AMD 1998 Annual Report Download - page 225

We believe that all critical Year 2000-related manufacturing activities,
including our wafer fabrication facilities and assembly and test facilities,
will be complete by year-end 1999. We have begun contingency planning for
critical areas of manufacturing and will continue developing and refining these
plans throughout 1999.
However, we cannot give any assurance that we will be successful in our efforts
to resolve any Year 2000 issues and to continue operations in our wafer
fabrication facilities in 2000. Our failure to successfully resolve such issues
could result in a shutdown of some or all of our operations, which would have a
material adverse effect on our business.
. Products and Product Design. We have reviewed the status of our current
products and have not identified any mission critical products with Year 2000
problems. It is our goal that the hardware and software we use for product
design will be Year 2000 capable by June 30, 1999. Testing of these systems is
ongoing and will continue through the end of the year. If we fail to make the
hardware and software we use for product design Year 2000 capable by year-end
1999, our business could be materially and adversely affected.
. Organizational Support. Since organizational support consists of several
functional divisions that provide administrative support to us as a whole, and
this support overlaps in many areas, we are unable to quantify the overall
progress of this group. However, several divisions have commenced significant
projects aimed at Year 2000 readiness. For example, the facilities department is
in the process of upgrading the building management system at our corporate
marketing, general and administrative facility located in Sunnyvale, California.
Our goal is to install all software upgrades required by facilities for Year
2000 readiness by June 30, 1999. EHS provides another example. Upgrades are
being scheduled and performed on gas detection systems, acid neutralization
systems and groundwater cleanup controls. Our goal is for EHS's remaining Year
2000 readiness activities to be 75 percent complete by March 31, 1999 and 100
percent complete by June 30, 1999. Similarly, our security department has
completed our plan to ensure Year 2000 compliance of the fire, intrusion and
industrial process alarms in our China, Thailand and Germany sites. Our goal is
to have our domestic alarm systems upgraded and tested for Year 2000 compliance
by September 30, 1999, and to have all remaining international alarm system
upgrades and testing complete by October 31, 1999. However, if we are unable to
complete such upgrades and testing before year-end 1999, our business could be
materially and adversely affected.
Third-Party Suppliers and Customers. We have initiated formal communication with
our significant suppliers to determine the extent to which our operations are
vulnerable to those third parties' failure to remediate their own Year 2000
issues. Suppliers of hardware, software or other products that might contain
embedded processors were requested to provide information regarding the Year
2000 compliance status of their products. We contacted additional suppliers in
the second half of 1998 and will continue to seek information from nonresponsive
suppliers in the first quarter of 1999. In addition, in order to protect against
the acquisition of additional non-compliant products, we now require suppliers
to warrant that products sold or licensed to us are Year 2000 capable. In the
event that any of our significant customers and suppliers do not successfully
and timely achieve Year 2000 compliance, our business or operations could be
adversely affected. We cannot give any assurance that the systems of other
companies on which our systems rely will be converted in a timely manner and
would not have an adverse effect on our operations. We are currently assessing
our exposure to contingencies related to the Year 2000 issue for the products we
sell; however, we do not expect these to have a material impact on our
operations.
Our goal is to resolve our critical Year 2000 issues by June 30, 1999, which is
prior to any anticipated impact on our operating systems. We expect some testing
and verification activities, as well as some upgrading of the wafer fabrication
equipment, to continue through the end of the year. We also expect some aspects
of the Year 2000 plan to continue beyond January 1, 2000 with respect to
resolution of non-critical issues. However, these dates are contingent upon the
timeliness and accuracy of software and hardware upgrades from vendors, adequacy
and quality of resources available to work on completion of the project and any
other unforeseen factors.
Costs. The total expense of the Year 2000 plan is currently estimated to be a
maximum of $35 million, although actual expenditures may differ. Actual costs
incurred through the end of the fourth quarter of 1998 were approximately $8.5
million, the majority of which was expensed. The expenses of the Year 2000
project are being funded through operating cash flows.
Estimates. The costs of the Year 2000 plan and the dates on which we believe we
will complete the Year 2000 modifications are based on management's best
estimates, which were derived utilizing numerous assumptions of future events,
including the continued availability of certain resources, third-party
modification plans and other factors. We cannot give any assurance that these
estimates will be achieved. Consequently, actual results could differ materially
from those anticipated.
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Source: ADVANCED MICRO DEVIC, 10-K, March 29, 1999