AMD 2005 Annual Report Download - page 69

Table of Contents
• difficulties in protecting our intellectual property;
• difficulties in achieving headcount reductions;
• changes in foreign currency exchange rates;
• restrictions on transfers of funds and other assets of our subsidiaries between jurisdictions;
• changes in freight and interest rates;
• disruption in air transportation between the United States and our overseas facilities; and
• loss or modification of exemptions for taxes and tariffs.
Any conflict or uncertainty in the countries in which we operate, including public health or safety concerns, natural disasters or general economic factors,
could have a material adverse effect on our business. Any of the above risks, should they occur, could have a material adverse effect on us.
Worldwide economic and political conditions may adversely affect demand for our products.
Worldwide economic conditions may adversely affect demand for our products. For example, China’s economy has been growing at a fast pace over the
past several years, and the Chinese government introduced various measures to slow down the pace of economic growth. A decline in economic conditions in
China could lead to declining worldwide economic conditions. If economic conditions decline, whether in China or worldwide, we could be materially adversely
affected.
The occurrence and threat of terrorist attacks and the consequences of sustained military action in the Middle East have in the past, and may in the future,
adversely affect demand for our products. Terrorist attacks may negatively affect our operations, directly or indirectly, and such attacks or related armed conflicts
may directly impact our physical facilities or those of our suppliers or customers. Furthermore, these attacks may make travel and the transportation of our
products more difficult and more expensive, which could materially adversely affect us.
The United States has been and may continue to be involved in armed conflicts that could have a further impact on our sales, and our supply chain.
Political and economic instability in some regions of the world may also result and could negatively impact our business. The consequences of armed conflicts
are unpredictable, and we may not be able to foresee events that could have a material adverse effect on us.
More generally, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the United States
economy and worldwide financial markets. Any of these occurrences could have a material adverse effect on us and also may result in volatility of the market
price for our securities.
Unfavorable currency exchange rate fluctuations could adversely affect us.
As a result of our foreign operations, we have costs, assets and liabilities that are denominated in foreign currencies, primarily the euro. For example, some
fixed asset purchases and certain expenses of our German subsidiaries, AMD Saxony and AMD Fab 36 KG, are denominated in euros while sales of products are
denominated in U.S. dollars.
As a consequence, movements in exchange rates could cause our euro-denominated expenses to increase as a percentage of net sales, affecting our
profitability and cash flows. Whenever we believe appropriate, we hedge a portion of our foreign currency exchange exposure to protect against fluctuations in
currency exchange rates. We determine our total foreign currency exchange exposure using projections of long-term expenditures for items such as equipment
and materials used in manufacturing. We cannot assure you that these activities will be effective in reducing foreign exchange rate exposure. Failure to do so
could have an adverse effect on our business, financial condition, results of operations and cash flow.
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Source: ADVANCED MICRO DEVIC, 10-K, February 27, 2006