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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): August 4, 2000
ADVANCED MICRO DEVICES, INC.
----------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 1-7822 94-1692300
--------- ------ ----------
(State or other jurisdiction (Commission (I.R.S. Employer Identification No.)
of incorporation or organization) File Number)
</TABLE>
One AMD Place
P.O. Box 3453 94088-3453
Sunnyvale, California ----------
---------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 732-2400
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Item 2. Acquisition or Disposition of Assets
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On August 4, 2000, Advanced Micro Devices, Inc. ("AMD") completed the
sale of 90 percent of the Communication Products Division ("CPD") for
approximately $375 million in cash to Francisco Partners, L.P., a private equity
investment firm. CPD, the part of the Communications Group that produced
telecommunication products, was reorganized into a subsidiary of AMD and
recapitalized in connection with the sale. AMD has retained a 10 percent
ownership interest in the business and also has a warrant to acquire
approximately an additional 10 percent. AMD's estimated pre-tax gain on the
sale of CPD is approximately $339 million. The gain will be recorded in the
third quarter ended October 1, 2000. The full text of the press release relating
to the completion of the sale of CPD is set forth in Exhibit 99 attached hereto
and is incorporated in this report as if fully set forth herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
------ ------------------------------------------------------------------
(b) Pro Forma Financial Information
On August 4, 2000, AMD completed the sale of 90 percent of CPD for
approximately $375 million in cash to Francisco Partners, L.P. CPD, the part of
the Communications Group that produced telecommunication products, was
reorganized into a subsidiary of AMD and recapitalized in connection with the
sale. AMD has retained a 10 percent ownership interest in the business and also
has a warrant to acquire approximately an additional 10 percent.
The following unaudited pro forma condensed consolidated financial
statements present financial information for AMD giving effect to the sale of
CPD, which was consummated on August 4, 2000 effective as of July 31, 2000. The
unaudited pro forma condensed consolidated balance sheet as of July 2, 2000 is
presented as if the sale transaction had occurred as of that date. The unaudited
pro forma condensed consolidated statements of operations for the six months
ended July 2, 2000 and for the fiscal year ended December 26, 1999 are presented
as if the disposition transaction had occurred at the beginning of the earliest
period presented.
The pro forma condensed consolidated financial statements should be read
in conjunction with the unaudited condensed consolidated financial statements
and notes thereto included in AMD's quarterly report on Form 10-Q for the
quarterly period ended July 2, 2000 and the audited consolidated financial
statements and notes thereto incorporated by reference in AMD's annual report on
Form 10-K for the fiscal year ended December 26, 1999. The pro forma information
may not necessarily be indicative of what AMD's results of operations or
financial position would have been had the transaction been in effect as of and
for the periods presented, nor is such information necessarily indicative of
AMD's results of operations or financial position for any future period or date.
