-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GZOSyugNYud6VjKx+5EqD1aFb69M1Rn8vhI4j/0K0GdggdiPwa95+he561MLQWeV 24QqMzwnDoHpyKI5t7Am7w== 0001193125-07-158181.txt : 20070719 0001193125-07-158181.hdr.sgml : 20070719 20070719162935 ACCESSION NUMBER: 0001193125-07-158181 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070719 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070719 DATE AS OF CHANGE: 20070719 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANCED MICRO DEVICES INC CENTRAL INDEX KEY: 0000002488 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 941692300 STATE OF INCORPORATION: DE FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07882 FILM NUMBER: 07989454 BUSINESS ADDRESS: STREET 1: ONE AMD PL STREET 2: MS 68 CITY: SUNNYVALE STATE: CA ZIP: 94088-3453 BUSINESS PHONE: 4087322400 MAIL ADDRESS: STREET 1: ONE AMD PLACE STREET 2: MS 68 CITY: SUNNYVALE STATE: CA ZIP: 94088-3450 8-K 1 d8k.htm FORM 8-K Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


FORM 8-K

 


CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

July 19, 2007

Date of Report (Date of earliest event reported)

 


ADVANCED MICRO DEVICES, INC.

(Exact name of registrant as specified in its charter)

 


 

Delaware   001-07882   94-1692300
(State of Incorporation)   (Commission File Number)  

(IRS Employer

Identification Number)

One AMD Place

P.O. Box 3453

Sunnyvale, California 94088-3453

(Address of principal executive offices) (Zip Code)

(408) 749-4000

(Registrant’s telephone number, including area code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



Item 2.02 Results of Operations and Financial Condition.

 

Item 7.01 Regulation FD Disclosure.

The information in this Report, including the Exhibit 99.1 attached hereto, is furnished pursuant to Item 2.02 and Item 7.01 of this Form 8-K. Consequently, it is not deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Exchange Act or the Securities Act of 1933, as amended, if such subsequent filing specifically references this Form 8-K.

On July 19, 2007, Advanced Micro Devices, Inc. (the “Company”) announced its financial position and results of operations as of and for the quarter ended June 30, 2007 in a press release that is attached hereto as Exhibit 99.1.

To supplement the Company’s financial results presented on a U.S. GAAP basis, the Company’s earnings release contains non-GAAP financial measures of non-GAAP operating income (loss), non-GAAP gross margin and adjusted EBITDA.

To derive non-GAAP operating income (loss) and non-GAAP gross margin, the Company excluded stock-based compensation expense, certain business combination accounting entries and expenses related to its acquisition of ATI Technologies, Inc. (“ATI”) which closed on October 24, 2006 and charges related to severance payments for workforce reductions. Specifically, these non-GAAP financial measures reflect adjustments based of the following items:

Stock-based compensation expense: Non-GAAP gross margin and operating income (loss) exclude stock-based compensation expenses. The Company adopted FASB Statement No. 123R, Share-Based Payments, on December 26, 2005, which requires that share-based payments, including employee stock options, be measured at their fair value and recorded as compensation expense in the Company’s financial statements. Prior to the adoption of Statement 123R, the Company was required to record stock-based compensation expense using the awards’ intrinsic value which generally resulted in no compensation expense being recorded in the financial statements. In accordance with the modified prospective method the Company used to adopt Statement 123R, the Company’s financial statements for prior periods have not been restated to reflect, and do not include, changes in the method to expense share-based payments, including employee stock options, at their fair values. Starting from the fourth quarter of 2006, the Company’s management no longer considers this non-cash expense in evaluating the business performance of the Company’s operating segments.

Acquisition-related, integration and severance charges: The Company incurred significant expenses in connection with the ATI acquisition, which it would not have otherwise incurred and which the Company believes are not indicative on ongoing performance. Consequently, the Company excluded the effect of these charges from its GAAP operating income (loss) and gross margin. Acquisition-related and integration charges primarily consist of the amortization expense of acquired intangible assets and other charges incurred in connection with integrating the two companies. The severance charges relate to costs


incurred for workforce reductions as a result of the Company’s cost cutting efforts. The Company believes that the exclusion of these amounts enables investors to better evaluate its current operating performance compared with prior periods.

