AMD 1999 Annual Report Download - page 120

EXHIBIT 13
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, among other things, operating results; anticipated cash
flows; capital expenditures; adequacy of resources to fund operations and
capital investments; our ability to transition to new process technologies; our
ability to produce AMD Athlon microprocessors in the volume required by
customers on a timely basis; our ability, and the ability of third parties, to
provide timely infrastructure solutions (motherboards and chipsets) to support
AMD Athlon microprocessors; our ability to increase customer and market
acceptance of AMD Athlon microprocessors; our ability to maintain average
selling prices for AMD Athlon microprocessors; our ability to increase
manufacturing capacity to meet the demand for Flash memory products; the effect
of foreign currency hedging transactions; our new submicron 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 related notes as of December 26, 1999 and
December 27, 1998 and for each of the three years in the period ended December
26, 1999.
RESULTS OF OPERATIONS
In 1997, 1998 and 1999, we participated in all three technology areas within the
digital integrated circuit (IC) market--microprocessors, memory circuits and
logic circuits--through (1) our AMD segment, which consists of our three product
groups--our Computation Products Group (CPG), our Memory Group and our
Communications Group and (2) our Vantis segment, up until June 15, 1999, which
consisted of our programmable logic subsidiary, Vantis Corporation (Vantis). CPG
products include microprocessors, core logic products and embedded processors.
Memory Group products include Flash memory devices and Erasable Programmable
Read-Only Memory (EPROM) devices. Communications Group products include
telecommunication products and networking products. Vantis products consisted of
complex and simple, high-performance complementary metal oxide semiconductor
(CMOS) programmable logic devices (PLDs).
On June 15, 1999, we completed the sale of Vantis to Lattice Semiconductor
Corporation. After the Vantis sale, we provided foundry and administrative
services to Vantis during 1999.
The following is a summary of the net sales of the AMD and Vantis segments
for 1999, 1998 and 1997:
(Millions) 1999 1998 1997
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AMD segment:
CPG $1,657 $1,484 $ 938
Memory Group 773 561 724
Communications Group 298 292 451
Lattice service fees 43 -- --
--------------------------------------------------------------------------------
2,771 2,337 2,113
Vantis segment 87 205 243
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Total $2,858 $2,542 $2,356
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Net Sales Comparison of Years Ended December 26, 1999 and December 27, 1998
Total net sales increased by $315 million, or 12 percent, to $2,858 million in
1999 from $2,542 million in 1998. Excluding sales from the Vantis segment and
Lattice service fees, net sales for 1999 increased by 17 percent compared to
1998.
CPG net sales of $1,657 million increased by 12 percent in 1999 compared to
1998. This increase was primarily due to the introduction of AMD Athlon
microprocessors, which are our seventh-generation Microsoft(R) Windows(R)
compatible microprocessors, at the end of the second quarter of 1999, and was
partially offset by a decrease in net sales of AMD-K6 microprocessors. Although
unit sales volumes of AMD-K6 microprocessors increased, net sales decreased due
to declines in average selling prices which were caused by aggressive Intel
pricing, including marketing rebates and product bundling of microprocessors,
motherboards, chipsets and combinations thereof. Overall CPG sales growth in
2000 is dependent upon a successful production ramp to 0.18-micron process
technology and copper interconnect technology, availability of chipsets and
Source: ADVANCED MICRO DEVIC, 10-K405, March 21, 2000