Why is AMD presenting non-GAAP financial measures in this filing?

AMD is presenting non-GAAP financial measures to provide investors with a clearer view of its core operating performance. By excluding items like stock-based compensation, amortization of acquired intangibles, and acquisition-related integration costs from the ATI acquisition, the company aims to make it easier for investors to compare its current performance to historical results and to assess the ongoing operational trends without the impact of these specific, often non-recurring or accounting-driven, items.

What specific items are excluded from AMD's non-GAAP calculations?

The non-GAAP calculations in this report exclude stock-based compensation expense (due to the adoption of FASB 123R), amortization of acquired intangible assets related to the ATI acquisition, and acquisition-related and integration charges, which include costs like in-process R&D and fair value adjustments for acquired inventory.

What is Adjusted EBITDA and why is it being provided?

Adjusted EBITDA is a non-GAAP measure calculated by adjusting net income for interest expense, income tax, depreciation, amortization, and further adjustments for in-process R&D and amortization of acquired intangibles related to the ATI acquisition. AMD provides this metric because management believes it is of interest to investors and lenders concerning the company's overall capital structure and its ability to obtain additional funding.

Are these non-GAAP measures a substitute for GAAP results?

No, AMD explicitly states that these non-GAAP measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. Investors should read these non-GAAP measures only in conjunction with the company's consolidated financial statements prepared under U.S. GAAP. The company also cautions that its calculation of Adjusted EBITDA may differ from that of other companies.

AMD 8-K: Earnings & Results & Regulation FD

Summary

This 8-K filing from Advanced Micro Devices, Inc. (AMD) on January 23, 2007, primarily serves to disclose the company's financial results for the quarter and year ended December 31, 2006. A key focus of the filing is the presentation of non-GAAP financial measures, including non-GAAP operating income, non-GAAP gross margin, and Adjusted EBITDA. These adjusted figures are provided to offer investors a clearer view of the company's performance by excluding stock-based compensation expense, certain business combination accounting entries, and acquisition-related and integration charges stemming from the recent acquisition of ATI Technologies, Inc. The company emphasizes that these non-GAAP measures are intended to facilitate a better comparison of current operating performance with prior periods, particularly before the ATI acquisition. Management believes that by excluding these specific items, investors can gain a more accurate understanding of the ongoing business operations and performance trends, separate from the impacts of the significant integration activities and accounting adjustments related to the ATI merger.

Key Highlights

1AMD filed an 8-K on January 23, 2007, to report on its financial results for the quarter and year ended December 31, 2006.
2The filing includes non-GAAP financial measures such as non-GAAP operating income, non-GAAP gross margin, and Adjusted EBITDA.
3These non-GAAP measures exclude stock-based compensation expense, which was impacted by the adoption of FASB Statement No. 123R.
4Significant expenses related to the acquisition of ATI Technologies, Inc. (closed October 24, 2006), including amortization of acquired intangibles and integration charges, are also excluded from non-GAAP calculations.
5AMD states these exclusions are to enable investors to better evaluate current operating performance and compare it with prior periods.
6Adjusted EBITDA is presented for investors and lenders in relation to the company's capital structure and borrowing capacity.
7The company includes reconciliations of these non-GAAP measures to U.S. GAAP within the accompanying press release (Exhibit 99.1).

ADVANCED MICRO DEVICES INC 8-K Report, Financial Results (Jan 23, 2007)

Summary

Key Highlights

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