UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1997
-----------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 1-7882
------------------
ADVANCED MICRO DEVICES, INC.
----------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-1692300
- ------------------------------- ------------------------------------
State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization
One AMD Place
P. O. Box 3453
Sunnyvale, California 94088-3453
- --------------------- ---------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 732-2400
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- -------
The number of shares of $0.01 par value common stock outstanding as of May 2,
1997: 140,294,549.
ADVANCED MICRO DEVICES, INC.
- ----------------------------
INDEX
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Part I. Financial Information Page No.
--------------------- --------
Item 1. Financial Statements
Condensed Consolidated Statements of Operations--
Quarters Ended March 30, 1997
and March 31, 1996 3
Condensed Consolidated Balance Sheets--
March 30, 1997 and December 29, 1996 4
Condensed Consolidated Statements of Cash Flows--
Quarters Ended March 30, 1997
and March 31, 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 9
Part II. Other Information
-----------------
Item 1. Legal Proceedings 24
Item 5. Other Information 25
Item 6. Exhibits and Reports on Form 8-K 26
Signature 28
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2
I. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
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ADVANCED MICRO DEVICES, INC.
----------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(Unaudited)
(Thousands except per share amounts)
Quarter Ended
-----------------------
March 30, March 31,
1997 1996
--------- --------
Net sales $551,999 $544,212
Expenses:
Cost of sales 349,076 368,735
Research and development 104,908 94,780
Marketing, general and administrative 94,519 103,011
------- -------
548,503 566,526
------- -------
Operating income (loss) 3,496 (22,314)
Interest income and other, net 13,322 28,059
Interest expense (9,410) (1,981)
------- -------
Income before income taxes and equity in joint venture 7,408 3,764
Provision for income taxes 2,148 -
------- -------
Income before equity in joint venture 5,260 3,764
Equity in net income of joint venture 7,691 21,563
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Net income $ 12,951 $ 25,327
======== ========
Net income per common share:
Primary $ .09 $ .18
======== ========
Fully diluted $ .09 $ .18
======== ========
Shares used in per share calculation:
Primary 146,751 138,399
======== ========
Fully diluted 147,322 138,399
======== ========
See accompanying notes
- ----------------------
3
ADVANCED MICRO DEVICES, INC.
----------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS*
--------------------------------------
(Thousands)
March 30, December 29,
1997 1996
---------- ------------
Assets
- ------
Current assets:
Cash and cash equivalents $ 225,385 $ 166,194
Short-term investments 403,502 220,004
----------- -----------
Total cash, cash equivalents and
short-term investments 628,887 386,198
Accounts receivable, net 282,590 220,028
Inventories:
Raw materials 25,337 22,050
Work-in-process 86,486 83,853
Finished goods 37,395 48,107
----------- -----------
Total inventories 149,218 154,010
Deferred income taxes 140,085 140,850
Prepaid expenses and other current assets 51,976 127,991
----------- -----------
Total current assets 1,252,756 1,029,077
Property, plant and equipment, at cost 3,456,077 3,326,768
Accumulated depreciation and amortization (1,606,143) (1,539,366)
----------- -----------
Property, plant and equipment, net 1,849,934 1,787,402
Investment in joint venture 187,566 197,205
Other assets 135,870 131,599
----------- -----------
$ 3,426,126 $ 3,145,283
=========== ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Notes payable to banks $ 12,965 $ 14,692
Accounts payable 233,237 224,139
Accrued compensation and benefits 65,838 66,745
Accrued liabilities 106,796 103,436
Income tax payable 45,547 51,324
Deferred income on shipments to distributors 105,390 95,466
Current portion of long-term debt and capital
lease obligations 31,406 27,671
----------- -----------
Total current liabilities 601,179 583,473
Deferred income taxes 98,777 95,102
Long-term debt and capital lease obligations,
less current portion 682,413 444,830
Stockholders' equity:
Capital stock:
Common stock, par value 1,400 1,380
Capital in excess of par value 989,767 957,226
Retained earnings 1,052,590 1,063,272
----------- -----------
Total stockholders' equity 2,043,757 2,021,878
----------- -----------
$ 3,426,126 $ 3,145,283
=========== ===========
* Amounts as of March 30, 1997 are unaudited. Amounts as of December 29, 1996
were derived from the December 29, 1996 audited financial statements.
See accompanying notes
----------------------
4
ADVANCED MICRO DEVICES, INC.
----------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(Unaudited)
(Thousands)
Quarter Ended
-------------------------
March 30, March 31,
1997 1996
Cash flows from operating activities: ---------- ---------
Net income $ 12,951 $ 25,327
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 88,821 79,623
Net loss on disposal of property, plant and equipment 3,110 416
Net gain realized on sale of available-for-sale securities (4,978) (24,743)
Compensation recognized under employee stock plans 7,733 687
Undistributed income of joint venture (7,691) (21,563)
Changes in operating assets and liabilities:
Net (increase) decrease in receivables, inventories,
prepaid expenses and other assets (5,286) 19,036
Net decrease in deferred income taxes 4,440 6,000
Decrease in income tax payable (5,777) (6,901)
Net increase (decrease) in payables and accrued liabilities 21,475 (102,423)
--------- ---------
Net cash provided by (used in) operating activities 114,798 (24,541)
--------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment (150,594) (95,329)
Proceeds from sale of property, plant and equipment 130 802
Purchase of available-for-sale securities (308,326) (236,331)
Proceeds from sale of available-for-sale securities 138,892 322,128
Investment in joint venture (128) -
--------- ---------
Net cash used in investing activities (320,026) (8,730)
--------- ---------
Cash flows from financing activities:
Proceeds from borrowings 261,584 15,125
Payments on debt and capital lease obligations (21,993) (39,812)
Proceeds from issuance of stock 24,828 17,024
--------- ---------
Net cash provided by (used in) financing activities 264,419 (7,663)
--------- ---------
Net increase (decrease) in cash and cash equivalents 59,191 (40,934)
Cash and cash equivalents at beginning of period 166,194 126,316
--------- ---------
Cash and cash equivalents at end of period $ 225,385 $ 85,382
========= ========
Supplemental disclosures of cash flow information:
Cash (refunded) paid during the first three months for:
Income taxes $(101,435) $ 464
========= ========
Non-cash financing activities:
Equipment capital leases $ - $ 342
========= ========
See accompanying notes
- ----------------------
5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
1. The results of operations for the interim periods shown in this report are
not necessarily indicative of results to be expected for the fiscal year.
In the opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim
periods a fair statement of such operations. All such adjustments are of a
normal recurring nature.
The Company uses a 52- to 53-week fiscal year ending on the last Sunday in
December. The quarters ended March 30, 1997 and March 31, 1996 included 13
weeks.
Certain prior year amounts on the Condensed Consolidated Financial
Statements have been reclassified to conform to the 1997 presentation.
