AMD 1997 Annual Report Download - page 80

ADVANCED MICRO DEVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Inventories. Given the volatility of the market, the Company makes inventory
provisions for potentially excess and obsolete inventory based on backlog and
forecasted demand. However, such backlog demand is subject to revisions,
cancellations and rescheduling. Actual demand will inevitably differ from such
anticipated demand, and such differences may have a material effect on the
financial statements.
Customers. The Company primarily markets and sells its products to a broad
base of customers comprised of distributors and OEMs of computation and
communication equipment. One of the Company's distributors, Arrow Electronics,
Inc., accounted for approximately 12 percent, 13 percent and 12 percent of
1997, 1996 and 1995 net sales, respectively. No other distributor or OEM
customer accounted for 10 percent or more of net sales in 1997, 1996 or 1995.
International Operations. The Company derives a substantial portion of its
revenues from international sales. However, only a portion of the Company's
international sales were denominated in foreign currencies. Further, the
Company does not have any sales denominated in the local currencies of those
countries which have highly inflationary economies.
Nearly all product assembly and final testing of the Company's products are
performed at the Company's manufacturing facilities in Penang, Malaysia;
Bangkok, Thailand; and Singapore; or by subcontractors in Asia. Wafer
fabrication of certain products is performed at foundries in Asia. FASL wafer
fabrication facilities are located in Aizu-Wakamatsu, Japan. Foreign
manufacturing entails political and economic risks, including political
instability, expropriation, currency controls and fluctuations, changes in
freight and interest rates, and loss or modification of exemptions for taxes
and tariffs. For example, if AMD were unable to assemble and test its products
abroad, or if air transportation between the United States and the Company's
overseas facilities were disrupted, there could be a material adverse effect
on the Company's operations.
7. WARRANTS
On May 24, 1995, the effective date of the initial public offering by
NexGen, all previously issued preferred series warrants were converted into
warrants to purchase common stock. At December 28, 1997, the Company had 4,801
warrants outstanding with an exercise price of $6.25 expiring on August 17,
1998.
For the year ended December 28, 1997, warrants previously issued to purchase
31,939 shares of common stock were exercised on a cashless basis for 27,296
shares of common stock. All warrants are currently exercisable at December 28,
1997.
8. INCOME TAXES
Provision (benefit) for income taxes consists of:
1997 1996 1995
-------- --------- -------
(THOUSANDS)
Current:
U.S. Federal................................. $(43,053) $(102,213) $58,683
U.S. State and Local......................... (1,959) (1,026) 1,855
Foreign National and Local................... 8,423 1,097 10,594
Deferred:
U.S. Federal................................. (12,902) 16,280 1,295
U.S. State and Local......................... (7,872) 854 (3,167)
Foreign National and Local................... 2,208 -- 946
-------- --------- -------
Provision (benefit) for income taxes........... $(55,155) $ (85,008) $70,206
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F-15
Source: ADVANCED MICRO DEVIC, 10-K405, March 03, 1998