ADVANCED MICRO DEVICES INC — Capital/Financing Update 2000

Aug 21, 2000

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)

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 -------------- Item 2. Acquisition or Disposition of Assets - ------ ------------------------------------ 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 ADVANCED MICRO DEVICES, INC. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Thousands)

See accompanying notes 3 ADVANCED MICRO DEVICES, INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Thousands except per share amounts)

See accompanying notes 4 ADVANCED MICRO DEVICES, INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Thousands except per share amounts)

See accompanying notes 5 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 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