In addition, the Company presented “Adjusted EBITDA” in the financial schedules to the earnings release. In the financial schedules, Adjusted EBITDA was determined by adjusting net income (loss) for interest expense, income tax, depreciation and amortization, and then, due to the significant expenses incurred in connection with the ATI acquisition, for the quarters ended June 30, 2007 and March 31, 2007, further adjusting EBITDA for the amortization expense of acquired intangible assets.

Pursuant to the requirements of Regulation G, the Company has provided reconciliations within the press release and financial schedules of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures.

The Company provided non-GAAP operating income (loss) and gross margin financial measures in the press release to reflect the results without employee stock-based compensation expense, acquisition-related and integration charges in connection with its acquisition of ATI and charges related to severance payments for workforce reductions. The Company’s management believes this non-GAAP presentation will aid investors by presenting current and historical results in a form that makes it easier to compare current period operating results with historical operating results.

The Company calculated and communicated Adjusted EBITDA in the financial schedules because management believes it is of interest to investors and lenders in relation to its overall capital structure and its ability to borrow additional funds.

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 U.S. GAAP operating measure of net income or U.S. 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 and income taxes that can affect cash flows.

Management does not intend the presentation of these non-GAAP measures to be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. These non-GAAP measures should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with U.S. GAAP.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.  

Description

99.1   Press release dated July 19, 2007.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: July 19, 2007     ADVANCED MICRO DEVICES, INC.
    By:  

/s/ Faina Medzonsky

    Name:   Faina Medzonsky
    Title:  

Assistant General Counsel and

Assistant Secretary


INDEX TO EXHIBITS

 

Exhibit No.  

Description

99.1   Press release dated July 19, 2007.
EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

AMD NEWS RELEASE

 

EDITORIAL CONTACTS:    INVESTOR CONTACTS:
Drew Prairie    Mike Haase
(512) 602-4425    (408) 749-3124
drew.prairie@amd.com    mike.haase@amd.com

AMD Reports Second Quarter Results

– Microprocessor Unit Shipments Increase 22% Year-Over-Year and 38% Sequentially –

SUNNYVALE, Calif. — July 19, 2007 — AMD (NYSE: AMD) today reported financial results for the quarter ended June 30, 20071. AMD reported second quarter 2007 revenue of $1.378 billion, an operating loss of $457 million, and a net loss of $600 million, or $1.09 per share. These results include an impact of $130 million, or $0.24 per share, from ATI acquisition-related and integration charges of $78 million, employee stock-based compensation expense of $31 million, severance charges of $16 million and debt issuance charges of $5 million. In the first quarter of 2007, AMD reported revenue of $1.233 billion and an operating loss of $504 million. In the second quarter of 2006, AMD reported revenue of $1.216 billion and operating income of $102 million.

 

     Change  

($M except percentages)

   Q2-07     Q1-07     Q2-061    Q2-07 vs
Q1-07
    Q2-07 vs
Q2-06
 

Revenue

   $ 1,378     $ 1,233     $ 1,216    12 %   13 %
Operating Income (Loss)            

GAAP Operating income (loss)

   $ (457 )   $ (504 )   $ 102     

Acquisition-related, integration and severance charges

   $ 94     $ 113       NA     

Stock-based compensation expense

   $ 31     $ 28     $ 18     

Non-GAAP Operating income (loss) 2

   $ (332 )   $ (363 )   $ 120     

1

As a result of the acquisition of ATI, 2006 financial results only include the results of the former ATI operations from October 25 through December 31, 2006. Therefore, financial results for the second quarter 2007 do not correlate directly to those for the second quarter 2006.

2

In this press release, AMD has provided non-GAAP financial measures for operating income (loss) and gross margin to reflect its financial results without acquisition-related, integration and severance charges and employee stock-based compensation expense. Management believes this non-GAAP presentation makes it easier for investors to compare current and historical period operating results.