2. The following is a summary of available-for-sale securities included in
cash and cash equivalents and short-term investments as of March 30, 1997
(in thousands):
Cash equivalents
Treasury notes $ 2,017
Federal agency notes 32,777
Security repurchase agreements 125,300
Commercial paper 30,824
Other debt securities 869
--------
Total cash equivalents $191,787
========
Short-term investments
Certificates of deposit $155,619
Bank/Corporate notes 34,828
Treasury notes 81,614
Commercial paper 131,441
--------
Total short-term investments $403,502
========
As of March 30, 1997 the Company held $6 million of available-for-sale
equity securities with a fair value of $11 million which are included in
other assets. The total net unrealized gain on these equity securities, net
of tax, is included in retained earnings. During the first quarter of 1997,
the Company sold a portion of its available-for-sale equity securities and
realized a pre-tax gain of $5 million which is included in interest income
and other, net.
6
3. The net income per common share computations are based on the weighted-
average number of common shares outstanding plus dilutive common share
equivalents. Shares used in the per share computations are as follows:
Quarter Ended
-------------------------
March 30, March 31,
1997 1996
--------- ---------
(Thousands)
Primary:
Common shares outstanding 138,616 133,229
Employee stock plans 7,873 4,374
Warrants 262 796
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146,751 138,399
======= =======
Fully diluted:
Common shares outstanding 138,616 133,229
Employee stock plans 8,437 4,374
Warrants 269 796
------- -------
147,322 138,399
======= =======
In February, 1997 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 (SFAS 128), "Earnings per Share."
SFAS 128 supersedes Accounting Principles Board Opinion No. 15 (APB 15),
"Earnings per Share," and other related interpretations and is effective
for the periods ending after December 15, 1997. Upon adoption of SFAS 128,
all prior-period earnings per share amounts are required to be restated.
The Company's pro forma basic and diluted earnings per share as if SFAS 128
were effective for the periods presented, are $0.09 and $0.09 for the
quarter ended March 30, 1997, respectively, and $0.19 and $0.18 for the
quarter ended March 31, 1996, respectively.
4. On July 19, 1996 the Company entered into a syndicated bank loan agreement
(the Credit Agreement) which provided for a new $400 million term loan and
revolving credit facility. The Credit Agreement provided for a $150 million
three-year secured revolving line of credit (which can be extended for one
additional year, subject to approval of the lending banks) and a $250
million four-year secured term loan, the latter of which the Company
utilized fully in January, 1997.
7
5. In 1993, AMD and Fujitsu Limited formed a joint venture, Fujitsu AMD
Semiconductor Limited (FASL), for the development and manufacture of non-
volatile memory devices. FASL operates an advanced integrated circuit
manufacturing facility in Aizu-Wakamatsu, Japan, to produce Flash memory
devices. The Company's share of FASL is 49.992 percent and the investment
is being accounted for under the equity method. At March 30, 1997, the
accumulated adjustment related to the translation of the FASL financial
statements into U.S. dollars resulted in a decrease of approximately $45
million to the investment in FASL. In the first quarter of 1997 and of
1996, the Company purchased $50 million and $69 million, respectively, of
Flash memory devices from FASL. At March 30, 1997 and March 31, 1996, the
Company had outstanding payables to FASL of $24 million and $55 million,
respectively, for Flash memory device purchases. In the first quarter of
1997 and of 1996, the Company earned royalty income of $4 million and $5
million, respectively, as a result of purchases from FASL.
The following is condensed unaudited financial data of FASL:
Quarter Ended
-------------------------
(Unaudited) March 30, March 31,
(Thousands) 1997 1996
--------- ---------
Net sales $103,711 $134,340
Gross profit 35,583 83,732
Operating income 25,205 66,630
Net income 27,314 54,457
The Company's share of the above FASL net income differs from the equity in
net income of joint venture reported on the condensed Consolidated
Statements of Operations due to differences in tax rates, as the above
table reflects the FASL tax expense (benefit) and the Statements of
Operations reflects the tax AMD would expect to pay if the Company's share
of FASL profits were remitted to AMD as a dividend.
8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
- ------- -----------------------------------------------------------------
FINANCIAL CONDITION
-------------------
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
- ---------------------------------------------------------
The statements in this Management's Discussion and Analysis of Results of
Operations and Financial Condition 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 operating results, cash flows, capital expenditures, tax rates and
adequacy of resources to fund operations and capital investments; future
business prospects for microprocessors, Flash memory device products and other
product lines; the effect of foreign exchange contracts and interest rate swaps;
the development, validation, certification, introduction, market acceptance and
pricing of the K86(TM) products; the Company's commitment to research and
development; the effective utilization of the Company's manufacturing
facilities; the proposed Dresden (as defined below) and FASL manufacturing
facilities; and the assembly and test facility being constructed in Suzhou,
China. See Financial Condition and Risk Factors below, as well as such other
risks and uncertainties as are detailed in the Company's Securities and Exchange
Commission reports and filings for a discussion of the factors that could cause
the actual results to differ materially from the forward-looking statements.
The following discussion should be read in conjunction with the attached
condensed Consolidated Financial Statements and Notes thereto, and with the
Company's Consolidated Financial Statements and Notes thereto at December 29,
1996 and December 31, 1995 and for each of the three years in the period ended
December 29, 1996.
AMD, the AMD logo, and combinations thereof, Advanced Micro Devices, Vantis and
NexGen, are either registered trademarks or trademarks of Advanced Micro
Devices, Inc. Other terms used to identify companies and products may be
trademarks of their respective owners. MACH, Am486, K86, K86 RISC SUPERSCALAR,
AMD-K5, AMD-K6, Nx586 and Nx686 are trademarks or registered trademarks of AMD.
Microsoft, MS-DOS, Windows and Windows NT are either registered trademarks or
trademarks of Microsoft Corporation. Pentium is a registered trademark
and MMX is a trademark of Intel Corporation.
9
RESULTS OF OPERATIONS
- ---------------------
AMD participates in the digital integrated circuit (IC) market - memory
circuits, microprocessors and logic circuits - through, collectively, its Memory
Group, its Communications Group, its Computation Products Group (CPG) and its
Programmable Logic Division (Vantis). Memory Group products include Flash memory
devices and Erasable Programmable Read-Only Memory (EPROM) devices.
Communications Group products include voice and data communications products,
embedded processors, input/output (I/O) devices, network products and bipolar
programmable logic devices, an older line of programmable logic devices that the
Company manufactures. CPG products include microprocessors and chip sets. Vantis
products are high-speed CMOS programmable logic devices.
The following is a summary of the net sales of the Memory Group, Communications
Group, CPG and Vantis for the first quarter of 1997 and of 1996, and the fourth
quarter of 1996:
Quarter Ended March 30, December 29, March 31,
1997 1996 1996
(Millions) --------- ------------ ---------
Memory Group $184 $162 $210
Communications Group 171 166 182
CPG 128 110 82
Vantis 69 59 70
---- ---- ----
Total $552 $497 $544
==== ==== ====
Revenue Comparison of Quarters Ended March 30, 1997 and March 31, 1996
- ----------------------------------------------------------------------
Net sales increased as a result of increases in AMD-K5(TM) microprocessor sales,
which more than offset declines in Am486(R) microprocessor and memory product
sales.
