AMD re-org bill could be $600m (And the rest)
But maybe 'only' $300m (And the rest)
Last week, AMD announced that it is to pink-slip 2,000 employees - 15 per cent of the workforce. Today, it has issued an estimate of the accountancy hit it will take in Q4. The AMD beancounters are showing the now-legendary precision of the US accountancy profession, coming in with a range of between $300m and $600m pre-tax and $563 million to $863 million on an after-tax basis, for restructuring costs. Don't they know?
In Q4, AMD is also taking a non-cash charge of c.$263m, tilting after-tax results further into the red. The charge takes the form of a 100 per cent valuation allowance against its net deferred assets (which stood at $263m at the end of Q3, 2002).
This charge to income tax expense would reduce after-tax results of operations but would not affect cash, cash flows or pre-tax results of operations for the quarter.
AMD ANNOUNCES ESTIMATED RESTRUCTURING AND OTHER SPECIAL CHARGES IN FOURTH QUARTER
- Company Expects to Record Non-Cash Charge to Eliminate Net Deferred Tax Assets -
SUNNYVALE, CA - NOVEMBER 18, 2002 - AMD (NYSE: AMD) today announced that it currently estimates that restructuring and other special charges in its fourth quarter will be in the range of $300 million to $600 million, inclusive of charges associated with the Company's restructuring and cost-cutting initiatives announced on November 14, 2002.
AMD stated that the Company also expects to record a charge to income tax expense in the fourth quarter in order to establish a 100% valuation allowance against its net deferred tax assets, which were $263 million as of the third quarter ended September 29, 2002. This charge to income tax expense would reduce after-tax results of operations but would not affect cash, cash flows or pre-tax results of operations for the quarter.
The Company estimates that the impact of these two sets of charges in the fourth quarter would be $300 to $600 million on a pre-tax basis and (consisting of the $300 to $600 million pre-tax charges for restructuring and other special charges and a $263 million non-cash charge to tax expense for the 100% valuation allowance).
The Company plans to announce results for the fourth quarter and the year on January 16, 2003.
Note to the editor: For further information please contact: AMD Press Office Theresa Zimmer 01276803100
AMD is a global supplier of integrated circuits for the personal and networked computer and communications markets with manufacturing facilities in the United States, Europe, Japan, and Asia. AMD, a Fortune 500 and Standard & Poor's 500 company, produces microprocessors, Flash memory devices, and support circuitry for communications and networking applications. Founded in 1969 and based in Sunnyvale, California, AMD had revenues of $3.9 billion in 2001. (NYSE: AMD).
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