 

   -more-    #27096


“While we made solid progress in the second quarter across a number of fronts, we must improve our financial results,” said Robert J. Rivet, AMD’s Chief Financial Officer. “We achieved a 12 percent sequential revenue increase, improved the gross margin and won back microprocessor unit and revenue market share. Strong distribution channel demand, initial sales to Toshiba, and a broader adoption of AMD platforms led to a 38 percent sequential increase in microprocessor unit shipments. In addition, our Graphics business gained momentum at the end of the quarter as we began shipping the new ATI Radeon HD 2000 family of graphics processors.

“We continue to focus on realigning our business model and reducing our capital expenditures and cost structure in the second half of the year.”

Second quarter 2007 gross margin was 34 percent, excluding stock-based compensation expense, acquisition-related and severance charges, compared to 31 percent in the first quarter of 2007 and 57 percent in the second quarter of 2006. The increase from the prior quarter was largely due to increased microprocessor unit shipments. The second quarter gross margin was impacted by a write-off of older microprocessor inventory of approximately $30 million.

 

($M except percentages)

   Q2-07     Q1-07     Q2-06  
Gross Margins       

GAAP Gross margin

   $ 461     $ 347     $ 690  

GAAP Gross margin %

     33 %     28 %     57 %

Acquisition-related and severance charges

   $ 2     $ 29       NA  

Stock-based compensation expense

   $ 2     $ 2     $ 2  

Non-GAAP Gross margin2

   $ 465     $ 378     $ 692  

Non-GAAP Gross margin2 %

     34 %     31 %     57 %

Computing Solutions

Second quarter Computing Solutions segment revenue was $1.098 billion, compared with $918 million in the first quarter of 2007. The 20 percent sequential increase was primarily due to a 38 percent increase in microprocessor unit shipments, offset partially by lower average selling prices (ASPs) for desktop microprocessors. Second quarter server, mobile, and desktop microprocessor revenue increased sequentially. Mobile processor unit shipments increased 21 percent sequentially and 82 percent year-over-year.

 

   -more-    #27096

 

2


Graphics

In the seasonally down second quarter, Graphics segment revenue of $195 million was flat from the first quarter of 2007. Initial sales of the ATI Radeon HD 2000 family of graphics processors were strong in the channel, and design win momentum with key mobile and desktop OEMs continues to grow.

Consumer Electronics

Second quarter Consumer Electronics segment revenue was $85 million, compared with $118 million in the first quarter of 2007. The sequential revenue decline of 28 percent was largely the result of lower handheld unit sales and revenue, partially offset by increased digital TV processor revenue.

Additional Highlights

 

Toshiba chose AMD as a strategic supplier for its new series of Satellite notebook computers powered by an AMD platform featuring AMD Turion 64 X2 dual-core mobile technology and the AMD M690 chipset.

 

 

Customers continued to adopt AMD-based solutions across a broader portion of their product offerings:

 

   

Acer launched three consumer Aspire notebooks and three commercial TravelMate notebooks based on AMD Turion 64 X2 dual-core mobile technology.

 

   

Dell expanded its AMD-based commercial solutions with the launch of a new AMD-based Latitude notebook and OptiPlex desktop. Dell also added ten new PowerEdge servers powered by AMD Opteron processors and two new Dell Inspiron desktop systems powered by AMD Athlon X2 microprocessors. The AMD-based Dell Inspiron 531 PC received editors’ choice awards from PC Magazine and CNET.

 

   

Fujitsu-Siemens announced a new Amilo notebook based on AMD Turion X2 dual-core mobile technology.

 

   

HP announced two new HP Blade PCs based on single-core AMD Athlon 64 and AMD Athlon 64 X2 dual-core processors.

 

   

Sun Microsystems unveiled its new Blade 6000 server based on AMD Opteron processors.

 

   -more-    #27096

 

3


 

AMD announced that initial revenue shipments of the industry’s first native x86 quad-core processor, “Barcelona,” will commence in the third quarter in both standard and low-power versions. AMD broadened its portfolio of product offerings in the quarter with the introduction of:

 

   

The ATI Radeon HD 2000 series, a top-to-bottom line of ten discrete graphics processors for both desktop and mobile platforms that deliver the Ultimate Visual Experience through immersive HD gaming with DirectX® 10 and HD media playback.

