AMD 2004 Annual Report Download - page 54

Table of Contents
Outlook
During the first quarter of 2005, for our Computation Products segment, we expect net sales to decline slightly compared to the fourth quarter of 2004. For
our Memory Products segment, we expect net sales to decline during the first quarter of 2005 compared to the fourth quarter of 2004 due to continued imbalance
in supply and demand, continued pressure on average selling prices and seasonality.
In fiscal 2005, we expect capital expenditures of approximately $1.5 billion. We expect depreciation and amortization expense to be approximately $1.2
billion, and research and development expenses, both in total dollars and as a percentage of sales, to increase primarily due to Fab 36 start-up costs of
approximately $200 million. We also expect total marketing, general and administrative expenses to increase in 2005, but to decline as a percentage of sales.
In 2005, our strategy is to expand our position in the enterprise segment with our AMD64-based processors; to leverage our Spansion product portfolio to
expand our position in the Flash memory market, and to increase the adoption of our MirrorBit technology. However, economic and industry conditions remain
uncertain and continue to make it particularly difficult to forecast product demand. If economic conditions do not continue to improve in the near term in
accordance with our expectations, or if the semiconductor industry experiences a significant downturn, our revenues and profitability will be adversely affected.
Supplementary Stock-Based Incentive Compensation Disclosures
Section I. Option Program Description
Our stock option programs are intended to attract, retain and motivate highly qualified employees. On April 29, 2004, our stockholders approved the 2004
Equity Incentive Plan (the 2004 Plan), which had previously been approved by our Board of Directors. Stock options available for grant under our equity
compensation plans that were in effect before April 29, 2004, (the Prior Plans), including those that were not approved by our stockholders, were consolidated
into the 2004 Plan. As of April 29, 2004, equity awards are made only from the 2004 Plan. Under our Prior Plans key employees generally were, and under the
2004 Plan key employees generally are, granted nonqualified stock options (NSOs) to purchase our common stock. Generally, options vest and become
exercisable over a four-year period from the date of grant and expire five to ten years after the date of grant. Any incentive stock options (ISOs) granted under the
Prior Plans or the 2004 Plan have exercise prices of not less than 100 percent of the fair market value of the common stock on the date of grant. Exercise prices
of NSOs range from $0.01 to the fair market value of the common stock on the date of grant. Under the 2004 Plan, we have also granted awards of restricted
stock. The purchase price for an award of restricted stock is $0.01 per share. Restricted stock can be granted to any employee or consultant. Restricted stock that
vests based on continued service does not fully vest for three years from the date of grant. Restricted stock that vests based on performance does not vest for at
least one year from the date of grant.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005