Memory Group net sales decreased due to a decline in both the average selling
price and unit shipments for EPROM products. Flash memory device sales were
slightly lower as substantial unit growth was offset by average selling price
declines.
Communications Group net sales decreased primarily due to a decline in the
average selling price for network products and secondarily due to a decline in
both unit shipments and average selling price of bipolar programmable logic
devices. These declines were partially offset by increased sales, due to unit
growth, of the Company's telecommunication products.
10
CPG net sales increased due to sales of AMD-K5 microprocessors at higher average
selling prices than the Am486 microprocessor which represented most of the
Company's microprocessor sales in the first quarter of 1996. The Company expects
AMD-K5 microprocessor sales to substantially decrease as the Company ramps up
production of its sixth generation processor, the AMD-K6(TM) MMX(TM) Enhanced
processor. The Company began shipments of its AMD-K6 processor at the end of the
first quarter of 1997. AMD-K6 microprocessor sales did not materially impact the
first quarter results.
Vantis net sales remained relatively flat in the first quarter of 1997 as
compared to the same period in 1996. The Company is in the process of
transferring its programmable logic device operations to a wholly owned
subsidiary, Vantis Corporation. Vantis Corporation will continue to rely upon
the Company for manufacturing and administrative services.
Revenue Comparison of Quarters Ended March 30, 1997 and December 29, 1996
- -------------------------------------------------------------------------
Net sales increased as a result of strength in nearly all product lines, led by
sales growth in AMD-K5 microprocessors and Flash memory devices.
Memory Group net sales increased due to strong unit growth in Flash memory
device sales offset by slight average selling price declines.
Communications Group net sales increased primarily due to increased unit
shipments of network products.
CPG net sales increased due to sales of higher performance AMD-K5
microprocessors.
Vantis net sales increased as a result of unit growth in both MACH(R) and
simple programmable logic products.
Comparison of Expenses and Interest
- -----------------------------------
The following is a summary of expenses and interest income for the first quarter
of 1997 and of 1996, and the fourth quarter of 1996:
Quarter Ended March 30, December 29, March 31,
1997 1996 1996
--------- ------------ ---------
(Millions except for gross
margin percentages)
Cost of sales $349 $355 $369
Gross margin percentage 37% 29% 32%
Research and development $105 $107 $ 95
Marketing, general and
administrative 95 88 103
Interest income and other, net 13 4 28
Interest expense 9 8 2
11
Gross margin percentage increased as compared to the first quarter of 1996 and
the fourth quarter of 1996 primarily due to better utilization of the Company's
Fab 25 wafer production facilities and the transition of a higher proportion of
Submicron Development Center (SDC) activities to research and development.
Research and development expenses increased as compared to the first quarter of
1996 due to the transition of a higher proportion of SDC activities to research
and development, partially offset by reduced research and development spending
related to the AMD-K5 processor.
Marketing, general and administrative expenses decreased as compared to the
first quarter of 1996 primarily due to (i) non-recurring costs associated with
the merger with NexGen, Inc. (NexGen) in the first quarter of 1996 and (ii)
effective cost containment efforts. During the first quarter of 1997 the Company
incurred higher advertising and marketing expenses primarily due to corporate
image and AMD-K6 microprocessor advertising.
Interest income and other, net decreased as compared to the first quarter of
1996 primarily due to a pre-tax gain of $25 million resulting from the sale of
equity securities in the first quarter of 1996, compared to a pre-tax gain of $5
million resulting from the sale of equity securities in the first quarter of
1997. The Company also fully utilized its $250 million four-year secured term
loan in the first quarter of 1997, increasing the average cash and cash
equivalents balance and the corresponding interest income. Interest income and
other, net increased as compared to the fourth quarter of 1996 primarily due to
the $5 million pre-tax gain and the utilization of the $250 million four-year
secured term loan as described above. Interest expense increased as compared to
the first quarter of 1996 primarily due to interest expense incurred on the
Company's $400 million Senior Secured Notes sold in August, 1996 and interest
expense on the $250 million four-year secured term loan. Interest expense
increased slightly as compared to the fourth quarter of 1996 due to the interest
expense on the $250 million four-year secured term loan.
Income Tax
- ----------
The Company's effective tax rate for the first quarter of 1997 was 29 percent.
No tax provision was recorded in the first quarter of 1996. Management currently
estimates that the 29 percent effective tax rate will continue throughout 1997.
Other Items
- -----------
International sales were 56 percent of total sales in the first quarter of 1997
as compared to 52 percent for the same period in 1996, and 55 percent for the
immediate prior quarter. In the first quarter of 1997, approximately 13 percent
of the Company's net sales were denominated in foreign currencies. The Company
does not have sales denominated in local currencies in those countries which
have highly
12
inflationary economies. (A highly inflationary economy is defined in accordance
with the Statement of Financial Accounting Standards No. 52 as one in which the
cumulative inflation over a three-year consecutive period approximates 100
percent or more.) The impact on the Company's operating results from changes in
foreign currency rates individually and in the aggregate has not been material.
The Company enters into foreign exchange forward contracts to buy and sell
currencies as economic hedges of the Company's foreign net monetary asset
position including the Company's liabilities for products purchased from FASL.
In 1996 and 1997, these hedging transactions were denominated in lira, yen,
French franc, deutsche mark (DM) and pound sterling. The maturities of these
contracts are generally short-term in nature. The Company believes its foreign
exchange contracts do not subject the Company to material risk from exchange
rate movements because gains and losses on these contracts are designed to
offset losses and gains on the net monetary asset position being hedged. Net
foreign currency gains and losses have not been material. As of March 30, 1997,
the Company had approximately $34 million (notional amount) of foreign exchange
forward contracts.
The Company has engaged in interest rate swaps primarily to reduce its interest
rate exposure by changing a portion of the Company's interest rate obligation
from a floating rate to a fixed rate basis. At March 30, 1997, the net
outstanding notional amount of interest rate swaps was $40 million, which will
mature June 30, 1997. Gains and losses related to these interest rate swaps
have not been material. The Company anticipates that it will engage in future
swap arrangements after the outstanding amount has matured.
The Company participates as an end user in various derivative markets to manage
its exposure to interest and foreign currency exchange rate fluctuations. The
counterparties to the Company's foreign exchange forward contracts and interest
rate swaps consist of a number of major, high credit quality, international
financial institutions. The Company does not believe that there is significant
risk of nonperformance by these counterparties because the Company monitors
their credit ratings, and reduces the financial exposure by limiting the
notional amount of agreements entered into with any one financial institution.
