AMD 1995 Annual Report Download - page 16

Distributors typically maintain an inventory of AMD's products. Pursuant
to the Corporation's agreements with the distributors, AMD protects its
distributors' inventory of AMD's products against price reductions as well as
products that are slow moving or have been discontinued. These agreements,
which may be canceled by either party on a specified notice, generally contain a
provision for the return of AMD's products in the event the agreement with the
distributor is terminated. The price protection and return rights AMD offers to
its distributors may materially adversely affect AMD's operating results. (See
Note 2 of Notes to Consolidated Financial Statements contained in the 1995
Annual Report to Stockholders.)
AMD derives a substantial portion of its revenues from its sales
subsidiaries located in Europe and the Pacific Rim. AMD subsidiaries have
offices in Australia, Belgium, Canada, China, Finland, France, Germany, Hong
Kong, Italy, Japan, Korea, Scotland, Singapore, Sweden, Switzerland, Taiwan, and
the United Kingdom. (See Note 12 of Notes to Consolidated Financial Statements
contained in the 1995 Annual Report to Stockholders.) The international sales
force also works with independent sales representatives and distributors in
approximately 32 countries, including those where AMD has sales subsidiaries.
AMD's international sales operations entail political and economic risks,
including expropriation, currency controls, exchange fluctuations, changes in
freight rates, and changes in rates and exemptions for taxes and tariffs.
While AMD derives more than half of its revenues from international sales,
only a portion of AMD's international sales are denominated in foreign
currencies. The Corporation enters into foreign exchange forward contracts to
buy and sell currencies as economic hedges of the Corporation's foreign net
monetary asset position including the Corporation's liabilities for products
purchased from Fujitsu AMD Semiconductor Limited (FASL). The hedging
transactions in 1995 were denominated in lira, yen, French franc, deutsche mark,
and pound sterling. The maturities of these contracts are generally short-term
in nature. (For more
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Source: ADVANCED MICRO DEVIC, 10-K405, March 21, 1996