AMD Reports Third Quarter Results; EPS of $0.18 Driven by All-Time Record Sales of $1.523 Billion

AMD (NYSE:AMD) today reported sales of $1.523 billion and netincome of $76 million, amounting to $0.18 per diluted share, for thequarter ended September 25, 2005.

Third quarter sales were up 23 percent compared to the thirdquarter of 2004 and increased 21 percent from the second quarter of2005. In the third quarter of 2004, AMD reported sales of $1.239billion and net income of $44 million, or $0.12 per diluted share. Inthe second quarter of 2005, AMD reported sales of $1.260 billion andnet income of $11 million, or $0.03 per share. Operating income in thethird quarter of 2005 was $79 million as compared to operating incomeof $68 million in the third quarter of 2004 and an operating loss of$7 million in the second quarter of 2005.

"This was another record-breaking quarter for AMD's microprocessorbusiness," said Robert J. Rivet, AMD's chief financial officer."Exceptional customer demand for our server, mobile and desktopprocessors helped drive microprocessor sales growth of 44 percentcompared to the third quarter of 2004 and 26 percent compared to thesecond quarter of 2005. We established new quarterly records in unitand Dollar sales, gross margin and operating income."

"Memory Products Group sales decreased 4 percent from the thirdquarter of 2004 but increased by 12 percent compared to the secondquarter of 2005, driven by higher overall unit sales and recordMirrorBit(TM) Flash sales. Increased shipments of high-densityMirrorBit Flash solutions to the largest wireless OEM customers and amore balanced supply and demand environment helped stabilize theaverage selling price during the quarter," Rivet continued.

BUSINESS OVERVIEW

Third quarter gross margin was 41 percent compared to 40 percentin the third quarter of 2004 and 39 percent in the second quarter of2005. The increase was due to improved gross margins in both ourmicroprocessor and Flash memory businesses.

Record Computation Product Group (CPG) sales of $969 millionincreased 44 percent from $673 million in the third quarter of 2004and increased 26 percent from $767 million in the second quarter of2005. CPG generated record operating income of $209 million in thethird quarter, up from $89 million in the third quarter of 2004 and$110 million in the second quarter of 2005. CPG's third quarter salesgrowth was driven by record server, mobile and desktop processor salesand a more than doubling of sales to large global OEM accountscompared to the third quarter of 2004. Record mobile processor saleswere largely the result of a 72 percent increase quarter-on-quarter inAMD Turion 64(TM) mobile processor sales. Geographically, sales wereespecially strong in high-growth markets including Russia, India andGreater China.

Memory Products Group (MPG) sales of $516 million decreased 4percent from $538 million in the third quarter of 2004 and increased12 percent from $462 million in the second quarter of 2005. MPGreduced its operating loss to $50 million, from an operating loss of$90 million in the second quarter of 2005. The revenue increase overthe second quarter of 2005 was driven by record unit sales, increasedpurchases by the largest global wireless OEMs, and a richer productmix. MirrorBit Flash sales increased 35 percent from the secondquarter of 2005 on improved unit volumes and ASPs.

ADDITIONAL HIGHLIGHTS OF THE QUARTER

-- AMD continued to expand the breadth of its industry-leading AMD64 product portfolio, introducing in the quarter more than 20 new AMD Opteron(TM), AMD Turion 64, and AMD Athlon(TM) 64 processors.

-- Based on overall performance and performance-per-watt leadership in the x86 server market, commercial adoption of AMD64 technology continues at a rapid pace. Today, more than 85 of the top 100 companies on the Forbes Global 2000 or their subsidiaries use AMD products. Companies that have recently joined these growing ranks include Saudi Aramco, Fidelity National Financial, Liberty Media, Manulife Financial of Japan, SKF Group and United Parcel Service.

-- Key global OEMs continued to expand their portfolios of AMD Opteron processor-based systems. Sun Microsystems introduced its new "Galaxy" family of servers and workstations powered by AMD Opteron multi-core processors. Fujitsu Siemens Computers also launched a new series of workstations based on the AMD Opteron processor.

-- Sun named AMD "Supplier of the Year" for extraordinary contributions to Sun's stellar record of delivering top-quality technology and service to its customers.