FINANCIAL CONDITION
- -------------------
The Company's working capital balance increased to $652 million at March 30,
1997 from $446 million at December 29, 1996, primarily due to proceeds from a
$250 million four-year secured term loan and receipt of a tax refund, partially
offset by capital expenditures during the period. The Company's cash, cash
equivalents and short-term investments balance was approximately $629 million at
March 30, 1997 compared to $386 million at December 29, 1996.
13
As a result of the Company's improved operating performance and a $101 million
tax refund received during the first quarter of 1997, the Company generated $115
million of cash flow from operating activities. The Company plans to continue to
make significant capital investments through 1997, including those relating to
the Dresden Facility (as defined below) and FASL. The Company's current capital
plan and requirements are based on the availability of financial resources and
various product-mix, selling-price, and unit-demand assumptions and are,
therefore, subject to revision.
AMD Saxony Manufacturing GmbH (AMD Saxony), a German subsidiary wholly owned by
the Company through a German holding company, is building a 900,000 square foot
submicron integrated circuit manufacturing and design facility in Dresden, in
the State of Saxony, Germany (the Dresden Facility) over the next five years at
a presently estimated cost of approximately $1.5 billion. The Dresden Facility
is being designed for the production of microprocessors and other advanced logic
products. The Federal Republic of Germany and the State of Saxony have agreed to
support the project in the form of (i) a guarantee of 65% of the bank debt to be
incurred by AMD Saxony up to a maximum of DM1.65 billion, (ii) investment grants
and subsidies totaling DM500.5 million, and (iii) interest subsidies from the
State of Saxony totaling DM300 million. In March, 1997 AMD Saxony entered into a
loan agreement with a consortium of banks led by Dresdner Bank AG under which
loan facilities totaling DM1.65 billion will be made available. In connection
with the financing, the Company has agreed to invest in AMD Saxony over the next
three years equity and subordinated loans in an amount totaling approximately
DM507.5 million. Until the Dresden Facility has been completed, AMD has also
agreed to guarantee AMD Saxony's obligations under the loan agreement up to a
maximum of DM217.5 million. After completion of the Dresden Facility, AMD has
agreed to make available to AMD Saxony up to DM145 million if the subsidiary
does not meet its fixed charge coverage ratio covenant. Finally, AMD has agreed
to undertake certain contingent obligations, including various obligations to
fund project cost overruns. The Company began site preparation of the Dresden
Facility in the fourth quarter of 1996, and has commenced construction in the
second quarter of 1997. The planned Dresden Facility costs are denominated in
deutsche marks and, therefore, are subject to change due to foreign exchange
rate fluctuations. The Company plans to hedge future foreign exchange
transaction exposure for the Dresden Facility.
The Company's total cash investment in FASL was $160 million at March 30, 1997
and at the end of 1996. In March of 1996, FASL began construction of a second
Flash memory device wafer fabrication facility (FASL II) at a site contiguous to
the existing FASL facility in Aizu-Wakamatsu, Japan. The facility is expected to
cost approximately $1.1 billion when fully equipped. Capital expenditures for
FASL II construction are expected to be funded by cash generated from FASL
operations and borrowings by FASL. To the extent that FASL is unable to secure
the necessary funds for FASL II, AMD may be required to contribute cash or
guarantee third-party loans in proportion to its percentage interest in FASL.
At March 30, 1997, AMD had loan guarantees of $26 million outstanding with
respect to such loans. The planned
14
FASL II costs are denominated in yen and, therefore, are subject to change due
to foreign exchange rate fluctuations.
The Company has a syndicated bank loan agreement providing for a $150 million
three-year secured revolving line of credit (which can be extended for one
additional year, subject to approval of the lending banks) and a $250 million
four-year secured term loan, the latter of which the Company fully utilized in
January, 1997. Additionally, as of March 30, 1997, the Company has available
unsecured uncommitted bank lines of credit in the amount of $84 million, of
which $16 million was utilized.
The Company believes that current cash balances, together with cash flows, will
be sufficient to fund operations and capital investments currently planned
through 1997.
RISK FACTORS
- ------------
The Company's business, results of operations and financial condition are
subject to the following risk factors:
Microprocessor Products
Intel Dominance. Intel Corporation (Intel) has long held a dominant position in
- ---------------
the market for microprocessors used in personal computers (PCs). Intel
Corporation's dominant market position has to date allowed it to set and control
x86 microprocessor standards and thus dictate the type of product the market
requires of Intel Corporation's competitors. In addition, Intel Corporation's
financial strength has enabled it to reduce prices on its microprocessor
products within a short period of time following their introduction, which
reduces the margins and profitability of its competitors, to exert substantial
influence and control over PC manufacturers through the Intel Inside advertising
rebate program and to invest hundreds of millions of dollars in, and as a result
exert influence over, other technology companies. The Company expects Intel to
continue to invest heavily in research and development and new manufacturing
facilities, and to maintain its dominant position through the Intel Inside
program, through other contractual constraints on customers and other third
parties, and by controlling industry standards. As an extension of its dominant
microprocessor market share, Intel also increasingly dominates the PC platform.
The Company does not have the financial resources to compete with Intel on such
a large scale. As long as Intel remains in this dominant position, its product
introduction schedule, product pricing strategy, customer brand loyalty and
control over industry standards, PC manufacturers and other PC industry
participants may have a material adverse effect on the Company.
As Intel has expanded its dominance in designing and setting standards for PC
systems, many PC original equipment manufacturers (OEMs) have reduced their
system development expenditures and have begun to purchase microprocessors in
conjunction with chip sets or in assembled motherboards. In marketing its
microprocessors to these OEMs and dealers, AMD is dependent upon companies
15
other than Intel for the design and manufacture of core-logic chip sets,
motherboards, basic input/output system (BIOS) software and other components. In
recent years, these third-party designers and manufacturers have lost
significant market share to Intel. In addition, these companies are able to
produce chip sets, motherboards, BIOS software and other components to support
each new generation of Intel Corporation's microprocessors only to the extent
that Intel makes its related proprietary technology available. Any delay in the
availability of such technologies would make it increasingly difficult for them
to retain or regain market share. To compete with Intel in this market in the
future, the Company intends to continue to form closer relationships with third-
party designers and manufacturers of core-logic chip sets, motherboards, BIOS
software and other components. The Company similarly intends to expand its chip
set and system design capabilities, and offer to OEMs a portion of the Company's
processors together with chip sets and licensed system designs incorporating the
Company's processors and companion products. There can be no assurance, however,
that such efforts by the Company will be successful. The Company expects that as
Intel introduces future generations of microprocessors, chip sets and
motherboards, the design of chip sets and higher level board products which
support Intel microprocessors will become increasingly dependent on the Intel
microprocessor design and may become incompatible with non-Intel processor-based
PC systems. Intel has announced that the Pentium II will be sold only in the
form of a daughtercard that is not compatible with "Socket 7" motherboards
currently used with Intel Pentium(R) processors. Thus, Intel will cease
supporting the Socket 7 infrastructure as it transitions away from its Pentium
processors. Because the AMD-K6 processor is designed to be Socket 7 compatible,
and will not work with motherboards designed for Pentium II processors, the
Company intends to work with third party designers and manufacturers of
motherboards, chip sets and other products to assure the continued availability
of Socket 7 infrastructure support for the AMD-K6 processor, including support
for enhancements and features the Company plans to add to the processor. The
Company's ability to compete with Intel in the market for seventh- and future
generation microprocessors will depend not only upon its success in designing
and developing the microprocessors themselves, but also in ensuring either that
they can be used in PC platforms designed to support future Intel
microprocessors or that alternative platforms are available which are
competitive with those used with Intel processors. A failure for any reason of
the designers and producers of motherboards, chip sets and other system
components to support the Company's x86 microprocessor offerings could have a
material adverse effect on the Company.
