AMD 2002 Annual Report Download - page 27

Table of Contents
was less than the statutory rate because of a 24 percent tax benefit rate on the 2001 restructuring charges, reflecting the allocation of the charges between the U.S.
and foreign low-taxed jurisdictions, and a provision for U.S. taxes on certain previously undistributed earnings of low-taxed foreign subsidiaries. The effective
tax rate was 20.5 percent for 2000. The effective tax rate, excluding the gain on the sale of Legerity, was 14.5 percent, reflecting the benefit of realizing
previously reserved deferred tax assets. The tax rate recorded in 2000 attributable to the gain on the sale of Legerity was 37 percent.
Other Items
International sales as a percent of net sales were 72 percent in 2002, 66 percent in 2001 and 60 percent in 2000. During 2002, approximately one percent of
our net sales were denominated in currencies other than the U.S. Dollar. The impact on our operating results from changes in foreign currency rates individually
and in the aggregate has not been material, principally as a result of our foreign currency hedging activities.
Comparison of Segment Income (Loss)
In 2002, we operated in two reportable segments: the Core Products segment, which reflects the aggregation of the PC processors, memory products and
Other IC products operating segments, and the Foundry Services segment. The Core Products segment includes PC processors, Flash memory devices, EPROMs,
embedded processors, platform products, personal connectivity solutions products and networking products. The Foundry Services segment included fees for
products sold to Legerity and Vantis. Our previous Voice Communications segment included the voice communications products of our former subsidiary,
Legerity. 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 2002, 2001 and 2000:
2002 2001 2000
(Millions)
Core Products $ (846) $ 72 $ 832
Foundry Services (7) (34) 22
Voice Communications — — 35
Total $ (853) $ 38 $ 889
Core Products segment operating results decreased by $918 million in 2002 compared to 2001 primarily due to a decrease in net sales. The decrease was
primarily due to a decline in both average selling prices and unit sales for our core products due to the sustained downturn in the PC, telecommunications and
networking equipment industries.
The Foundry Services segment operating loss decreased by $27 million in 2002 compared to 2001 primarily due to the cost savings realized from the
closure of Fabs 14 and 15 pursuant to the 2001 Restructuring Plan.
The Voice Communications segment operating income was zero in 2002 and 2001 due to our sale of Legerity, effective July 31, 2000.
Financial Condition
Net cash used in operating activities was $89 million in 2002 primarily as a result of our net loss of $1,303 million, offset by non-cash charges, including
$756 million of depreciation and amortization, $311 million of restructuring and other special charges, and other sources of cash of $163 million due to net
changes in operating assets and liabilities.
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Source: ADVANCED MICRO DEVIC, 10-K, March 14, 2003