973     4,433      5,300       14,142       16,538
Net income
(loss)    $  1,006 $ (64,560) $ (31,675)  $ (126,281)  $  (8,756)
Net income
(loss) per
common share
-  Basic    $ 0.01   $ (0.45)   $ (0.22)     $ (0.88)     $ (0.06)
-  Diluted  $ 0.01   $ (0.45)   $ (0.22)     $ (0.88)     $ (0.06)
Shares used
in per share
calculation
-  Basic   143,915   143,462    141,055      143,249      139,975
-  Diluted 146,642   143,462    141,055      143,249      139,975
Advanced Micro Devices, Inc.
CONSOLIDATED BALANCE SHEETS
(Thousands)
                                       Sept. 27,       Dec. 28,
                                         1998            1997
                                      (Unaudited)     (Audited)
Assets
Current assets:
Cash, cash equivalents and
  short-term investments              $   580,510    $   467,032
Accounts receivable, net                 372,393        329,111
Inventories                              172,231        168,517
Deferred income taxes                    168,554        160,583
Prepaid expenses and other
  current assets                           71,915         50,024
     Total current assets               1,365,603      1,175,267
Property, plant and equipment, net      2,375,105      1,990,689
Investment in joint venture               206,792        204,031
Other assets                              168,618        145,284
                                      $ 4,116,118    $ 3,515,271
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable to banks               $     5,167    $     6,601
Accounts payable                         312,543        359,536
Accrued compensation and benefits         83,763         63,429
Accrued liabilities                      161,984        134,656
Income tax payable                        20,386         12,676
Deferred income on shipments
  to distributors                          86,790         83,508
Current portion of long-term
  debt and capital lease obligations     149,220         66,364
      Total current liabilities           819,853        726,770
Deferred income taxes                       2,339         96,269
Long-term debt and capital lease
obligations, less current portion      1,364,230        662,689
Stockholders' equity:
Capital stock:
  Common stock, par value                   1,453          1,428
Capital in excess of par value         1,051,619      1,018,884
Retained earnings                        939,850      1,066,131
Accumulated other comprehensive loss     (63,226)       (56,900)
     Total stockholders' equity        1,929,696      2,029,543
                                      $ 4,116,118    $ 3,515,271
Advanced Micro Devices, Inc.
                 INFORMATION ONLY
NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS(a)
(Includes Pre-Tax FASL Investment Equity Income in Operating Income
(Loss))
(Thousands except per share amounts)
                  Quarters Ended              Nine Months Ended
                   (Unaudited)                   (Unaudited)
          Sept. 27,  June 28,  Sept. 28,    Sept. 27,    Sept. 28,
             1998      1998       1997        1998         1997
Net sales $ 685,927 $ 526,538 $  596,644  $ 1,753,321  $ 1,743,204
Cost of
sales      422,985   390,140    428,240    1,236,716    1,149,582
Income from
equity
investment
in FASL     (4,487)   (7,416)   (11,041)     (27,891)    (30,779)
Research and
development143,665   139,158    125,917      410,943      340,846
Marketing,
general and
administra-
tive       109,768   101,198    100,915      299,180      298,417
            671,931   623,080    644,031    1,918,948    1,758,066
Operating
income
  (loss)     13,996   (96,542)   (47,387)    (165,627)     (14,862)
Litigation
settlement      --        --         --      (11,500)          --
Interest
income and
other, net  10,071     8,518      5,532       24,170       28,572
Interest
expense    (21,182)  (17,663)   (14,151)     (51,317)     (33,519)
Income (loss)
before income
taxes        2,885  (105,687)   (56,006)    (204,274)     (19,809)
Benefit for
income taxes  (635)  (44,110)   (30,072)     (91,742)     (25,294)
Provision for
taxes on
equity income
in FASL      2,514     2,983      5,741       13,749       14,241
Net income
(loss)   $   1,006 $ (64,560) $ (31,675)  $ (126,281)   $  (8,756)
Net income
(loss) per
common share
-  Basic    $ 0.01   $ (0.45)   $ (0.22)     $ (0.88)     $ (0.06)
-  Diluted  $ 0.01   $ (0.45)   $ (0.22)     $ (0.88)     $ (0.06)
Shares used
in per share
calculation
-  Basic   143,915   143,462    141,055      143,249      139,975
-  Diluted 146,642   143,462    141,055      143,249      139,975