Dependence on New AMD Microprocessor Products. The Company's microprocessor
- ---------------------------------------------
products have traditionally made significant contributions to the Company's
revenues, profits and margins. The Company's AMD-K5 microprocessor, its fifth-
generation microprocessor and its first K86 RISC SUPERSCALAR(TM) microprocessor,
was introduced relatively late in the life cycle of fifth-generation products
and has not resulted in the levels of revenue that the Company realized from its
fourth-generation product. The Company expects AMD-K5 microprocessor sales
16
to substantially decrease as the Company ramps up production for the AMD-K6
microprocessor. The Company's ability to expand its current levels of revenues
from microprocessor products and to benefit fully from the substantial financial
commitments it has made related to microprocessors will depend upon the success
of the AMD-K6 microprocessor and future generations of K86 microprocessors. The
Company's production and sales plans for its AMD-K6 microprocessors are subject
to numerous risks and uncertainties, including the pace at which the Company
will be able to ramp production in Fab 25, the effects of marketing and pricing
strategies adopted by Intel, the development of market acceptance for the
products particularly with leading PC OEMs, the possibility that products newly
introduced by the Company may be found to be defective, possible adverse
conditions in the personal computer market and unexpected interruptions in the
Company's manufacturing operations. A failure of the Company's AMD-K6 processors
to achieve market acceptance would have a material adverse effect on the
Company. AMD is also devoting substantial resources to the development of its
seventh-generation Microsoft(R) Windows(R) compatible microprocessor.
Compatibility Certifications. For its future generations of K86 microprocessors,
- ----------------------------
AMD intends to obtain Windows, Windows 95 and Windows NT(R) certifications from
Microsoft and other appropriate certifications from recognized testing
organizations. A failure to obtain certifications from Microsoft would prevent
the Company from describing and labeling its K86 microprocessors as Microsoft
Windows compatible. This could substantially impair the Company's ability to
market the products and could have a material adverse effect on the Company.
Fluctuation in PC Market. Since most of the Company's microprocessor products
- ------------------------
are used in personal computers and related peripherals, the Company's future
growth is closely tied to the performance of the PC industry. The Company could
be materially and adversely affected by industry-wide fluctuations in the PC
marketplace in the future.
Possible Rights of Others. Prior to its acquisition by AMD, NexGen granted
- -------------------------
limited manufacturing rights regarding certain of its current and future
microprocessors, including the Nx586 and Nx686(TM), to other companies. The
Company does not intend to produce any NexGen products. The Company believes
that its AMD-K6 processors are AMD products and not NexGen products. There can
be no assurance that another company will not seek to establish rights with
respect to the processors. If another company were deemed to have rights to
produce the Company's AMD-K6 processors for its own use or for sale to third
parties, such production could reduce the potential market for microprocessor
products produced by AMD, the profit margin achievable with respect to such
products, or both.
17
Flash Memory Products
Importance of Flash Memory Device Business; Increasing Competition. In 1996, the
- ------------------------------------------------------------------
market for Flash memory devices experienced rapid growth and increased
competition as additional manufacturers introduced competitive products and
industry-wide production capacity increased. The Company expects that the
marketplace for Flash memory devices will continue to be increasingly
competitive. A substantial portion of the Company's revenues are derived from
sales of Flash memory devices, and the Company expects that this will continue
to be the case for the foreseeable future. During 1996 and the first quarter of
1997, the Company experienced declines in the selling prices of Flash memory
devices. There can be no assurance that the Company will be able to maintain its
market share in Flash memory devices or that price declines may not accelerate
as the market develops and as new competitors emerge. A decline in the Company's
Flash memory device business could have a material adverse effect on the
Company.
Manufacturing
Capacity. The Company's manufacturing facilities have been underutilized from
- --------
time to time as a result of reduced demand for certain of the Company's
products. The Company's operations related to microprocessors have been
particularly affected by this situation. Any future underutilization of the
Company's manufacturing facilities could have a material adverse effect on the
Company. The Company plans to increase its manufacturing capacity by making
significant capital investments in Fab 25 and in Fab 30 in Dresden, Germany. In
addition, FASL has begun construction of a second Flash memory device
manufacturing facility (FASL II). There can be no assurance that the industry
projections for future growth upon which the Company is basing its strategy of
increasing its manufacturing capacity will prove to be accurate. If demand for
the Company's products does not increase, underutilization of the Company's
manufacturing facilities will likely occur and have a material adverse effect on
the Company.
There have been situations in the past in which the Company's manufacturing
facilities were inadequate to enable the Company to meet demand for certain of
its products. In addition to having its own fabrication facilities, AMD has
foundry arrangements for the production of its products by third parties. Any
inability of AMD to generate sufficient manufacturing capabilities to meet
demand, either in its own facilities or through foundry or similar arrangements
with others, could have a material adverse effect on the Company.
Process Technology. Manufacturers of integrated circuits are constantly seeking
- ------------------
to improve the process technologies used to manufacture their products. In order
to remain competitive, the Company must make continuing substantial investments
in improving its process technologies. In particular, the Company has made and
continues to make significant research and development investments in the
18
technologies and equipment used to fabricate its microprocessor products and its
Flash memory devices. Portions of these investments might not be recoverable if
the Company's microprocessors fail to gain market acceptance or if the market
for its Flash memory products should significantly deteriorate. This could have
a material adverse effect on the Company. In addition, any inability of the
Company to remain competitive with respect to process technology could have a
material adverse effect on the Company.
Manufacturing Interruptions. Any substantial interruption with respect to any of
- ---------------------------
the Company's manufacturing operations, either as a result of a labor dispute,
equipment failure or other cause, could have a material adverse effect on the
Company. The Company may also be materially adversely affected by fluctuations
in manufacturing yields.
Essential Manufacturing Materials. Certain raw materials used by the Company in
- ---------------------------------
the manufacture of its products are available from a limited number of
suppliers. For example, several types of the integrated circuit packages
purchased by AMD, as well as by the majority of other companies in the
semiconductor industry, are principally supplied by Japanese companies.
