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Fourth Quarter Microprocessor Unit Shipments Set New Record, Increasing 26 Percent Year-Over-Year and 19 Percent Sequentially: AMD today reported financial results for the quarter ended December 31, 2006. As a result of AMD’s acquisition of ATI, fourth quarter financial results include the results of the former ATI operations beginning October 25, 2006. Because comparison of fourth quarter consolidated financial results to previous periods do not correlate directly, AMD has provided non-GAAP financial measures for AMD’s historical business (pre-acquisition AMD). Management believes this non-GAAP presentation will aid investors by presenting current and historical results in a form that makes it easier to compare current period results with historical results. AMD reported fourth quarter 2006 revenue of $1.77 billion, an operating loss of $527 million, and a net loss of $574 million, or $1.08 per share. These results include acquisition-related and integration charges of $550 million, or $1.04 per share, and $27 million of employee stock-based compensation expense, or $0.05 per share. “We believe we once again gained microprocessor unit share in the quarter, as we did in the year, by continuing to execute against our customer acquisition strategy and our product, technology and manufacturing plans,” said Robert J. Rivet, AMD’s chief financial officer. Excluding the former ATI operations, acquisition-related and integration charges, and employee stock-based compensation expense, AMD reported fourth quarter revenue of $1.37 billion and operating income of $63 million compared with revenue of $1.35 billion and operating income of $272 million for the fourth quarter of 2005. Comparable third quarter 2006 revenue was $1.33 billion and operating income was $142 million. AMD revenue increased 33 percent to $5.25 billion and operating income increased 9 percent to $600 million for the year ended December 31, 2006, excluding the former ATI operations, acquisition-related and integration charges, and employee stock-based compensation expense. This compares with revenue of $3.94 billion and operating income of $548 million for the year ended December 25, 2005. Fourth quarter 2006 gross margin was 40 percent, excluding acquisition-related charges and stock-based compensation expense for the applicable periods, compared to 52 percent in the third quarter of 2006 and 57 percent in the fourth quarter of 20052. The decrease from the prior quarter was due largely to significantly lower server processor average selling prices (ASPs) and the inclusion of the former ATI operations. Computation Products Fourth quarter microprocessor unit shipments grew 26 percent year-over-year and 19 percent sequentially as customers continued leveraging AMD solutions to provide greater choice to the market. Fourth quarter demand for AMD mobile processors was especially strong, resulting in record unit shipments and revenue. Mobile processor unit shipments and revenue both increased 41 percent quarter-over-quarter. Year-over-year, mobile processor unitshipments increased 76 percent and revenue increased 85 percent. Desktop processor revenue was also strong in the quarter, led by demand for AMD Athlon 64 X2 dual-core processors. Overall server processor unit shipments were essentially flat compared to the third quarter and ASPs were down significantly. AMD commenced first revenue shipments of 65nm processors in December as planned. Additional Highlights AMD’s acquisition of ATI closed on October 24, joining two industry leading technology companies to create a processing powerhouse. AMD demonstrated its next-generation processor code-named “Barcelona”, the industry’s first native quad-core x86 server processor, in a four-socket system running 64-bit Windows Server 2003. “Barcelona” will deliver significant architectural and performance-per-watt enhancements inside a consistent thermal envelope. Customers continued to expand the number of AMD-based solutions targeting the commercial market, including: - Dell launched two new servers powered by AMD Opteron processors and its first AMD-based commercial client desktop and notebook systems. - Sun announced three Sun Fire X4000 servers. - HP expanded its portfolio of AMD-based servers and blades for the datacenter with the addition of the 1U 2-socket HP ProLiant DL365 server and the 4-socket ProLiant BL685c server blade. HP also introduced the HP dx2255 and dx2250 commercial desktops. - Gateway became the latest global computer manufacturer to offer AMD Opteron-based servers, debuting three new rack mount servers. Samsung introduced the DB-V60 commercial desktop in Korea. - AMD continues to be a technology partner of choice for an increasing number of enterprises. M&T Bank, ServiceMaster, Sutter Health, and Wyeth Pharmaceuticals, among others, joined the growing ranks of enterprise customers adopting AMD64 technology. - AMD Opteron processor-based systems remained the fastest growing platform on the TOP500 Supercomputing list. There are 113 AMD Opteron processor-based systems on the list, including three of the top 10, as reported by the TOP500 Organization. - AMD brought multi-GPU technology to the masses with the introduction of the ATI Radeon X1650 XT featuring CrossFire technology. With its incredible image quality and strong performance, the ATI Radeon X1650 XT delivers enthusiast-class features at a mainstream price point. Current Outlook In a seasonally down first quarter, AMD expects revenue to be in the range of $1.6 to $1.7 billion.