-- AMD introduced the AMD Commercial Stable Image Platform (AMD CSIP) program. The AMD CSIP program offers a 15-month disk image stability period that reduces the number of platform configurations an IT organization must support while improving system manageability, lowering IT costs and increasing end-user productivity.

-- The AMD64 platform added to its long roster of awards. AMD's industry-leading dual-core processors received a 2005 Popular Mechanics Breakthrough Award and were chosen to power the 10th annual Maximum PC Dream Machine. AMD also received "Best of Show" honors for best overall presence and products at Gartner Group's Mid-Size Enterprise Summit.

-- Spansion demonstrated 1Gb ORNAND(TM) Flash memory based on 90 nanometer (nm) MirrorBit technology.

-- Casio Hitachi Mobile Communications began selling cellular handsets incorporating 512 Mb of Spansion MirrorBit NOR Flash memory, the highest-performance two-bit-per-cell technology currently in production.

-- Spansion and Taiwan Semiconductor Manufacturing Company (TSMC) announced a manufacturing agreement that will augment Spansion's internal production of its 110 nm MirrorBit technology.

CURRENT OUTLOOK

AMD's outlook statements for the fourth quarter of 2005 are basedon current expectations. The following statements are forward looking,and actual results could differ materially depending on marketconditions.

-- AMD expects fourth quarter microprocessor sales to grow between seven and 13 percent compared to the third quarter of 2005, which is a 42 to 50 percent increase from the fourth quarter of 2004.

-- Because of Spansion's SEC Form S-1 filing, AMD is not providing guidance for the Flash memory business.

AMD TELECONFERENCE

AMD will hold a conference call for the financial community at2:30 p.m. PT today to discuss quarterly financial results. AMD willprovide a real-time audio broadcast of the teleconference on theInvestor Relations page of its Web site at www.amd.com orwww.streetevents.com. The webcast will be available for 10 days afterthe conference call.

CAUTIONARY STATEMENT

This release contains forward-looking statements concerning thefiscal quarter ending December 25, 2005, which are made pursuant tothe safe harbor provisions of the Private Securities Litigation ReformAct of 1995. Investors are cautioned that the forward-lookingstatements in this release involve risks and uncertainties that couldcause actual results to differ materially from the company's currentexpectations. Risks that the company considers to be the importantfactors that could cause actual results to differ materially fromthose set forth in the forward-looking statements include thepossibility that global business and economic conditions will worsenresulting in lower than currently expected sales in the fourth quarterof 2005; that Intel Corporation's pricing, marketing programs, productbundling, new product introductions or other activities targeting thecompany's microprocessor business will prevent attainment of thecompany's current microprocessor sales plans; that demand forcomputers, and, in turn, demand for the company's microprocessors willbe lower than currently expected; that adoption of AMD64 products byOEMs will not continue to occur as expected; that demand for thecompany's Flash memory products will be lower than currently expected;that Intel Corporation's pricing, marketing programs, productbundling, new product introductions or other activities willnegatively affect NOR Flash memory prices; that OEMs will increasinglychoose NAND-based Flash memory products over NOR-based Flash memoryproducts for their applications; that customer acceptance of MirrorBittechnology will not continue to increase; that the company may notachieve its current product and technology introduction orimplementation schedules; that the company will not be able to raisesufficient capital to enable it to establish leading-edge capacity tomaintain its market positions and that solutions providers will nottimely provide the infrastructure to support the company's AMD64technology. We urge investors to review in detail the risks anduncertainties in the company's Securities and Exchange Commissionfilings, including but not limited to the Annual Report on Form 10-Kfor the year ended December 26, 2004 and the Quarterly Report on Form10-Q for the quarter ended June 26, 2005.

ABOUT AMD

AMD (NYSE:AMD) designs and produces innovative microprocessors,Flash memory devices and low-power processor solutions for thecomputer, communications and consumer electronics industries. AMD isdedicated to delivering standards-based, customer-focused solutionsfor technology users, ranging from enterprises and governments toindividual consumers. For more information visit www.amd.com.