Shortages could occur in various essential materials due to interruption of
supply or increased demand in the industry. If AMD were unable to procure
certain of such materials, it would be required to reduce its manufacturing
operations which could have a material adverse effect on the Company. To date,
AMD has not experienced significant difficulty in obtaining necessary raw
materials.
International Manufacturing. Nearly all product assembly and final testing of
- ---------------------------
the Company's products are performed at the Company's manufacturing facilities
in Penang, Malaysia; Bangkok, Thailand; and Singapore; or by subcontractors in
Asia. AMD has a 50 year land lease in Suzhou, China, to be used for the
construction and operation of an additional assembly and test facility. Foreign
manufacturing and construction of foreign facilities entail political and
economic risks, including political instability, expropriation, currency
controls and fluctuations, changes in freight and interest rates, and loss or
modification of exemptions for taxes and tariffs. For example, if AMD were
unable to assemble and test its products abroad, or if air transportation
between the United States and the Company's overseas facilities were disrupted,
there could be a material adverse effect on the Company.
Other Risk Factors
Debt Restrictions. The Credit Agreement and the Indenture related to the
- -----------------
Senior Secured Notes contain significant covenants that limit the Company's and
its subsidiaries' ability to engage in various transactions and require
satisfaction of specified financial performance criteria. In addition, the
occurrence of certain events (including, without limitation, failure to comply
with the foregoing covenants, material inaccuracies of representations and
warranties, certain defaults under or acceleration of other indebtedness and
events of bankruptcy or insolvency) would, in
19
certain cases after notice and grace periods, constitute events of default
permitting acceleration of indebtedness. The limitations imposed by the Credit
Agreement and the Indenture are substantial, and failure to comply with such
limitations could have a material adverse effect on the Company. In addition,
the agreements entered into by AMD Saxony in connection with the Dresden
Facility loan substantially prohibit the transfer of assets from AMD Saxony to
the Company, which will prevent the Company from utilizing current or future
assets of AMD Saxony other than to satisfy obligations of AMD Saxony.
Dependence on Third Parties for Programmable Logic Software. Customers utilizing
- -----------------------------------------------------------
programmable logic devices must use special software packages, generally
provided by the suppliers of the programmable logic devices, to program these
devices. AMD provides its programmable logic device customers with software
which it licenses from third parties and is dependent upon third parties for
the software and continuing improvements in the quality of the software. No
assurance can be made that the Company will be able to maintain its existing
relationships with these third parties. An inability of AMD to continue to
obtain appropriate software and improvements from third parties or to develop
its own software internally could materially adversely affect the Company's
Vantis business, including the timing of new or improved product introductions,
which could have a material adverse effect on the Company.
Technological Change and Industry Standards. The market for the Company's
- -------------------------------------------
products is generally characterized by rapid technological developments,
evolving industry standards, changes in customer requirements, frequent new
product introductions and enhancements, short product life cycles and severe
price competition. The establishment of industry standards is a function of
market acceptance. Currently accepted industry standards may change. The
Company's success depends substantially upon its ability, on a cost-effective
and timely basis, to continue to enhance its existing products and to develop
and introduce new products that take advantage of technological advances and
adhere to evolving industry standards. An unexpected change in one or more of
the technologies related to its products, in market demand for products based on
a particular technology or on accepted industry standards could have a material
adverse effect on the Company. There can be no assurance that AMD will be able
to develop new products in a timely and satisfactory manner to address new
industry standards and technological changes, or to respond to new product
announcements by others, or that any such new products will achieve market
acceptance.
Product Incompatibility. While AMD submits its products to rigorous internal and
- -----------------------
external testing, there can be no assurance that the Company's products will be
compatible with all industry-standard software and hardware. Any inability of
the Company's customers to achieve such compatibility or compatibility with
other software or hardware after the Company's products are shipped in volume
could have a material adverse effect on the Company. There can be no assurance
that AMD will be successful in correcting any such compatibility problems that
are discovered or
20
that such corrections will be acceptable to customers or made in a timely
manner. In addition, the mere announcement of an incompatibility problem
relating to the Company's products could have a material adverse effect on the
Company.
Competition. The IC industry is intensely competitive and, historically, has
- -----------
experienced rapid technological advances in product and system technologies
together with substantial price reductions in maturing products. After a product
is introduced, prices normally decrease over time as production efficiency and
competition increase, and as a successive generation of products is developed
and introduced for sale. Technological advances in the industry result in
frequent product introductions, regular price reductions, short product life
cycles and increased product performance. Competition in the sale of ICs is
based on performance, product quality and reliability, price, compatibility with
industry standards, software and hardware compatibility, marketing and
distribution capability, brand recognition, financial strength and ability to
deliver in large volumes on a timely basis.
Fluctuations in Operating Results. The Company's operating results are subject
- ---------------------------------
to substantial quarterly and annual fluctuations due to a variety of factors,
including the effects of competition with Intel in the microprocessor industry,
competitive pricing pressures, anticipated decreases in unit average selling
prices of the Company's products, production capacity levels and fluctuations in
manufacturing yields, availability and cost of products from the Company's
suppliers, the gain or loss of significant customers, new product introductions
by AMD or its competitors, changes in the mix of products sold and in the mix of
sales by distribution channels, market acceptance of new or enhanced versions of
the Company's products, seasonal customer demand, the timing of significant
orders and the timing and extent of product development costs. In addition,
operating results could be adversely affected by general economic and other
conditions causing a downturn in the market for semiconductor devices, or
otherwise affecting the timing of customer orders or causing order cancellations
or rescheduling. The Company's customers may change delivery schedules or cancel
orders without significant penalty. Many of the factors listed above are
outside of the Company's control. These factors are difficult to forecast, and
these or other factors could materially adversely affect the Company's quarterly
or annual operating results.
Order Revision and Cancellation Policies. AMD manufactures and markets standard
- ----------------------------------------
lines of products. Sales are made primarily pursuant to purchase orders for
current delivery, or agreements covering purchases over a period of time, which
are frequently subject to revision and cancellation without penalty. As a
result, AMD must commit resources to the production of products without having
received advance purchase commitments from customers. Any inability to sell
products to which it had devoted significant resources could have a material
adverse effect on the Company. Distributors typically maintain an inventory of
the Company's products. Pursuant to the Company's agreements with distributors,
AMD protects its distributors' inventory of the Company's products against price
reductions as well as
21
products that are slow moving or have been discontinued. These agreements, which
may be canceled by either party on a specified notice, generally contain a
provision for the return of the Company's products in the event the agreement
with the distributor is terminated. The price protection and return rights AMD
offers to its distributors may materially adversely affect the Company.
Key Personnel. The Company's future success depends upon the continued service
- -------------
of numerous key engineering, manufacturing, sales and executive personnel. There
can be no assurance that AMD will be able to continue to attract and retain
qualified personnel necessary for the development and manufacture of its
products. Loss of the service of, or failure to recruit, key engineering design
personnel could be significantly detrimental to the Company's product
development programs or otherwise have a material adverse effect on the Company.
