AMD 1998 Annual Report Download - page 209

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; our ability to access external sources of
capital; our ability to transition to new process technologies; our ability to
increase unit shipments of microprocessors at higher speed grades; anticipated
market growth; Year 2000 costs; the effect of foreign currency hedging
transactions; the effect of adverse economic conditions in Asia; our new
integrated circuit manufacturing and design facility in Dresden, Germany
(Dresden Fab 30); and the Fujitsu AMD Semiconductor Limited (FASL) manufacturing
facilities. See "Financial Condition" and "Risk Factors" below, as well as such
other risks and uncertainties as are detailed in our 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 Consolidated
Financial Statements and Notes thereto at December 27, 1998 and December 28,
1997 and for each of the three years in the period ended December 27, 1998.
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RESULTS OF OPERATIONS
Advanced Micro Devices, Inc. (AMD, we or our) participates in all three
technology areas within the digital integrated circuit (IC) market - memory
circuits, logic circuits and microprocessors - through, collectively, (1) our
AMD segment, which consists of our three product groups - Computation Products
Group (CPG), Memory Group and Communications Group; and (2) our Vantis segment,
which consists of our programmable logic subsidiary, Vantis Corporation
(Vantis). CPG products include microprocessors and core logic products. Memory
Group products include Flash memory devices and Erasable Programmable Read-Only
Memory (EPROM) devices. Communications Group products include telecommunication
products, networking and input/output (I/O) products and embedded processors.
Vantis products are complex and simple, high-performance CMOS (complementary
metal oxide semiconductor) programmable logic devices (PLDs).
The following is a summary of the net sales of the CPG, the Memory Group, the
Communications Group and Vantis for 1998, 1997 and 1996:
(Millions) 1998 1997 1996
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AMD segment
CPG $1,257 $ 682 $ 341
Memory Group 561 724 698
Communications Group 519 707 666
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2,337 2,113 1,705
Vantis segment 205 243 248
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Total $2,542 $2,356 $1,953
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For the year ended December 27, 1998, we experienced lower than expected net
sales due to the general downturn in the worldwide semiconductor market and the
current economic conditions in Asia, which negatively impacted our results of
operations. To the extent that these factors continue to deteriorate in 1999,
our net sales and results of operations may continue to be negatively affected.
Recent and Anticipated Results of Operations
Net sales were $789 million in the fourth quarter of 1998 compared to $686
million in the third quarter of 1998 and $613 million in the fourth quarter of
1997. In the first quarter of 1999, we implemented design enhancements to
increase the yield of higher-speed versions of AMD-K6(R)-2 microprocessors.
However, we will incur a shortfall in
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Source: ADVANCED MICRO DEVIC, 10-K, March 29, 1999