2
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ADVANCED MICRO DEVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Thousands)
<TABLE>
<CAPTION>
July 2, 2000
---------------------------------------------------------
Business to be Pro forma
Assets Historical disposed adjustment Pro forma
------
[A]
----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Current assets:
Cash, cash equivalents and short-term investments $ 1,079,893 $ - $ 375,000[A] $ 1,454,893
Accounts receivable, net 533,007 (33,952) - 499,055
Inventories:
Raw materials 11,430 - - 11,430
Work-in-process 162,101 (8,084) - 154,017
Finished goods 82,048 (2,862) - 79,186
----------- ------------ --------- -----------
Total inventories 255,579 (10,946) - 244,633
Deferred income taxes 63,440 63,440
Prepaid expenses and other current assets 127,472 - - 127,472
----------- ------------ --------- ------------
Total current assets 2,059,391 (44,898) 375,000 2,389,493
Property, plant and equipment, at cost 5,063,403 (9,624) - 5,053,779
Accumulated depreciation and amortization (2,587,736) 6,853 - (2,580,883)
----------- ------------- --------- ------------
Property, plant and equipment, net 2,475,667 (2,771) - 2,472,896
Investment in joint venture 267,448 - - 267,448
Other assets 160,988 (3,438) 3,696[A] 161,246
----------- ------------ --------- ------------
$ 4,963,494 $ (51,107) $ 378,696 $ 5,291,083
=========== ============ ========= ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 353,398 $ (2,955) $ 2,613[A] $ 353,056
Accrued compensation and benefits 155,779 (1,420) - 154,359
Accrued liabilities 233,256 (662) - 232,594
Income tax payable 18,763 - - 18,763
Deferred income on shipments to distributors 99,590 (9,115) - 90,475
Current portion of long-term debt, capital
lease obligations and other 75,951 - - 75,951
----------- ------------ --------- -----------
Total current liabilities 936,737 (14,152) 2,613 925,198
Deferred income taxes 101,861 - 124,014[C] 225,875
Long-term debt, capital lease obligations and
other, less current portion 1,481,725 - - 1,481,725
Commitments and contingencies
Stockholders' equity:
Capital stock:
Common stock, par value 1,649 - - 1,649
Capital in excess of par value 1,219,409 - 4,004[A] 1,223,413
Retained earnings 1,269,726 (36,955) 248,065[A] 1,480,836
Accumulated other comprehensive loss (47,613) - - (47,613)
----------- ------------ --------- -----------
Total stockholders' equity 2,443,171 (36,955) 252,069 2,658,285
----------- ------------ --------- -----------
$ 4,963,494 $ (51,107) $ 378,696 $ 5,291,083
=========== ============ ========= ===========
</TABLE>
See accompanying notes
3
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ADVANCED MICRO DEVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Thousands except per share amounts)
<TABLE>
<CAPTION>
Six months ended July 2 , 2000
--------------------------------------------------------------------
Historical Business to be Pro forma Pro forma
disposed adjustment
[A]
-------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 2,262,466 $ (122,883) $ 48,337 [B] $ 2,187,920
Expenses:
Cost of sales 1,218,324 (56,521) 43,943 [B] 1,205,746
Research and development 316,948 (14,262) - 302,686
Marketing, general and administrative 296,328 (17,228) - 279,100
---------------- ---------------- ------------- --------------
1,831,600 (88,011) 43,943 1,787,532
---------------- ---------------- ------------- --------------
Operating income 430,866 (34,872) 4,394 400,388
Interest income and other, net 41,063 - - 41,063
Interest expense (22,723) - - (22,723)
---------------- ---------------- ------------- --------------
Income before income taxes and equity in joint venture 449,206 (34,872) 4,394 418,728
Provision for income taxes 51,778 (11,299) - 40,479
---------------- ---------------- ------------- --------------
Income before equity in joint venture 397,428 (23,573) 4,394 378,249
Equity in net loss of joint venture (937) - - (937)
---------------- ---------------- ------------- --------------
Net income $ 396,491 $ (23,573) $ 4,394 $ 377,312
================ ================ ============= ==============
Net income per common share:
Basic $ 2.60 $ 2.47
================ ==============
Diluted $ 2.36 $ 2.25
================ ==============
Shares used in per share calculation:
Basic 152,719 152,719
================ ==============
Diluted 174,080 174,080
================ ==============
</TABLE>
See accompanying notes
4
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ADVANCED MICRO DEVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Thousands except per share amounts)
<TABLE>
<CAPTION>
Fiscal year ended December 26, 1999
----------------------------------------------------------------------
Historical Business to be Pro forma Pro forma
disposed adjustment
[A]
---------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 2,857,604 $ (166,988) $ 67,037 [B] $ 2,757,653