AMD, the AMD Arrow logo, AMD Athlon, AMD Opteron, AMD Turion, andcombinations thereof, are trademarks of Advanced Micro Devices, Inc.Spansion, MirrorBit, and ORNAND are trademarks of Spansion LLC. Othernames used are for informational purposes only and may be trademarksof their respective owners.

Advanced Micro Devices, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands except per share amounts)


Quarter Ended Nine Months Ended
------------------------------------------------- --------------------
Sept. 25, Jun. 26, Sept. 26, Sept. 25, Sept. 26,
2005 2005 2004 2005 2004
(Unaudited) (Unaudited) (Unaudited)(Unaudited)(Unaudited)
----------------------------------------------------------------------

Net sales $1,522,755 $1,259,918 $1,239,459 $4,009,301 $3,737,729

Cost of sales 896,261 765,954 738,026 2,469,663 2,289,935
Research and
development 289,018 272,584 230,896 814,724 681,807
Marketing,
general and
administrative 258,748 228,511 202,179 698,974 561,389
Restructuring
and other
special
charges, net - - - - 2,514


------------------------------------------------ ---------------------
1,444,027 1,267,049 1,171,101 3,983,361 3,535,645

------------------------------------------------ ---------------------

Operating
income (loss) 78,728 (7,131) 68,358 25,940 202,084

Interest income
and other, net 6,054 3,098 2,502 13,126 11,280
Interest
expense (30,615) (25,653) (25,148) (80,513) (83,258)

------------------------------------------------ ---------------------

Income (loss)
before
minority
interest and
income taxes 54,167 (29,686) 45,712 (41,447) 130,106

Minority
interest in
loss of
subsidiary 21,227 37,905 3,008 105,985 1,832

Provision
(benefit) for
income taxes (606) (3,100) 4,872 (5,358) 10,819

------------------------------------------------ ---------------------

Net income 76,000 11,319 43,848 69,896 121,119

------------------------------------------------ ---------------------

Net income per
common share

Basic $ 0.19 $ 0.03 $ 0.12 $ 0.18 $ 0.34

Diluted $ 0.18 $ 0.03 $ 0.12 $ 0.17 $ 0.32

------------------------------------------------ ---------------------

Shares used in
per share
calculation

- Basic 399,025 395,414 355,254 395,839 353,412
- Diluted 443,681 405,739 417,576 409,586 418,531

------------------------------------------------ ---------------------




Advanced Micro Devices, Inc.
---------------------------------------------------------------------
RECONCILIATION OF NET INCOME TO EBITDA
(Thousands)
---------------------------------------------------------------------
Quarter Ended Nine Months Ended
----------------------------------------------- ----------------------
Sept. 25, Jun. 26, Sept. 26, Sept. 25, Sept. 26,
2005 2005 2004 2005 2004
(Unaudited)(Unaudited)(Unaudited)(Unaudited) (Unaudited)
----------------------------------------------- ----------------------

Net income $ 76,000 $ 11,319 $ 43,848 $ 69,896 $ 121,119
Depreciation
and
amortization 290,750 318,455 304,731 942,086 895,104
Interest
income (9,510) (7,194) (4,415) (23,589) (10,122)
Interest
expense 30,615 25,653 25,148 80,513 83,258
Provision
(benefit)
for income
taxes (606) (3,100) 4,872 (5,358) 10,819

----------------------------------------------- ----------------------
EBITDA $387,249 $345,133 $374,184 $1,063,548 $1,100,178




Advanced Micro Devices, Inc.
CONSOLIDATED BALANCE SHEETS
(Thousands)
Sept. 25, Jun. 26, Dec. 26,
2005 2005 2004(1)
----------------------------------------------------------------------
(unaudited) (unaudited)
Assets

Current assets:
Cash, cash equivalents and
short-term investments $1,342,167 $1,220,064 $1,195,559
Accounts receivable, net 861,799 735,687 719,572
Inventories 931,763 911,163 874,790
Prepaid expenses and other
current assets 272,442 309,491 350,240
Deferred income taxes 54,232 71,656 87,836

----------------------------------------------------------------------

Total current assets 3,462,403 3,248,061 3,227,997

Property, plant and equipment,
net 4,305,129 4,145,483 4,233,807
Other assets 376,169 379,018 382,406

