AMD 2000 Annual Report Download - page 375

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
20.5 percent, reflecting the benefit of realizing previously reserved deferred
tax assets. The 1999 effective tax rate of 227 percent reflected the
establishment of such reserves against our deferred tax assets due to current
and prior operating losses. The effective tax benefit rate was 44 percent for
1998, reflecting the benefits of tax credits and low-taxed foreign income.
We had net deferred tax assets of $14.5 million as of December 31, 2000.
Other Items
International sales as a percent of net sales were 60 percent in both 2000 and
1999 and 55 percent in 1998. During 2000, approximately six percent of our net
sales were denominated in foreign currencies. We do not have sales denominated
in local currencies in countries which have highly inflationary economies (as
defined by generally accepted accounting principles). The impact on our
operating results from changes in foreign currency rates individually and in the
aggregate has not been material.
Comparison of Segment Income (Loss)
In 2000, we operated in three reportable segments: the Core Products, Voice
Communications and Foundry Services segments. As a result of the sale of
Legerity, effective July 31, 2000, we re-evaluated our segment reporting
structure. Prior period segment information has been restated to conform to the
current period presentation. The Core Products segment includes microprocessors,
Flash memory devices, EPROMs, embedded processors, platform products and
networking products. The Voice Communications segment includes the voice
communications products of our former subsidiary, Legerity. The Vantis segment
included the programmable logic devices (PLD) of our former subsidiary, Vantis,
prior to its sale on June 15, 1999. The Foundry Services segment includes fees
for services provided to Legerity and Vantis. For a comparison of segment net
sales, refer to the previous discussions on net sales by product group.
The following is a summary of operating income (loss) by segment for 2000, 1999
and 1998:
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(Millions) 2000 1999 1998
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Core Products $ 832 $ (342) $ (162)
Voice Communications 35 14 (24)
Vantis - 6 22
Foundry Services 22 1 -
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Total $ 889 $ (321) $ (164)
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The Core Products segment operating income increased by $1,174 million in 2000
compared to 1999 primarily due to an increase in net sales of our
seventh-generation microprocessors and Flash memory devices which more than
offset higher fixed costs.
The Voice Communications segment operating income increased by $21 million in
2000 compared to 1999 primarily due to an increase in net sales of
telecommunications linecard circuits and devices for physical-layer Ethernet
solutions. The increase in operating income was also due to decreased costs and
expenses as a result of the sale of Legerity effective July 31, 2000.
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Source: ADVANCED MICRO DEVIC, 10-K405, March 20, 2001