Product Defects. One or more of the Company's products may possibly be found to
- ---------------
be defective after AMD has already shipped such products in volume, requiring a
product replacement, recall, or a software fix which would cure such defect but
impede performance. Product returns could impose substantial costs on AMD and
have a material adverse effect on the Company.
Intellectual Property Rights; Potential Litigation. Although the Company
- --------------------------------------------------
attempts to protect its intellectual property rights through patents,
copyrights, trade secrets, trademarks and other measures, there can be no
assurance that the Company will be able to protect its technology or other
intellectual property adequately or that competitors will not be able to develop
similar technology independently. There can be no assurance that any patent
applications that the Company may file will be issued or that foreign
intellectual property laws will protect the Company's intellectual property
rights. There can be no assurance that any patent licensed by or issued to the
Company will not be challenged, invalidated or circumvented or that the rights
granted thereunder will provide competitive advantages to the Company.
Furthermore, there can be no assurance that others will not independently
develop similar products, duplicate the Company's products or design around the
Company's patents and other rights.
From time to time, AMD has been notified that it may be infringing intellectual
property rights of others. If any such claims are asserted against the Company,
the Company may seek to obtain a license under the third party's intellectual
property rights. AMD could decide, in the alternative, to resort to litigation
to challenge such claims. Such challenges could be extremely expensive and time-
consuming and could materially adversely affect the Company. No assurance can be
given that all necessary licenses can be obtained on satisfactory terms, or that
litigation may always be avoided or successfully concluded.
Environmental Regulations. The failure to comply with present or future
- -------------------------
governmental regulations related to the use, storage, handling, discharge or
disposal
22
of toxic, volatile or otherwise hazardous chemicals used in the manufacturing
process could result in fines being imposed on the Company, suspension of
production, alteration of the Company's manufacturing processes or cessation of
operations. Such regulations could require the Company to acquire expensive
remediation equipment or to incur other expenses to comply with environmental
regulations. Any failure by the Company to control the use, disposal or storage
of, or adequately restrict the discharge of, hazardous substances could subject
the Company to future liabilities and could have a material adverse effect on
the Company.
International Sales. AMD derives a substantial portion of its revenues from its
- -------------------
sales subsidiaries located in Europe and Asia Pacific. The Company's
international sales operations entail political and economic risks, including
expropriation, currency controls, exchange rate fluctuations, changes in freight
rates and changes in rates for taxes and tariffs.
Domestic and International Economic Conditions. The Company's business is
- ----------------------------------------------
subject to general economic conditions, both in the United States and abroad. A
significant decline in economic conditions in any significant geographic area
could have a material adverse effect on the Company.
Volatility of Stock Price; Ability to Access Capital. Based on the trading
- ----------------------------------------------------
history of its stock, AMD believes factors such as quarterly fluctuations in the
Company's financial results, announcements of new products by AMD or its
competitors and general conditions in the semiconductor industry have caused and
are likely to continue to cause the market price of AMD common stock to
fluctuate substantially. Technology company stocks in general have experienced
extreme price and volume fluctuations that often have been unrelated to the
operating performance of the companies. This market volatility may adversely
affect the market price of the Company's common stock and consequently limit the
Company's ability to raise capital. In addition, an actual or anticipated
shortfall in revenue, gross margins or earnings from securities analysts'
expectations could have an immediate effect on the trading price of AMD common
stock in any given period.
Earthquake Danger. The Company's corporate headquarters, a portion of its
- -----------------
manufacturing facilities, assembly and research and development activities and
certain other critical business operations are located near major earthquake
fault lines. The Company could be materially adversely affected in the event of
a major earthquake.
23
II. Other Information
Item 1. Legal Proceedings
Advanced Micro Devices, Inc. v. Altera Corporation (Case No. C94-20567-RMW, U.S.
- --------------------------------------------------------------------------------
District Ct., San Jose, California). This litigation, which began in 1994,
- ------------------------------------
involves multiple claims and counterclaims for patent infringement relating to
the Company's and Altera Corporation's programmable logic devices. On June 27,
1996, the jury returned a verdict and found four of the eight patents-in-suit
were licensed to Altera. The parties have stipulated that the court, not a
jury, will decide which of the remaining AMD patents-in-suit fall within the
scope of the license that the jury found. The court has set August 7 and August
8, 1997 for the next phase regarding the remaining patents. Based upon
information presently known to management the Company does not believe that the
ultimate resolution of this lawsuit will have a material adverse effect on the
financial condition or results of operations of the Company.
Intel Corporation v. Advanced Micro Devices, Inc., et al. (Case No. 97-118, D.
- ------------------------------------------------------------------------------
Del.). On March 14, 1997, Intel Corporation (Intel) filed suit against the
- ------
Company and Cyrix Corporation in the United States District Court for the
District of Delaware alleging false designation of origin and false advertising,
trademark infringement and trademark dilution, and deceptive trade practices
arising out of alleged misuse by the Company of the term "MMX," which Intel
claims as a trademark. On April 2, 1997, Intel was denied a temporary
restraining order to prohibit the Company from using the term "MMX" until the
preliminary injunction hearing. In a related matter filed by Intel against the
Company on March 14, 1997, in the regional Court of Braunschweig, Germany (Case
Ref. No. 9 0 89/97), Intel was granted a temporary injunction prohibiting the
Company from using the term "MMX" to identify, advertise or market its
processors. These litigations have now been settled and dismissed. The
settlement gives AMD worldwide rights to use the term MMX in a variety of ways
in the marketing of AMD-K6 processors, and also provides analogous rights to AMD
customers in marketing AMD-K6 processor-based systems. In return, AMD agreed to
acknowledge MMX as an Intel trademark.
24
Item 5. Other Information
On March 11, 1997, the Company, AMD Saxony and bank syndicate representatives
executed definitive agreements relating to the financing of the Dresden
Facility. In addition to the obligations discussed above in Management's
Discussion and Analysis of Results of Operations and Financial Condition, the
agreements require the Company (directly or indirectly) to (1) return all
federal and state government grants, allowances and interest subsidies, or
replace all such subsidies that are not made available, if the Company or AMD
Saxony fails to meet certain material obligations to the Federal Republic of
Germany or the State of Saxony; (2) purchase the output of the Dresden Facility
at transfer prices to be set pursuant to specific formulas, and which adjust
downwards when the Dresden Facility is operating at less than 75% capacity
because of a lack of market demand for the products being fabricated there (the
Company's product purchase obligation can be terminated once the syndicated loan
has been repaid or under circumstances relating to a change of control of AMD
Saxony or the destruction or abandonment of the Dresden Facility); (3) cause AMD
Saxony to undertake bona fide research and development activities at the design
center of the Dresden Facility; and (4) grant a non-exclusive license to AMD
Saxony to use, at the Dresden Facility and in products manufactured at the
Dresden Facility, intellectual property developed at the Dresden design center.
