AMD (NYSE:AMD) today reported sales of $1.523 billion and net income of $76 million, amounting to $0.18 per diluted share, for the quarter ended September 25, 2005. Third quarter sales were up 23 percent compared to the third quarter of 2004 and increased 21 percent from the second quarter of 2005. In the third quarter of 2004, AMD reported sales of $1.239 billion and net income of $44 million, or $0.12 per diluted share. In the second quarter of 2005, AMD reported sales of $1.260 billion and net income of $11 million, or $0.03 per share. Operating income in the third quarter of 2005 was $79 million as compared to operating income of $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 microprocessor business,” said Robert J. Rivet, AMD’s chief financial officer. “Exceptional customer demand for our server, mobile and desktop processors helped drive microprocessor sales growth of 44 percent compared to the third quarter of 2004 and 26 percent compared to the second quarter of 2005. We established new quarterly records in unit and dollar sales, gross margin and operating income.” “Memory Products Group sales decreased 4 percent from the third quarter of 2004 but increased by 12 percent compared to the second quarter of 2005, driven by higher overall unit sales and record MirrorBit™ Flash sales. Increased shipments of high-density MirrorBit Flash solutions to the largest wireless OEM customers and a more balanced supply and demand environment helped stabilize the average selling price during the quarter,” Rivet continued. BUSINESS OVERVIEW Third quarter gross margin was 41 percent compared to 40 percent in the third quarter of 2004 and 39 percent in the second quarter of 2005. The increase was due to improved gross margins in both our microprocessor and Flash memory businesses. Record Computation Product Group (CPG) sales of $969 million increased 44 percent from $673 million in the third quarter of 2004 and increased 26 percent from $767 million in the second quarter of 2005. CPG generated record operating income of $209 million in the third quarter, up from $89 million in the third quarter of 2004 and $110 million in the second quarter of 2005. CPG’s third quarter sales growth was driven by record server, mobile and desktop processor sales and a more than doubling of sales to large global OEM accounts compared to the third quarter of 2004. Record mobile processor sales were largely the result of a 72 percent increase quarter-on-quarter in AMD Turion 64™ mobile processor sales. Geographically, sales were especially strong in high-growth markets including Russia, India and Greater China. Memory Products Group (MPG) sales of $516 million decreased 4 percent from $538 million in the third quarter of 2004 and increased 12 percent from $462 million in the second quarter of 2005. MPG reduced its operating loss to $50 million, from an operating loss of $90 million in the second quarter of 2005. The revenue increase over the second quarter of 2005 was driven by record unit sales, increased purchases by the largest global wireless OEMs, and a richer product mix. MirrorBit Flash sales increased 35 percent from the second quarter 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™, AMD Turion 64, and AMD Athlon™ 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™ 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 based on current expectations. The following statements are forward looking, and actual results could differ materially depending on market conditions. • 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 at 2:30 p.m. PT today to discuss quarterly financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its Web site at www.amd.com or www.streetevents.com. The webcast will be available for 10 days after the conference call.