Why is AMD using non-GAAP financial measures?

AMD is using non-GAAP financial measures, such as non-GAAP operating income (loss) and non-GAAP gross margin, to exclude the impact of stock-based compensation expense and acquisition-related charges from the ATI acquisition. Management believes this provides a more accurate reflection of the company's ongoing operational performance and facilitates better comparison with historical results.

What specific charges are being excluded in the non-GAAP calculations?

The non-GAAP calculations exclude stock-based compensation expense, which is a non-cash charge resulting from the adoption of FASB Statement No. 123R, and various acquisition-related and integration charges. These latter charges include in-process research and development, amortization of acquired intangible assets, and fair value adjustments related to the acquisition of ATI Technologies, Inc.

What is Adjusted EBITDA and why is it being reported?

Adjusted EBITDA is a non-GAAP measure calculated by adjusting net income for interest expense, income tax, depreciation and amortization, and also excluding in-process research and development charges and amortization of acquired intangible assets due to the ATI acquisition. AMD believes this metric is of interest to investors and lenders in assessing the company's overall capital structure and its capacity for additional borrowing.

AMD 8-K: Earnings & Results & Regulation FD

Q: What is the main purpose of this 8-K filing?

The primary purpose of this 8-K filing is to announce Advanced Micro Devices, Inc.'s financial results for the quarter ended March 31, 2007, and to disclose the use of non-GAAP financial measures in reporting these results.

Summary

This 8-K filing from Advanced Micro Devices, Inc. (AMD) on April 19, 2007, primarily announces the company's financial results for the quarter ended March 31, 2007. The report highlights the use of non-GAAP financial measures, including non-GAAP operating income (loss), non-GAAP gross margin, and Adjusted EBITDA, to provide investors with a clearer view of operational performance. These non-GAAP measures exclude significant items such as stock-based compensation expense and acquisition-related and integration charges stemming from the recent acquisition of ATI Technologies, Inc. AMD's management believes that by excluding these factors, investors can better assess the company's ongoing operational performance and compare it more effectively to historical results. The Adjusted EBITDA metric is specifically noted as being of interest to investors and lenders regarding the company's capital structure and borrowing capacity.

Key Highlights

1AMD announced its financial results for the quarter ended March 31, 2007.
2The company is presenting non-GAAP financial measures to supplement U.S. GAAP results.
3Key non-GAAP measures include non-GAAP operating income (loss), non-GAAP gross margin, and Adjusted EBITDA.
4Exclusions for non-GAAP calculations include stock-based compensation expense and acquisition-related/integration charges from the ATI acquisition.
5AMD asserts that non-GAAP measures aid in comparing current and historical operating performance.
6Adjusted EBITDA is presented to provide insight into the company's capital structure and borrowing ability.

ADVANCED MICRO DEVICES INC 8-K Report, Financial Results (Apr 19, 2007)

Summary

Key Highlights

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