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Advanced Micro Devices Inc. Reports Operating Results (10-Q)

November 01, 2012 | About:
10qk

10qk

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Advanced Micro Devices Inc. (AMD) filed Quarterly Report for the period ended 2012-09-29.

Advanced Micro Devices Inc has a market cap of $1.47 billion; its shares were traded at around $2.11 with a P/E ratio of 12.2 and P/S ratio of 0.2.

Highlight of Business Operations:

Marketing, general and administrative expenses of $188 million in the third quarter of 2012 decreased by $61 million, or 24%, compared to $249 million in the third quarter of 2011. The decrease was primarily due to a $52 million decrease in marketing, general and administrative expenses attributable to our Computing Solutions segment and a $12 million decrease in marketing, general and administrative expenses attributable to our Graphics segment, partially offset by a $3 million increase in stock-based compensation expense recorded in the All Other category. Marketing, general and administrative expenses attributable to our Computing Solutions segment decreased primarily due to a $42 million decrease in sales and marketing activities in the third quarter of 2012 and an $8 million decrease in other general and administrative expenses, which reflected our efforts to reduce operating expenses. The decrease in marketing, general and administrative expenses attributable to our Graphics segment was a result of a $5 million decrease in sales and marketing activities and a $5 million decrease in other general and administrative expenses, which reflected our efforts to reduce operating expenses.

Marketing, general and administrative expenses of $630 million in the first nine months of 2012 decreased by $119 million, or 16%, compared to $749 million in the first nine months of 2011. The decrease was primarily due to a $100 million decrease in marketing, general and administrative expenses attributable to our Computing Solutions segment and a $25 million decrease in marketing, general and administrative expenses attributable to our Graphics segment, partially offset by a $5 million increase in stock-based compensation expense recorded in the All Other category. Marketing, general and administrative expenses attributable to our Computing Solutions segment decreased primarily due to an $83 million decrease in sales and marketing activities during the first nine months of 2012 and a $16 million decrease in other general and administrative expenses, which reflected our efforts to reduce operating expenses. The decrease in marketing, general and administrative expenses attributable to our Graphics segment was a result of a $17 million decrease in other general and administrative expenses, which reflected our efforts to reduce operating expenses, and an $8 million decrease in sales and marketing activities in the first nine months of 2012.

We did not record any income tax provision in the third quarter of 2012 and recorded an income tax provision benefit of $5 million in the third quarter of 2011. For the nine months ended September 29, 2012, we recorded an income tax provision benefit of $38 million. For the nine months ended October 1, 2011, we did not record any income tax provision. In the third quarter of 2012, we did not record any income tax provision due to foreign taxes in profitable locations of $2 million offset by $1 million tax benefit for the tax effects of items credited directly to other comprehensive income and $1 million of Canadian tax benefits from co-op tax credits. The $38 million income tax provision benefit recorded in the first nine months of 2012 was due to a tax benefit of $36 million relating to the SeaMicro acquisition, a $2 million tax benefit for the tax effects of items credited directly to other comprehensive income, a $1 million tax benefit for Canadian co-op tax credits, and a $9 million tax benefit associated with the successful negotiation of a tax holiday in a foreign jurisdiction net of $10 million of foreign taxes in profitable locations. The tax impact of the transfer of our remaining shares of capital stock in GF during the first quarter of 2012 was not material due to the existence of the U.S. valuation allowance.

Net cash used in operating activities was $52 million in the first nine months of 2012. A net loss of $710 million was adjusted for non-cash charges consisting primarily of a $278 million charge equal to the fair value of our transferred capital stock in GF related to the limited waiver of exclusivity from GF, $194 million of depreciation and amortization expense, $74 million of stock based compensation expense and $17 million of non-cash interest expense related to our 6.00% Notes and 8.125% Notes. These charges were partially offset by $41 million of benefit for deferred income taxes. The net changes in operating assets as of September 29, 2012 compared to December 31, 2011 included a decrease in accounts receivable of $237 million and an increase in inventories of $266 million, which were primarily due to lower sales during the first nine months of 2012. During the first nine months of 2012, payables to GF increased by $271 million. Payables to GF included all amounts that we owe to GF. The amount payable to GF increased due to an increase of $46 million in the amount of billings related to wafer purchases and the remaining cash obligations of $225 million related to the limited waiver of exclusivity from GF. Accounts payable, accrued liabilities and other decreased by $62 million primarily due to a $75 million decrease in accrued and other current liabilities, a $41 million decrease in other liabilities and a $13 million decrease in deferred income on shipments to distributors, partially offset by a $42 million increase in accounts payable and a $26 million increase in accrued compensation and benefits.

Net cash provided by operating activities was $195 million in the first nine months of 2011. Net income of $668 million was adjusted for non-cash charges consisting primarily of $247 million of depreciation and amortization expense, $69 million of stock-based compensation expense and $16 million of non-cash interest expense related to our 6.00% Notes and 8.125% Notes. These charges were partially offset by recognition of a one-time, non-cash gain of $492 million due to the dilution of our equity interest in GF. The net changes in operating assets as of October 1, 2011 compared to December 25, 2010 included an increase in accounts receivable of $337 million, which included the non-cash impact of our former financing arrangement with the IBM Parties. During the first nine months of 2011, the IBM Parties collected approximately $396 million from our distributor customers pursuant to this arrangement. Without considering the collection by the IBM Parties of the accounts receivables that we sold to them, our accounts receivable decreased by $59 million. This decrease was primarily due to the timing of sales and collections during the first nine months of 2011. During the first nine months of 2011, accounts payable to GF decreased by $54 million due to the timing of payments and a reduction in the amount of billings related to wafer purchases. Accounts payable, accrued liabilities, and other decreased by $57 million primarily due to a $58 million decrease in accrued compensation and benefits, technology license payments of $39 million, net of new licenses, and a decrease in marketing accruals of $26 million, partially offset by the timing of payments. Prepaid expenses and other current assets decreased by $42 million primarily due to the receipt of a settlement payment from Samsung of $58 million, which was previously recorded as another receivable in other current assets.

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