25
Item 6. Exhibits and Reports on Form 8-K
(a). Exhibits *10.48(a) Amendment No. 1 to the C-4 Technology Transfer
and Licensing Agreement, dated as of February
23, 1997, between the Company and International
Business Machine Corporation.
*10.50(a) Syndicated Loan Agreement with Schedules 1, 2
and 17, dated as of March 11, 1997, among AMD
Saxony Manufacturing GmbH, Dresdner Bank AG and
Dresdner Bank Luxembourg S.A.
*10.50(b) Determination Regarding the Request for a
Guarantee by AMD Saxony Manufacturing GmbH.
*10.50(c) AMD Subsidy Agreement, among AMD Saxony
Manufacturing GmbH and Dresdner Bank AG.
*10.50(d) Subsidy Agreement, dated February 12, 1997,
among Sachsische Aufbaubank and Dresdner Bank AG
with Appendix 1, 2a, 2b, 3 and 4.
10.50(e) AMD, Inc. Guaranty, dated as of March 11, 1997,
among the Company and Saxony Manufacturing GmbH
and Dresdner Bank AG.
10.50(f) Sponsors' Support Agreement, dated as of March
11, 1997, among the Company, AMD Saxony Holding
GmbH and Dresdner Bank AG.
10.50(g) Sponsors' Loan Agreement, dated as of March 11,
1997, among the Company, AMD Saxony Holding GmbH
and AMD Saxony Manufacturing GmbH.
10.50(h) Sponsors' Subordination Agreement, dated as of
March 11, 1997, among the Company, AMD Saxony
Holding GmbH, AMD Saxony Manufacturing GmbH and
Dresdner Bank AG.
10.50(i) Sponsors' Guaranty, dated as of March 11, 1997,
among the Company, AMD Saxony Holding GmbH and
Dresdner Bank AG.
26
*10.50(j) AMD Holding Wafer Purchase Agreement, dated as
of March 11, 1997, among the Company and AMD
Saxony Holding GmbH.
*10.50(k) AMD Holding Research, Design and Development
Agreement, dated as of March 11, 1997, among
AMD Saxony Holding GmbH and the Company.
*10.50(l) AMD Saxonia Wafer Purchase Agreement, dated as
of March 11, 1997, among AMD Saxony Holding
GmbH and AMD Saxony Manufacturing GmbH.
*10.50(m) AMD Saxonia Research, Design and Development
Agreement, dated as of March 11 1997, among
AMD Saxony Manufacturing GmbH and AMD
Saxony Holding.
10.50(n) License Agreement, dated March 11, 1997, among
the Company, AMD Saxony Holding GmbH and
AMD Saxony Manufacturing GmbH.
10.50(o) AMD, Inc. Subordination Agreement, dated March
11, 1997, among the Company, AMD Saxony Holding
GmbH and Dresdner Bank AG.
*10.50(p) ISDA Agreement, dated March 11, 1997, among the
Company and AMD Saxony Manufacturing GmbH.
27.1 Financial Data Schedule
* Confidential treatment has been requested as to certain portions of
this Exhibit.
(b). Reports on Form 8-K
The following reports on Form 8-K were filed during the quarter
for which this report is filed:
1. Current Report on Form 8-K dated January 13, 1997 reporting
under Item 5 - Other Events - fourth quarter earnings.
2. Current Report on Form 8-K dated March 13, 1997 reporting
under Item 5 - Other Events - announcement of the Dresden
loan agreement.
27
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly earned this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ADVANCED MICRO DEVICES, INC.
Date: May 13, 1997 By: /s/ Geoffrey Ribar
------------------------------- ------------------
Geoffrey Ribar
Vice President and
Corporate Controller
Signing on behalf of the
registrant and as the principal
accounting officer
28
EXHIBIT INDEX
-------------
Exhibits
- --------
*10.48(a) Amendment No. 1 to the C-4 Technology Transfer and
Licensing Agreement, dated as of February 23, 1997,
between the Company and International Business
Machine Corporation.
*10.50(a) Syndicated Loan Agreement with Schedules 1, 2 and
17, dated as of March 11, 1997, among AMD Saxony
Manufacturing GmbH, Dresdner Bank AG and Dresdner
Bank Luxemborg S.A.
*10.50(b) Determination Regarding the Request for a Guarantee
by AMD Saxony Manufacturing GmbH.
*10.50(c) AMD Subsidy Agreement, among AMD Saxony
Manufacturing GmbH and Dresdner Bank AG.
*10.50(d) Subsidy Agreement, dated February 12, 1997,
among Sachsische Aufbaubank and Dresdner Bank AG
with Apendix 1, 2a, 2b, 3 and 4.
10.50(e) AMD, Inc. Guaranty, dated as of March 11, 1997,
among the Company and Saxony Manufacturing GmbH and
Dresdner Bank AG.
10.50(f) Sponsors' Support Agreement, dated as of March 11,
1997, among the Company, AMD Saxony Holding GmbH
and Dresdner Bank AG.
10.50(g) Sponsors' Loan Agreement, dated as of March 11,
1997, among the Company, AMD Saxony Holding GmbH
and AMD Saxony Manufacturing GmbH.
10.50(h) Sponsors' Subordination Agreement, dated as of
March 11, 1997, among the Company, AMD Saxony
Holding GmbH, AMD Saxony Manufacturing GmbH and
Dresdner Bank AG.
10.50(i) Sponsors' Guaranty, dated as of March 11, 1997,
among the Company, AMD Saxony Holding GmbH and
Dresdner Bank AG.
*10.50(j) AMD Holding Wafer Purchase Agreement, dated as of
March 11, 1997, among the Company and AMD Saxony
Holding GmbH.
*10.50(k) AMD Holding Research, Design and Development
Agreement, dated as of March 11, 1997, among AMD
Saxony Holding GmbH and the Company.
*10.50(l) AMD Saxonia Wafer Purchase Agreement, dated as of
March 11, 1997, among AMD Saxony Holding GmbH and
AMD Saxony Manufacturing GmbH.
*10.50(m) AMD Saxonia Research, Design and Development
Agreement, dated as of March 11, 1997, among AMD
Saxony Manufacturing GmbH and AMD Saxony Holding.
10.50(n) License Agreement, dated March 11, 1997, among the
Company, AMD Saxony Holding GmbH and AMD Saxony
Manufacturing GmbH.
10.50(o) AMD, Inc. Subordination Agreement, dated March 11,
1997, among the Company, AMD Saxony Holding GmbH
and Dresdner Bank AG.
*10.50(p) ISDA Agreement, dated March 11, 1997, among the
Company and AMD Saxony Manufacturing GmbH.
27.1 Financial Data Schedule
* Confidential treatment has been requested as to certain portions of this
Exhibit.