What are the main reasons AMD is presenting non-GAAP financial measures?

AMD is presenting non-GAAP financial measures to provide investors with a clearer view of its operating performance and to make it easier to compare current and historical period results. They exclude items that management believes are not indicative of ongoing operating performance, such as gains from legal settlements, restructuring charges, amortization of acquired intangible assets, and the impact of discontinued operations or asset sales.

What is the significance of the 'AMD Product Company' financial results?

The 'AMD Product Company' results exclude the financial performance of AMD's Foundry segment and intersegment eliminations. This presentation was particularly important as GLOBALFOUNDRIES (GF), the manufacturing joint venture, was consolidated through December 26, 2009. By excluding GF's results, AMD aimed to provide investors with better visibility into the performance of its core semiconductor product business independent of the foundry operations.

What was the impact of the Intel legal settlement on AMD's results?

In November 2009, AMD reached a settlement with Intel, receiving $1.25 billion, which resulted in a $1.242 billion gain. This gain was excluded from AMD's non-GAAP net income and non-GAAP operating income, as it is considered a one-time event not indicative of ongoing operational performance.

How does the separation from GLOBALFOUNDRIES affect the financial reporting?

Prior to the full separation, AMD was required to consolidate GLOBALFOUNDRIES (GF) into its financial statements. The company used non-GAAP measures, specifically reporting as 'AMD Product Company,' to exclude GF's operating results and intersegment eliminations. This allowed investors to assess AMD's core business performance without the influence of the foundry segment, which management believed was essential for understanding the underlying business.

AMD 8-K: Earnings & Results & Regulation FD

Summary

Advanced Micro Devices, Inc. (AMD) filed an 8-K report on January 21, 2010, to announce its financial results for the fiscal quarter and year ended December 26, 2009. The report highlights the company's use of non-GAAP financial measures to provide a clearer view of its operating performance, especially concerning the separation of its manufacturing joint venture, GLOBALFOUNDRIES (GF). Investors are provided with adjusted figures that exclude one-time gains, charges, and the impact of the foundry segment to better understand the core business performance. This includes adjustments for gains from legal settlements, restructuring charges, and the foundry segment's results, which were consolidated until December 26, 2009. The company detailed significant adjustments made to its GAAP financial results to arrive at non-GAAP figures, such as excluding the gain from the Intel legal settlement and the impact of the Intel lawsuit settlement. Furthermore, AMD provided a separate view of its financial results as an "AMD Product Company," excluding the Foundry segment and intersegment eliminations to offer better visibility into the core semiconductor product business, particularly ahead of the full separation from GF. The Adjusted EBITDA metric was also presented, deemed important by management for assessing capital structure and borrowing capacity.

Key Highlights

1AMD announced financial results for the fiscal quarter and year ended December 26, 2009.
2The company utilized non-GAAP financial measures, including non-GAAP net income/loss, non-GAAP operating income/loss, non-GAAP gross margin, and Adjusted EBITDA.
3Significant adjustments were made to GAAP results, including excluding gains from legal settlements (Intel, DRAM manufacturers) and various charges (restructuring, amortization of intangibles).
4AMD presented results for 'AMD Product Company' (excluding Foundry segment and intersegment eliminations) to provide visibility into core operations prior to the full separation from GLOBALFOUNDRIES (GF).
5The separation of the DTV business unit (divested in Q4 2008) as discontinued operations was noted.
6The company detailed the exclusion of specific items such as gains/losses from debt redemption and impairment charges related to the ATI acquisition.
7Adjusted EBITDA was provided, with management emphasizing its importance for assessing capital structure and borrowing capacity.

ADVANCED MICRO DEVICES INC 8-K Report, Financial Results (Jan 21, 2010)

Summary

Key Highlights

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