AMD Reports 2014 Third Quarter Results

Q4 2014 Restructuring and Transformation Initiatives
As a part of AMD's ongoing transformation work, the company has developed a targeted restructuring plan to better position AMD for profitability and long-term growth while aligning investments and resources with high-priority opportunities.

The restructuring plan, which will be largely implemented in Q4 2014, is expected to:

  • Reduce global headcount by 7 percent, largely expected to be completed by the end of Q4 2014;
  • Align AMD's real estate footprint with its reduced headcount;
  • Result in a restructuring and impairment charge of approximately $57 million in Q4 2014, primarily related to severance, and a restructuring charge of approximately $13 million in 1H 2015, primarily related to real estate actions;
    • The company expects to make cash payments related to these actions of approximately $34 million in Q4 2014 and $20 million in 1H 2015;
  • Result in operational savings, primarily in operating expenses, of approximately $9 million in Q4 2014 and approximately $85 million in 2015.

"While decisions that impact the size of our global team are never entered into lightly, this is the right step to ensure we prioritize our resources and engineering investments in our highest-priority opportunities that can drive improved profitability and long-term growth," said Dr. Su.

Recent Highlights

  • AMD appointed Dr. Lisa Su as president and CEO and a member of the board of directors, succeeding Mr. Rory Read who will remain with the company through 2014 to advise on the transition. Mr. Joseph Householder was also appointed to the company's board. Mr. Householder currently serves as executive vice president and chief financial officer of Sempra Energy.
  • AMD and Synopsys announced a multi-year agreement, with Synopsys acquiring rights to AMD's interface and foundation IP. The IP partnership will provide AMD with access to a range of Synopsys tools and IP for advanced FinFET process nodes.
  • AMD expanded its award-winning AMD Radeon™ R9 series graphics family with the launch of the AMD Radeon™ R9 285 graphics card designed to run the most demanding games at the highest settings.
  • AMD completed its most advanced APU lineup to-date for the component channel with the introduction of new AMD A-Series APUs with HSA features and GCN architecture for the system builder and DIY market, along with new APUs designed for smaller form factor gaming and home theater PC (HTPC) systems.
  • Demonstrating its leadership in building a robust software ecosystem for 64-bit ARM servers, AMD announced immediate availability of the AMD Opteron™ A1100-Series development kit, featuring AMD's first 64-bit ARM®-based processor, and showcased the first public demonstration of Apache™ Hadoop® running on an ARM® Cortex®-A57-based AMD Opteron™ A-Series processor. AMD is the first company to provide a standard ARM Cortex®-A57-based server platform for software developers and integrators.
  • AMD expanded its AMD FirePro™ professional graphics offerings with the introduction of 4 new next-generation AMD FirePro™ W-series professional graphics cards that deliver at least 2x(2) more graphics memory over the previous generation, multi-display 4K capability and increased compute performance. AMD secured several new design wins with tier-1 OEMs, including multiple HP mobile and desktop workstations. AMD also introduced the most powerful server GPU ever built for High Performance Computing with the AMD FirePro™ S9150(3).
  • Mentor Graphics announced the availability of commercial Embedded Linux® software enabling developers to easily migrate to new commercially-supported versions for the AMD Embedded G-Series SoC and CPU, and the AMD Embedded R-Series APU.
  • AMD announced a new technology partnership with OCZ Storage Solutions, a Toshiba Group Company, for AMD Radeon™-branded Solid State Drives (SSDs).
  • In collaboration with Canonical®, AMD announced a ready-to-deploy OpenStack private cloud based on the SeaMicro SM15000™ server. The "out of the box" experience is meant to ease the complexities of deploying OpenStack technology and automates complex configuration tasks, simplifies management, and provides a graphical user interface to dynamically deploy new services on demand.
  • Dow Jones named AMD to the Dow Jones Sustainability Index (DJSI) North America, marking more than a decade-long appearance on the list and exemplifying the company's legacy of corporate responsibility and commitment to social, economic and environmental issues.

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 Q4 2014, AMD expects revenue to decrease 13 percent, plus or minus 3 percent, sequentially.

For additional details regarding AMD's results and outlook please see the CFO commentary posted at quarterlyearnings.amd.com.

AMD Teleconference
AMD will hold a conference call for the financial community at 2:30 p.m. PT (5:30 p.m. ET) today to discuss its third quarter 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. The webcast will be available for 12 months after the conference call.

Reconciliation of GAAP to Non-GAAP Operating Income(1)

                                                                            
                                                ----------------------------
(Millions)                                        Q3-14     Q2-14     Q3-13 
----------------------------------------------------------------------------
GAAP operating income                           $     63  $    435  $    426
----------------------------------------------------------------------------
  Amortization of acquired intangible assets           3         4         5
----------------------------------------------------------------------------
  Restructuring and other special charges                                   
   (gains), net                                        -         -      (22)
----------------------------------------------------------------------------
Non-GAAP operating income                       $     66  $    431  $    443
----------------------------------------------------------------------------
                                                                            

Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income

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