What is the main change in how AMD reports its financials starting this quarter?

The primary change is the deconsolidation of GLOBALFOUNDRIES Inc. (GF). AMD will now account for its investment in GF using the equity method, meaning GF's results will no longer be fully consolidated into AMD's financial statements. Instead, AMD will report its proportionate share of GF's earnings or losses.

What is the impact of the GLOBALFOUNDRIES deconsolidation on AMD's reported earnings?

The deconsolidation resulted in a one-time, non-cash gain of approximately $325 million recognized by AMD in the first quarter of 2010, based on the fair value assessment of its investment in GF at the time of deconsolidation. This gain is excluded from AMD's non-GAAP earnings.

Why is AMD providing non-GAAP financial measures?

AMD is providing non-GAAP measures to offer investors a better understanding of its ongoing operational performance. These measures exclude items that management believes are not indicative of core business performance, such as the impact of the now deconsolidated GF/Foundry segment, amortization of acquired intangible assets, and significant legal settlement gains, allowing for more consistent comparison of current and historical results.

What is 'Adjusted EBITDA' and how is it calculated?

Adjusted EBITDA is a supplemental performance measure presented by AMD. It is calculated by taking GAAP operating income (loss) and adjusting for depreciation and amortization, employee stock-based compensation, and amortization of acquired intangible assets. For specific prior periods, further adjustments were made to exclude items like the Foundry segment's operating loss and gains from legal settlements.

AMD 8-K: Earnings & Results & Regulation FD

Summary

Advanced Micro Devices, Inc. (AMD) filed an 8-K on April 15, 2010, to report on its financial results for the fiscal quarter ended March 27, 2010. A significant development is the deconsolidation of GLOBALFOUNDRIES Inc. (GF) and the adoption of the equity method of accounting for this investment. This change impacts how GF's results are reported, moving from consolidated reporting to equity method accounting. AMD is also providing several non-GAAP financial measures to offer investors a clearer view of its ongoing operational performance, excluding items like the impact of GF/Foundry segment, gains from legal settlements, and amortization of acquired intangible assets. These non-GAAP measures are intended to facilitate better comparison of current and historical performance and exclude one-time or non-operational items. Notably, the company reported a one-time, non-cash gain of approximately $325 million related to the fair value assessment of its investment in GF upon deconsolidation.

Key Highlights

1Deconsolidation of GLOBALFOUNDRIES Inc. (GF) and adoption of equity method of accounting for the investment, effective December 27, 2009.
2Reported a one-time, non-cash gain of approximately $325 million related to the fair value assessment of the investment in GF upon deconsolidation.
3Introduction of various non-GAAP financial measures (e.g., non-GAAP net income, operating income, EPS, gross margin) to provide a clearer view of core operating performance.
4Non-GAAP measures exclude significant items such as GF/Foundry segment results, amortization of acquired intangible assets, and gains/losses from legal settlements.
5Details provided on how non-GAAP measures for prior periods (Q1 2009, Q4 2009) were restated to reflect the exclusion of the Foundry segment and intersegment eliminations.
6Presentation of Adjusted EBITDA as a supplemental performance measure, calculated by adjusting operating income for specific non-operational items.
7Introduction of non-GAAP adjusted free cash flow to better reflect the economic substance of certain supplier agreements with IBM Credit LLC.

ADVANCED MICRO DEVICES INC 8-K Report, Financial Results (Apr 15, 2010)

Summary

Key Highlights

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