 

   

Three new AMD Opteron processors, models 1222 SE, 2222 SE, and 8222 SE.

 

   

The AMD Turion 64 X2 dual-core mobile technology TL-66.

 

   

The AMD Athlon 64 X2 dual-core processor 6000+ and 5200+.

 

   

45-watt energy-efficient AMD Athlon X2 dual-core processor BE-2350 and BE-2300.

 

 

AMD disclosed details of its next-generation platform for notebook computing, codenamed “Puma.” The platform pairs AMD’s next-generation notebook processor, “Griffin,” with the next-generation AMD “RS780” mobile chipset. “Puma” represents one of the first results of the “new AMD,” delivering an optimized mobile solution with extended battery life, graphics and video processing enhancements and improved overall system performance.

 

 

The Italian stock exchange, Borsa Italiana, joined the growing roster of global exchange customers running their business on AMD Opteron processor based technology, including NYSE Group, Inc., the International Securities Exchange’s Stock Exchange, London Stock Exchange, Luxembourg Stock Exchange, Montréal Exchange and Philadelphia Stock Exchange.

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.

In the seasonally up third quarter, AMD expects revenue to increase in line with seasonality.

 

   -more-    #27096

 

4


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 second 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 10 days after the conference call.

About AMD

Advanced Micro Devices (NYSE: AMD) is a leading global provider of innovative processing solutions in the computing, graphics and consumer electronics markets. AMD is dedicated to driving open innovation, choice and industry growth by delivering superior customer-centric solutions that empower consumers and businesses worldwide. For more information, visit www.amd.com.

Cautionary Statement

This release contains forward-looking statements concerning revenue for the third quarter of 2007, timing of new product releases, product features and performance characteristics and planned reductions in capital expenditures and cost structure, 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 release are based on current beliefs, assumptions and expectations, speak only as of the date of this release and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Risks include the possibility that Intel Corporation’s pricing, marketing and rebating programs, product bundling, standard setting, new product introductions or other activities targeting the company’s business will prevent attainment of the company’s current plans; the company will require additional funding and may not be able to raise funds on favorable terms or at all; the company’s cost reduction efforts will not be effective; customers stop buying the company’s products or materially reduce their operations or demand for its products; the company will be unable to develop, launch and ramp new products and technologies in the volumes and mix required by the market and at mature yields on a timely basis; the company’s competitors, customers and suppliers may take

 

   -more-    #27096

 

5


actions that will negate the anticipated benefits of the company’s acquisition of ATI; demand for computers and consumer electronics products and, in turn, demand for the company’s products will be lower than currently expected; global business and economic conditions will worsen, resulting in lower than currently expected revenue in the third quarter of 2007 and beyond; there will be unexpected variations in market growth and demand for the company’s products and technologies in light of the product mix that it may have available at any particular time or a decline in demand; the company will be unable to transition to advanced manufacturing process technologies in a timely and effective way, consistent with planned capital expenditures; the company will be unable to maintain the level of investment in research and development and capacity that is required to remain competitive; the company will be unable to obtain sufficient manufacturing capacity or components to meet demand for its products or the under-utilization of its microprocessor manufacturing facilities; and unfavorable results of operations of Spansion will adversely impact the company’s results of operations. Investors are urged to review in detail the risks and uncertainties in the company’s Securities and Exchange Commission filings, including but not limited to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.

AMD, the AMD Arrow logo, AMD Opteron, AMD Turion, AMD Athlon, and combinations thereof, and ATI, the ATI logo, Radeon and Imageon 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 owners.

