AMD 1997 Annual Report Download - page 21

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The statements in this Management's Discussion and Analysis of Financial
Condition and Results of Operations that are forward-looking are based on
current expectations and beliefs and involve numerous risks and uncertainties
that could cause actual results to differ materially. The forward-looking
statements relate to operating results; anticipated cash flows; realization of
net deferred tax assets; capital expenditures; adequacy of resources to fund
operations and capital investments; the Company's ability to access external
sources of capital; the Company's ability to transition to new process
technologies; anticipated market growth; year 2000 expenses; the effect of
foreign currency hedging transactions; the effect of adverse economic
conditions in Asia; and the Dresden Fab 30 and FASL manufacturing facilities.
See Financial Condition and Risk Factors below, as well as such other risks
and uncertainties as are detailed in the Company's Securities and Exchange
Commission reports and filings for a discussion of the factors that could
cause actual results to differ materially from the forward-looking statements.
The following discussion should be read in conjunction with the included
Consolidated Financial Statements and Notes thereto at December 28, 1997 and
December 29, 1996 and for each of the three years in the period ended December
28, 1997.
RESULTS OF OPERATIONS
AMD participates in all three segments of the digital IC market--memory
circuits, logic circuits and microprocessors--through, collectively, its
Memory Group, its Communications Group, its Computation Products Group (CPG)
and Vantis. During 1996, the Company's business groups were reorganized.
Results for all periods have been reclassified to conform to the current
presentation. Memory Group products include Flash memory devices and EPROM
devices. Communications Group products include telecommunication products,
networking and I/O products, and embedded processors. CPG products include
microprocessors and core logic products. Vantis products are complex and
simple, high performance CMOS PLDs.
The following is a summary of the net sales of the Memory Group,
Communications Group, CPG and Vantis for 1997, 1996 and 1995:
1997 1996 1995
------ ------ ------
(MILLIONS)
Memory Group............................................ $ 724 $ 698 $ 701
Communications Group.................................... 707 666 733
CPG..................................................... 682 341 778
Vantis.................................................. 243 248 256
------ ------ ------
Total.................................................. $2,356 $1,953 $2,468
====== ====== ======
RECENT AND ANTICIPATED RESULTS OF OPERATIONS
In the fourth quarter of 1997, revenues were approximately $613 million and
the net loss was approximately $12 million. The Company expects revenues in
the first quarter of 1998 to decline significantly, and the net loss to
increase significantly as compared to the fourth quarter of 1997.
REVENUE COMPARISON OF YEARS ENDED DECEMBER 28, 1997 AND DECEMBER 29, 1996
1997 net sales of $2.4 billion increased approximately 21 percent from 1996.
Memory Group net sales increased as substantial Flash memory device unit
growth more than offset average selling price declines. EPROM product net
sales decreased due to a decline in both the average selling price and unit
shipments. In 1997, the Company's Flash memory devices saw increasing
competition which resulted in prices falling significantly.
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Source: ADVANCED MICRO DEVIC, 10-K405, March 03, 1998