EX-99.1 2 dex991.htm UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited Pro Forma Condensed Consolidated Statements of Operations

EXHIBIT 99.1

Advanced Micro Devices, Inc.

Unaudited Pro Forma Condensed Consolidated Financial Statements

These unaudited pro forma condensed consolidated financial statements of the Company have been prepared to reflect the October 27, 2008 sale of certain assets of the Company’s digital television business (DTV) to Broadcom Corporation as described in Item 2.01 of this Current Report.

The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the years ended December 29, 2007 and December 31, 2006 are based on the Company’s historical condensed consolidated statements of operations, and give effect to the disposition transaction as if it had occurred on December 26, 2005, the first day of fiscal 2006. The Company purchased DTV as part of the acquisition of ATI Technologies Inc. on October 25, 2006. Since DTV was purchased on October 25, 2006, the Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2006 includes the results of operations for DTV for the period October 26, 2006 through December 31, 2006. For the six months ended June 28, 2008, DTV’s and the Company’s Hand-held Products Business (Hand-held) results of operations were presented as discontinued operations in the Company’s Quarterly Report on Form 10-Q for the period ended June 28, 2008, in accordance with FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets; therefore, an unaudited pro forma condensed consolidated statement of operations is not necessary for that period. Also, these unaudited pro forma condensed consolidated financial statements present the Hand-held business as a discontinued operation for all periods presented. The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 28, 2008 is based on the Company’s historical balance sheet as of that date, and gives effect to the disposition transaction as if it had occurred on June 28, 2008. The Unaudited Pro Forma Condensed Consolidated Statements of Operations are based on the assumptions and adjustments described in the accompanying notes and do not reflect any adjustments for non-recurring items or changes in operating strategies arising as a result of the disposition. These unaudited pro forma condensed consolidated financial statements include no assumptions regarding the use of proceeds from the sale of DTV, which are presented as additional cash on the Unaudited Pro Forma Condensed Consolidated Balance Sheet. Accordingly, the actual effect of the sale, due to this and other factors, could differ from the pro forma adjustments presented herein. However, management believes that the assumptions used and the adjustments made are reasonable under the circumstances and given the information available.

These unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the operating results or the financial position that would have been achieved had the sale been consummated as of the dates indicated or of the results that may be obtained in the future. These unaudited pro forma condensed consolidated financial statements and the accompanying notes should be read together with the Company’s audited consolidated financial statements and accompanying notes as of and for the year ended December 29, 2007, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 29, 2007, as well as in conjunction with the Company’s unaudited condensed consolidated financial statements and accompanying notes as of and for the period ended June 28, 2008, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Quarterly Report on Form 10-Q for the six months ended June 28, 2008.

 

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Advanced Micro Devices, Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the year ended December 29, 2007

(in millions, except per share amounts)

 

     Historical
AMD
    Pro Forma
Adjustments (c)
    Pro Forma
AMD
 

Net revenue

   $ 6,013     $ (319 )   $ 5,694  

Cost of sales

     3,751       (200 )     3,551  
                        

Gross margin

     2,262       (119 )     2,143  

Research and development

     1,847       (147 )     1,700  

Marketing, general and administrative

     1,373       (26 )     1,347  

Impairment of goodwill and acquired intangible assets

     1,608       (1,003 )     605  

Amortization of acquired intangible assets and integration charges

     299       (134 )     165  
                        

Operating income (loss)

     (2,865 )     1,191       (1,674 )

Interest income

     73       —         73  

Interest expense

     (367 )     —         (367 )

Other income (expense), net

     (7 )     —         (7 )
                        

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

     (3,166 )     1,191       (1,975 )

Minority interest in consolidated subsidiaries

     (35 )     —         (35 )

Equity in net loss of Spansion Inc. and other

     (155 )     —         (155 )
                        

Income (loss) from continuing operations before income taxes

     (3,356 )     1,191       (2,165 )

Provision (benefit) for income taxes

     23       8 (f)     31  
                        

Income (loss) from continuing operations

   $ (3,379 )   $ 1,183     $ (2,196 )
                        

Income (loss) per common share

      

Basic and Diluted:

   $ (6.06 )     $ (3.94 )
                  

Shares used in per share calculation

      

Basic and diluted

     558         558  

 

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Advanced Micro Devices, Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the year ended December 31, 2006

(in millions, except per share amounts)

 

     Historical
AMD
    Pro Forma
Adjustments (c)
    Pro Forma
AMD
 

Net revenue

   $ 5,649     $ (97 )   $ 5,552  

Cost of sales

     2,856       (86 )     2,770  
                        

Gross margin

     2,793       (11 )     2,782  

Research and development

     1,205       (27 )     1,178  

Marketing, general and administrative

     1,140       (4 )     1,136  

In-process research and development

     416       (221 )     195  

Amortization of acquired intangible assets and integration charges

     79       (25 )     54  
                        

Operating income (loss)

     (47 )     266       219  

Interest income

     116       —         116  

Interest expense

     (126 )     —         (126 )

Other income (expense), net

     (13 )     —         (13 )
                        

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

     (70 )     266       196  

Minority interest in consolidated subsidiaries

     (28 )     —         (28 )

Equity in net loss of Spansion Inc. and other

     (45 )     —         (45 )
                        