 

      #27096

 

6


ADVANCED MICRO DEVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Millions except per share amounts and percentages)

 

     Quarter Ended     Six Months Ended  
     June 30,
2007
(Unaudited)
    March 31,
2007
(Unaudited)
   

July 2,

2006
(Unaudited)

    June 30,
2007
(Unaudited)
   

July 2,

2006
(Unaudited)

 

Net revenue

   $ 1,378     $ 1,233     $ 1,216     $ 2,611     $ 2,548  

Cost of sales

     917       886       526       1,803       1,079  
                                        

Gross margin

     461       347       690       808       1,469  

Gross margin %

     33.5 %     28.1 %     56.7 %     30.9 %     57.7 %

Research and development

     475       432       279       907       543  

Marketing, general and administrative

     365       335       309       700       565  

Amortization of acquired intangible assets and integration charges

     78       84       —         162       —    
                                        

Operating income (loss)

     (457 )     (504 )     102       (961 )     361  

Interest income

     19       16       35       35       63  

Interest expense

     (99 )     (78 )     (18 )     (177 )     (41 )

Other income (expense), net

     (9 )     2       7       (7 )     (13 )
                                        

Income (loss) before minority interest, equity in net loss of Spansion Inc. and other and income taxes

     (546 )     (564 )     126       (1,110 )     370  

Minority interest in consolidated subsidiaries

     (9 )     (8 )     (7 )     (17 )     (13 )

Equity in net loss of Spansion Inc. and other

     (13 )     (16 )     (12 )     (29 )     (30 )
                                        

Income (loss) before income taxes

     (568 )     (588 )     107       (1,156 )     327  

Provision (benefit) for income taxes

     32       23       18       55       53  
                                        

Net income (loss)

   $ (600 )   $ (611 )   $ 89     $ (1,211 )   $ 274  
                                        

Net income (loss) per common share

          

Basic

   $ (1.09 )   $ (1.11 )   $ 0.18     $ (2.20 )   $ 0.58  

Diluted

   $ (1.09 )   $ (1.11 )   $ 0.18     $ (2.20 )   $ 0.55  
                                        

Shares used in per share calculation

          

Basic

     552       549       485       550       474  

Diluted

     552       549       500       550       498  


ADVANCED MICRO DEVICES, INC.

CONSOLIDATED BALANCE SHEETS

(Millions)

 

    

June 30,

2007

(Unaudited)

   

March 31,

2007

(Unaudited)

   

December 31,

2006*

Assets

      

Current assets:

      

Cash, cash equivalents and marketable securities

   $ 1,594     $ 1,167     $ 1,541

Accounts receivable, net

     648       667       1,140

Inventories

     892       938       814

Prepaid expenses and other current assets

     410       344       443

Deferred income taxes

     54       71       25
                      

Total current assets

     3,598       3,187       3,963

Property, plant and equipment, net

     4,575       4,405       3,987

Goodwill

     3,180       3,186       3,217

Net investment in Spansion Inc.

     326       345       371

Acquisition related intangible assets, net

     1,065       1,136       1,207

Other assets

     480       453       402
                      

Total Assets

   $ 13,224     $ 12,712     $ 13,147
                      

Liabilities and Stockholders’ Equity

      

Current liabilities:

      

Accounts payable

   $ 985     $ 1,365     $ 1,338

Accrued compensation and benefits

     192       160       177

Accrued liabilities

     768       719       716

Deferred income on shipments to distributors

     92       181       169

Current portion of long-term debt and capital lease obligations

     219       182       125

Other current liabilities

     220       304       327
                      

Total current liabilities

     2,476       2,911       2,852

Deferred income taxes

     56       43       31

Long-term debt and capital lease obligations, less current portion

     5,318       3,659       3,672

Other long-term liabilities

     610       591       517

Minority interest in consolidated subsidiaries

     292       303       290

Stockholders’ equity:

      

Capital stock:

      

Common stock, par value

     6       6       5

Capital in excess of par value

     5,237       5,372       5,316

Retained (deficit) earnings

     (932 )     (332 )     308

Accumulated other comprehensive income

     161       159       156
                      

Total stockholders’ equity

     4,472       5,205       5,785
                      

Total Liabilities and Stockholders’ Equity

   $ 13,224     $ 12,712     $ 13,147
                      

* Derived from the December 31, 2006 Audited Financial Statements of Advanced Micro Devices, Inc.


ADVANCED MICRO DEVICES, INC.

