AMD 2009 Annual Report Download - page 39

or safety, natural disasters or general economic factors, could have a material adverse effect on our business. Any
of the above risks, should they occur, could result in an increase in the cost of components, production delays,
general business interruptions, delays from difficulties in obtaining export licenses for certain technology, tariffs
and other barriers and restrictions, potentially longer payment cycles, potentially increased taxes, restrictions on
the repatriation of funds and the burdens of complying with a variety of foreign laws, any of which could
ultimately have a material adverse effect on us.
Worldwide economic and political conditions may adversely affect demand for our products.
Worldwide economic conditions may adversely affect demand for our products. Also, the occurrence and
threat of terrorist attacks and the consequences of sustained military action in the Middle East have in the past,
and may in the future, adversely affect demand for our products. Terrorist attacks may negatively affect our
operations, directly or indirectly, and such attacks or related armed conflicts may directly impact our physical
facilities or those of our suppliers or customers. Furthermore, these attacks may make travel and the
transportation of our products more difficult and more expensive, which could materially adversely affect us.
The United States has been and may continue to be involved in armed conflicts that could have a further
impact on our sales and our supply chain. Political and economic instability in some regions of the world may
also result and could negatively impact our business. The consequences of armed conflicts are unpredictable and
we may not be able to foresee events that could have a material adverse effect on us.
More generally, any of these events could cause consumer confidence and spending to decrease or result in
increased volatility in the United States economy and worldwide financial markets. Any of these occurrences
could have a material adverse effect on us and also may result in volatility of the market price for our securities.
Unfavorable currency exchange rate fluctuations could continue to adversely affect us.
We have costs, assets and liabilities that are denominated in foreign currencies, primarily the Canadian
dollar. As a consequence, movements in exchange rates could cause our foreign currency denominated expenses
to increase as a percentage of revenue, affecting our profitability and cash flows. In the past, the value of the U.S.
dollar has fallen significantly, leading to increasingly unfavorable currency exchange rates on foreign
denominated expenses. Whenever we believe appropriate, we hedge a portion of our short-term foreign currency
exposure to protect against fluctuations in currency exchange rates. We determine our total foreign currency
exposure using projections of long-term expenditures for items such as payroll and equipment and materials used
in manufacturing. We cannot assure you that these activities will be effective in reducing foreign exchange rate
exposure. Failure to do so could have an adverse effect on our business, financial condition, results of operations
and cash flow.
In addition, the majority of our product sales are denominated in U.S. dollars. Fluctuations in the exchange
rate between the U.S. dollar and the local currency can cause increases or decreases in the cost of our products in
the local currency of such customers. An appreciation of the U.S. dollar relative to the local currency could
reduce sales of our products.
Our inability to effectively control the sales of our products on the gray market could have a material
adverse effect on us.
We market and sell our products directly to OEMs and through authorized third-party distributors. From
time to time, our products are diverted from our authorized distribution channels and are sold on the “gray
market.” Gray market products result in shadow inventory that is not visible to us, thus making it difficult to
forecast demand accurately. Also, when gray market products enter the market, we and our distribution channel
compete with these heavily discounted gray market products, which adversely affects demand for our products
and negatively impact our margins. In addition, our inability to control gray market activities could result in
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