Expenses:
Cost of sales 1,964,434 (82,601) 60,943 [B] 1,942,776
Research and development 635,786 (36,433) - 599,353
Marketing, general and administrative 540,070 (24,862) - 515,208
Restructuring and other special charges 38,230 - - 38,230
---------------- ---------------- -------------- -------------
3,178,520 (143,896) 60,943 3,095,567
---------------- ---------------- -------------- -------------
Operating loss (320,916) (23,092) 6,094 (337,914)
Gain on sale of Vantis 432,059 432,059
Interest income and other, net 31,735 - - 31,735
Interest expense (69,253) - - (69,253)
---------------- ---------------- -------------- -------------
Income before income taxes and equity in joint venture 73,625 (23,092) 6,094 56,627
Provision for income taxes 167,350 (7,473) 7,473 [C] 167,350
---------------- ---------------- -------------- -------------
Loss before equity in joint venture (93,725) (15,619) (1,379) (110,723)
Equity in net income of joint venture 4,789 - - 4,789
---------------- ---------------- -------------- -------------
Net loss $ (88,936) $ (15,619) $ (1,379) $ (105,934)
================ ================ ============== =============
Net loss per common share:
Basic $ (0.60) $ (0.72)
================ =============
Diluted $ (0.60) $ (0.72)
================ =============
Shares used in per share calculation:
Basic 147,068 147,068
================ =============
Diluted 147,068 147,068
================ =============
</TABLE>
See accompanying notes
5
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Notes to Pro Forma Condensed Consolidated Financial Statements
1. Basis of Presentation
The following unaudited pro forma condensed consolidated financial statements
present financial information for AMD giving effect to the sale of CPD, which
was consummated on August 4, 2000 effective as of July 31, 2000. The unaudited
pro forma condensed consolidated balance sheet as of July 2, 2000 is presented
as if the sale transaction had occurred as of that date. The unaudited pro forma
condensed consolidated statements of operations for the six months ended July 2,
2000 and for the fiscal year ended December 26, 1999 are presented as if the
sale transaction had occurred at the beginning of the earliest period presented.
2. Unaudited Pro Forma Consolidated Financial Adjustments
[A] Reflects the sale of 90 percent of CPD, the part of the Communications
Group that produced telecommunication products, to Francisco Partners, L.P., a
private equity investment firm, for total cash proceeds of $375 million.
Included in pro forma retained earnings at July 2, 2000 is the resulting
estimated gain to be recognized on the sale, net of other expenses of the sale
transactions and compensation expense recorded in connection with options to
purchase AMD stock previously issued to CPD employees and applicable income
taxes, as if the sale transaction had occurred on July 2, 2000. The estimated
after-tax gain of approximately $211 million will be recorded in the third
quarter of the fiscal year ending December 31, 2000. The actual after-tax gain
will be determined based on the amount by which the proceeds received from the
sale exceed the sum of the actual carrying value of CPD net assets as of
July 31, 2000 and direct costs associated with the sale. Pursuant to Article 11
of Regulation S-X, the estimated gain to be recognized on the disposition
transaction has been excluded from the pro forma condensed consolidated
statement of operations for the six months ended July 2, 2000 and the fiscal
year ended December 26, 1999 due to its non-recurring nature.
[B] Subsequent to the CPD sale, AMD will continue to provide wafer fabrication,
administrative and assembly, test, mark and pack services to CPD pursuant to
service agreements. The wafer fabrication and assembly, test, mark and pack
service agreements will continue to December 31, 2004, and the administrative
service agreements will expire on the 12-month anniversary of the closing date.
The pro forma adjustments to the condensed consolidated statements of operation
for the six months ended July 2, 2000 and the fiscal year ended December 26,
1999 reflect the sales and related expenses to CPD that were eliminated in the
historical information.
[C] The pro forma adjustment to income taxes in the condensed consolidated
balance sheet as of July 2, 2000 reflects an effective tax rate of 37% on the
sale. The pro-forma adjustment to income tax expense on the 1999 statement of
operations reflects the adjustment to the deferred tax asset valuation
allowance.
(c) Exhibits
Number Exhibit
------ -------
99 Press release dated August 4, 2000.
6
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ADVANCED MICRO DEVICES, INC.
Date: August 17, 2000 By: /s/ Francis P. Barton
---------------------
Francis P. Barton
Senior Vice President,
Chief Financial Officer
7