Income (loss) from continuing operations before income taxes

     (143 )     266       123  

Provision (benefit) for income taxes

     23       (8 )(f)     15  
                        

Income (loss) from continuing operations

   $ (166 )   $ 274     $ 108  
                        

Income (loss) per common share

      

Basic

   $ (0.34 )     $ 0.22  

Diluted

   $ (0.34 )     $ 0.21  
                  

Shares used in per share calculation

      

Basic

     492         492  

Diluted

     492         509  

 

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Advanced Micro Devices, Inc.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of June 28, 2008

(in millions, except par value amounts)

 

     Historical
AMD
    Pro Forma
Adjustments
    Pro Forma
AMD
 

Assets

      

Current assets:

      

Cash, cash equivalents and marketable securities

   $ 1,567     $  102 (a)   $ 1,669  

Accounts receivable, net

     437       9 (g)     446  

Inventories

     791       —         791  

Prepaid expenses and other current assets

     244       16 (g)(i)     260  

Deferred income taxes

     20       —         20  

Assets of discontinued operations

     372       (277) (b)     95 (h)
                        

Total current assets

     3,431       (150 )     3,281  

Property, plant and equipment, net

     4,599       3 (g)     4,602  

Goodwill

     945       —         945  

Acquisition related intangible assets, net

     253       —         253  

Other assets

     556       14 (d)     570  
                        

Total Assets

   $ 9,784     $ (133 )   $ 9,651  
                        

Liabilities and Stockholders’ Equity

      

Current liabilities:

      

Accounts payable

   $ 800     $  9 (g)   $ 809  

Accrued compensation and benefits

     160       3 (g)     163  

Accrued liabilities

     730       2 (g)     732  

Deferred income on shipments to distributors

     80       1 (g)     81  

Current portion of long-term debt and capital lease obligations

     246       —         246  

Other short-term obligations

     60       —         60  

Other current liabilities

     369       —         369  

Liabilities of discontinued operations

     23       (15) (b)     8 (h)
                        

Total current liabilities

     2,468       —         2,468  

Deferred income taxes

     3       —         3  

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

     4,955       —         4,955  

Other long-term liabilities

     695       —         695  

Minority interest in consolidated subsidiaries

     189       —         189  

Stockholders’ equity:

      

Capital stock:

      

Common stock, par value

     6       —         6  

Capital in excess of par value

     5,962       —         5,962  

Retained earnings (deficit)

     (4,647 )     (133) (e)     (4,780 )

Accumulated other comprehensive income

     153         153  
                        

Total stockholders’ equity

     1,474       (133 )     1,341  
                        

Total Liabilities and Stockholders’ Equity

   $ 9,784     $ (133 )   $ 9,651  
                        

 

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Advanced Micro Devices, Inc.

Notes to the Unaudited Pro Forma Condensed Financial Statements

 

(a) Represents sales proceeds less certain direct transaction costs.

 

(b) Reflects the elimination of assets and liabilities associated with discontinued operations of the Company’s digital television business (DTV) in accordance with FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

 

(c) Reflects the elimination of the results of operations of the discontinued operations of the Company’s digital television business (DTV) and Hand-held Products Business (Hand-held) in accordance with FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, as follows:

 

     For the year ended  
     December 29, 2007     December 31, 2006  
     DTV     Hand-held     Total     DTV     Hand-held     Total  
     (In millions)  

Net revenue

   $ 155     $ 164     $ 319     $ 22     $ 75     $ 97  

Cost of sales

     82       118       200       23       63       86  
                                                

Gross margin

     73       46     $ 119       (1 )     12     $ 11  

Research and development

     76       71       147       13       14       27  

Marketing, general and administrative

     13       13       26       2       2       4  

In-process research and development

     —         —         —         82       139       221  

Impairment of goodwill and acquired intangible assets

     476       527       1,003       —         —         —    

Amortization of acquired intangible assets and integration charges

     63       71       134       12       13       25  
                                                

Income (loss) from discontinuing operations before income taxes

     (555 )     (636 )     (1,191 )     (110 )     (156 )     (266 )

Provision (benefit) for income taxes

     (4 )     (4 )     (8 )     4       4       8  
                                                

Income (loss) from discontinuing operations, net of tax

   $ (551 )   $ (632 )   $ (1,183 )   $ (114 )   $ (160 )   $ (274 )
                                                

 

(d) Represents the portion of the sales proceeds to be held in escrow, for an 18-month period, to reimburse the buyer for potential indemnification obligations of the Company under the Asset Purchase Agreement.

 

(e) Represents recognition of the loss, which would have been realized upon the disposition of DTV, had the transaction closed on June 28, 2008.

 

(f) Reflects 2006 charge for deferred tax liability related to tax deductible goodwill for discontinued operations, and the reversal of amount in 2007 due to goodwill impairment charge.

 

(g) Represents adjustments to reclassify assets and liabilities presented in discontinued operations as of June 28, 2008, which, in the final Asset Purchase Agreement, were not sold to or assumed by Broadcom.

 

(h) Represents assets and liabilities of the Company’s Hand-held business, which are classified as discontinued operations for all periods presented. The Company’s plans with respect to this business are disclosed in its Quarterly Report on Form 10-Q for the period ended June 28, 2008.

 

(i) Includes the $15 million portion of sales proceeds to be held in escrow until certain audited 2008 financial statements have been delivered to Broadcom.

 

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