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.