----------------------------------------------------------------------

Total Assets $8,143,701 $7,772,562 $7,844,210
======================================================================

Liabilities and Stockholders'
Equity

Current liabilities:
Notes payable $ 75,656 $ 50,412 $ --
Accounts payable 941,651 757,274 655,123
Accrued compensation and
benefits 232,446 163,063 191,431
Accrued liabilities 402,895 461,651 445,341
Restructuring accruals 21,355 20,077 18,997
Income taxes payable 12,245 17,971 47,145
Deferred income on shipments to
distributors 163,652 148,625 141,738
Current portion of long-term
debt and capital lease
obligations 224,024 254,233 230,828
Other current liabilities 137,583 124,378 115,773
----------------------------------------------------------------------

Total current
liabilities 2,211,507 1,997,684 1,846,376

Deferred income taxes 50,630 68,131 104,246
Long-term debt and capital lease
obligations 1,693,465 1,591,584 1,628,268
Other long-term liabilities 436,802 462,314 414,626
Minority interest in subsidiary 777,052 806,240 840,641

Stockholders' equity:
Capital stock:
Common stock, par value 4,020 3,963 3,917
Capital in excess of par value 2,438,504 2,370,339 2,316,669
Retained earnings 378,067 302,206 308,497
Accumulated other comprehensive
income 153,654 170,101 380,970
----------------------------------------------------------------------

Total stockholders'
equity 2,974,245 2,846,609 3,010,053

----------------------------------------------------------------------

Total Liabilities and
Stockholders' Equity $8,143,701 $7,772,562 $7,844,210
======================================================================


(1) Derived from the December 26, 2004 audited financial
statements of Advanced Micro Devices, Inc.



AMD
Selected Corporate Data
(Unaudited)

Quarter Ended Nine Months Ended
----------------------------------------------- ---------------------

Segment Sept. 25, Jun. 26, Sept. 26, Sept. 25, Sept. 26,
Information 2005 2005 2004 2005 2004
----------------------------------------------- ---------------------

Computation
Products (1)
Revenue $969 M $767 M $673 M $2,486 M $1,798 M
Operating
Income (Loss) 209 M 110 M 89 M 410 M 214 M

Memory Products
(2)
Revenue 516 M 462 M 538 M 1,425 M 1,839 M
Operating
Income (Loss) (50)M (90)M 15 M (249)M 74 M

Personal
Connectivity
Solutions
Products (3)(4)
Revenue 35 M 30 M 29 M 95 M 101 M
Operating
Income (Loss) (14)M (12)M (19)M (40)M (33)M

All Other (4)
Revenue 2 M 0 M 0 M 3 M 0 M
Operating
Income (Loss) (66)M (16)M (17)M (95)M (54)M

Total AMD
Revenue 1,523 M 1,260 M 1,239 M 4,009 M 3,738 M
Operating
Income (Loss) 79 M (7)M 68 M 26 M 202 M

----------------------------------------------- ---------------------

----------------------------------------------- ---------------------
Sept. 25, Jun. 26, Sept. 26, Sept. 25, Sept. 26,
Other Data 2005 2005 2004 2005 2004
----------------------------------------------- ---------------------

Depreciation &
Amortization $291 M $318 M $305 M $ 942 M $ 895 M

Capital
Additions $362 M $303 M $407 M $1,183 M $ 970 M

Headcount 17,682 16,694 15,451 17,682 15,451

----------------------------------------------- ---------------------

International
Sales 78% 76% 77% 78% 80%

Research and
Development $289 M $273 M $231 M $815 M $ 682 M

EBITDA $387 M $345 M $374 M $1,064 M $1,100 M

----------------------------------------------- ---------------------


(1) Computation Products segment includes PC processors and Chipsets.

(2) Memory Products segment includes Flash memory products of AMD and
Spansion LLC.

(3) The Personal Connectivity Solution Products segment includes
Embedded Processors and Products for global commercial and
consumer markets.

(4) The All Other category includes certain operating expenses and
credits that are not allocated to the operating segments and,
starting Q3-05, includes Personal Internet Communicator(PIC)
products. Prior period information has been restated to conform to
the current period presentation.

Note: Figures may not foot due to rounding