AMD 1994 Annual Report Download - page 48

AMD EXECUTIVE BONUS PLAN
================================================================================
VII. FINANCIAL TERMS EXPLAINED
o Reported Operating Income is total Operating Income as reported on
external financial statements.
o Return on Equity (ROE) is calculated by dividing Net Income for the
period by average Shareholders' Equity (i.e., the average of the fiscal
year's beginning and ending Shareholders' Equity). For the purposes of
the LTPP, ROE for AMD will be calculated over a three-year period as
described in Section IV. A.
"Net Income" is income after all expenses, including those not shown on
the internal (product line) P&L. Expenses shown on the P&L are operating
expenses (the costs of operating the business), interest expenses (the
costs of financing the business), and income taxes. Besides these P&L
expenses, profit sharing, bonus accruals, and foreign exchange gain/loss
expenses are included in the calculation of Net Income. Thus, reported
Net Income is income that is available to shareholders, which the
company can pay out in dividends or reinvest on their behalf. The
denominator, Shareholder Equity, is the book value of the shareholders'
investment in the company.
o The Standard and Poor's 500 (S&P 500) is a composite of 500 companies
chosen by Standard and Poor's Corporation because they tend to be
leaders in important industries within the U.S. economy. It consists of
400 industrial, 40 financial, 40 public utilities, and 20 transportation
companies. In addition to being used to measure AMD's Financial
performance for the LTPP, the S&P 500 is the comparator group used in
analyzing AMD's performance in the annual report and proxy statement.
o Worldwide Semiconductor Trade Statistics (WSTS), Inc. collects,
consolidates and publishes data (such as shipments and bookings) on a
monthly basis from the vast majority of semiconductor companies
worldwide. WSTS data are widely accepted benchmarks for performance
throughout the industry. The data used for EBP purposes are worldwide
semiconductor sales figures.
- 9 -
Source: ADVANCED MICRO DEVIC, 10-K, March 07, 1995