8-KFinancial Events

ADVANCED MICRO DEVICES INC 8-K Report, Exit or Disposal Costs (Oct 1, 2015)

Filed October 1, 2015For Securities:AMD

Summary

Advanced Micro Devices, Inc. (AMD) announced a restructuring plan (the "Plan") on September 26, 2015, aimed at simplifying its business and focusing resources on product development and customer relationships. This Plan includes a workforce reduction of approximately 5% of its global employees, outsourcing of certain IT services, and consolidation of real estate facilities. Investors should note the expected financial impact of this restructuring. AMD anticipates recording approximately $42 million in restructuring and asset impairment charges, with the majority ($41 million) recognized in the third quarter of fiscal year 2015. This includes $31 million for severance and benefits, $1 million for facility consolidation, and $9 million for intangible asset impairment, specifically software licenses. The company expects total cash payments related to this plan to be around $26 million in 2015 and $15 million in 2016. The Plan is projected to yield significant cost savings, with an anticipated $58 million in savings for fiscal year 2016.

Key Highlights

  • 1AMD adopted a restructuring plan on September 26, 2015, to simplify operations and refocus resources.
  • 2The plan involves a workforce reduction of approximately 5% globally.
  • 3Organizational changes include outsourcing IT services and consolidating real estate facilities.
  • 4Total restructuring and asset impairment charges are expected to be around $42 million.
  • 5A significant portion of the charges, approximately $41 million, will be recognized in Q3 2015.
  • 6The company anticipates substantial cost savings, reaching an estimated $58 million in fiscal year 2016.
  • 7The restructuring actions are expected to be substantially completed by the end of fiscal year 2016.

Frequently Asked Questions

The primary goal of the restructuring plan is to simplify AMD's business operations and align its resources more effectively with its key priorities, which are building great products and deepening customer relationships.

AMD expects to record approximately $42 million in restructuring and asset impairment charges, with the majority recognized in the third quarter of fiscal year 2015. These charges include severance, facility consolidation, and intangible asset impairment. Total cash payments are projected to be around $26 million in 2015 and $15 million in 2016.

The restructuring is expected to generate significant cost savings for AMD, with anticipated savings of approximately $58 million in fiscal year 2016. The company also expects savings of $2 million and $7 million in the third and fourth quarters of fiscal year 2015, respectively.

The actions associated with the restructuring plan are expected to be substantially completed by the end of fiscal year 2016.