SELECTED CORPORATE DATA

(Unaudited)

(Millions except headcount and percentages)

 

     Quarter Ended     Six Months Ended  

Segment Information (1)

  

June 30,

2007

   

March 31,

2007

   

July 2,

2006

   

June 30,

2007

   

July 2,

2006

 

Computing Solutions (2)

          

Net revenue

   $ 1,098     $ 918     $ 1,216     $ 2,016     $ 2,553  

Operating income (loss)

   $ (258 )   $ (321 )   $ 136     $ (579 )   $ 448  

Graphics (3)

          

Net revenue

     195       197       —         392       —    

Operating income (loss)

     (50 )     (35 )     —         (85 )     —    

Consumer Electronics (4)

          

Net revenue

     85       118       —         203       —    

Operating income (loss)

     (22 )     (4 )     —         (26 )     —    

All Other (5)

          

Net revenue

     —         —         —         —         (5 )

Operating income (loss)

     (127 )     (144 )     (34 )     (271 )     (87 )

Total AMD

          

Net revenue

   $ 1,378     $ 1,233     $ 1,216     $ 2,611     $ 2,548  

Operating income (loss)

   $ (457 )   $ (504 )   $ 102     $ (961 )   $ 361  
                                        

Other Data

          

Depreciation & amortization (excluding amortization of acquired intangible assets)

   $ 255     $ 243     $ 193     $ 498     $ 367  

Capital additions

   $ 414     $ 586     $ 455     $ 1,000     $ 765  

Headcount

     16,719       16,745       10,967       16,719       10,967  
                                        

Adjusted EBITDA (6)

   $ (143 )   $ (196 )   $ 318     $ (339 )   $ 735  

(1) Starting in Q406, the Company no longer allocates employee stock-based compensation and profit sharing expenses to its segments. These expenses are recorded in the All Other category. Prior period information has been restated to conform to current period presentation.
(2) Computing Solutions segment includes what was formerly the Computation Products segment and the Embedded Products segment as well as revenue from sales of chipsets sold by ATI prior to AMD’s acquisition of ATI.
(3) Graphics segment includes 3D graphics, video and multimedia products developed for use in desktop and notebook computers, including home media PCs, professional workstations and servers.
(4) Consumer Electronics segment includes products and revenue related to mobile phones and PDAs, digital televisions and other consumer electronics and revenue from royalties received in connection with sales of game console systems that incorporate the Company’s products.
(5) All Other category includes employee stock-based compensation expense, profit sharing expense, certain operating expenses and credits that are not allocated to the operating segments, and Personal Internet Communicator (PIC) related activities in Q206 and for six months ended Q206. Also included in this category are the ATI acquisition-related and integration charges incurred in Q207 and Q107 and severance charges incurred in Q207. Details of the ATI acquisition-related, integration and severance charges and employee stock-based compensation expense are shown below.

ATI acquisition-related, integration and severance charges:

     Q207    Q107

Amortization of acquired intangible assets

   $ 71    $ 71

Integration charges

     7      13
             

Subtotal

     78      84

Cost of fair value adjustment of acquired inventory

     —        29
             

ATI acquisition-related and integration charges

   $ 78    $ 113

Severance

   $ 16    $ —  
             

Total

   $ 94    $ 113
             

Employee stock-based compensation expense:

 

     Q207    Q107    Q206
Cost of sales    $ 2    $ 2    $ 2
Research and development      14      14      7
Marketing, general and administrative      15      12      9
                    
   $ 31    $ 28    $ 18
                    

 

(6) Reconciliation of Net income (loss) to Adjusted EBITDA*

 

     Q207     Q107     Q206

Net income (loss)

   $ (600 )   $ (611 )   $ 89

Depreciation and amortization

     255       243       193

Amortization of acquired intangible assets

     71       71       —  

Interest expense

     99       78       18

Provision (benefit) for income taxes

     32       23       18
                      

Adjusted EBITDA

   $ (143 )   $ (196 )   $ 318
                      

* The Company defines Adjusted EBITDA as net income (loss) adjusted for depreciation and amortization, amortization of acquired intangible assets, interest expense and taxes. The Company calculated and communicated Adjusted EBITDA because management believes it is of interest to investors and lenders in relation to its overall capital structure and its ability to borrow additional funds. 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 U.S. GAAP operating measure of net income or U.S. 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 and income taxes that can affect cash flows.
-----END PRIVACY-ENHANCED MESSAGE-----