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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the fiscal year ended December 31, 1995.
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
(State or other jurisdiction of incorporation or organization)
94-1692300
(IRS Employer Identification Number)
One AMD Place
Sunnyvale, California
(Address of principal executive offices)
94086 (Zip Code)
Registrant's telephone number, including area code: (408) 732-2400
Securities registered pursuant to Section 12(b) of the Act:
(Title of each class) (Name of each exchange on
which registered)
$.01 Par Value Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
---
Aggregate market value of the voting stock
held by non-affiliates as of February 26, 1996.
$2,623,543,765
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
133,337,618 shares as of February 26, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Annual Report to Stockholders for the fiscal year ended
December 31, 1995, are incorporated into Parts I, II and IV hereof.
(2) Portions of the Proxy Statement dated on or before April 29, 1996, for the
Annual Meeting of Stockholders to be held on April 25, 1996, are
incorporated into Part III hereof.
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PART I
ITEM 1. BUSINESS
Cautionary Statement Regarding Forward Looking Statements
The statements in Part I of this Form 10-K that are forward looking
are based on current expectations, and actual results may differ materially.
The forward looking statements include the future impact of the Advanced Micro
Devices, Inc. (AMD) merger with NexGen, Inc.; future business prospects for
microprocessor and Flash memory products; proposed and under construction
projects in Japan, Germany and China; the use of external foundries for
manufacturing; and the pricing and certification of K86 products. Forward
looking statements involve numerous risks and uncertainties that could cause
actual results to differ materially, including, but not limited to, the timely
development and market acceptance of new products; the impact of competitive
products and pricing; the timely development of wafer fabrication process
technologies; the effect of changing general and industry specific economic
conditions; business conditions and growth in the personal computer market;
continued demand for AMD's microprocessor and Flash memory products; AMD's
ability to access external sources of capital; and such risks and uncertainties
detailed from time-to-time in AMD's Securities and Exchange Commission reports
and filings, including Item 7, Management's Discussion and Analysis of Results
of Operations and Financial Condition of this Form 10-K and the Registration
Statement on Form S-4 (Registration Statement No. 33-64911) filed in connection
with the merger with NexGen, Inc.
General
Advanced Micro Devices, Inc. was incorporated under the laws of the state
of Delaware on May 1, 1969. The mailing address of AMD's executive offices is
One AMD Place, P.O. Box
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3453, Sunnyvale, California 94088-3453, and the telephone number is (408) 732-
2400. Unless otherwise indicated, the terms ''the Corporation'' and ''AMD'' in
this report refer to Advanced Micro Devices, Inc. and its subsidiaries.
AMD is a semiconductor manufacturer with manufacturing facilities in the
U.S. and Asia, and sales offices throughout the world. Focusing on the personal
and networked computing and communications markets, AMD is a global company that
derives more than half its revenues from international sales, mainly in Europe
and Asia. The Corporation provides programmable products in concert with
applications solutions to the manufacturers of equipment for personal and
networked computation and communications.
Merger with NexGen, Inc.
On January 17, 1996, the Corporation acquired NexGen, Inc. (NexGen) in a
tax-free reorganization in which NexGen was merged directly into the Corporation
(the Merger). The Merger will be accounted for under the pooling-of-interests
method. The stockholders of NexGen received eight-tenths (0.8) of a share of
the common stock of AMD for each outstanding share of the common stock of
NexGen.
The Merger resulted in substantial dilution of the interests of AMD's
stockholders holding stock prior to the Merger. The 28,549,053 shares of AMD
common stock issued to NexGen's stockholders represented approximately 21.5% of
the approximately 133,074,340 shares of AMD common stock outstanding immediately
after the Merger. In addition, AMD undertook to issue up to 4,541,528 shares of
AMD common stock to fulfill NexGen's obligations with respect to outstanding
options, warrants and rights. Assuming the issuance of all of such shares, those
shares together with the shares of AMD common stock issued to the prior
stockholders of NexGen in the Merger would represent approximately 24% of the
approximately 137,615,868 shares of AMD common stock which would then be
outstanding. As NexGen has not been
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profitable since its inception in 1986, the Merger has resulted in an immediate
decrease in the earnings per share attributable to each share of AMD common
stock outstanding prior to the Merger. The dilution resulting from the Merger
could reduce the earnings per share of AMD common stock unless earnings growth
or other business benefits sufficient to offset the effect of the issuance can
be achieved. There can be no assurance that such benefits will be achieved.
AMD will incur charges to operations currently estimated to be $10.0
million in the first quarter of 1996, to reflect transaction fees and costs
incident to the Merger. Such fees and costs include investment banking, legal,
accounting, financial, printing and other related charges. These amounts are
preliminary estimates and are subject to change when the exact amounts are
finally determined. Additional and unanticipated expenses may be incurred
relating to the integration of the businesses of AMD and NexGen, including the
integration of microprocessor products and the retargeting of NexGen products to
AMD's manufacturing processes. Although AMD expects that over time the savings
from elimination of duplicative expenses as well as other efficiencies related
to the integration of the businesses may offset additional expenses, there can
be no assurance that such benefit will be achieved in the near term or at all.
AMD will initially continue the operations of NexGen at its current
location in Milpitas, California. The primary mission will be the development
of high performance Microsoft Windows(R)-compatible microprocessors in the AMD
K86(tm) Superscalar Series. S. Atiq Raza, former President and Chief Executive
Officer of NexGen, will direct the operations. Mr. Raza has been appointed to
the Board of Directors of the Corporation and has been named Corporate Vice
President and Chief Technical Officer of AMD.
AMD effected the Merger with the expectation that it would result in
beneficial synergies. Achieving the anticipated benefits of the Merger will
depend in part upon whether the integration of the two companies' businesses is
accomplished in an efficient and effective manner, and there can be no assurance
that this will occur. The successful combination of
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companies in the high technology industry may be more difficult to accomplish
than in other industries. The combination of the companies will require, among
other matters, integration of AMD's and NexGen's respective engineering
personnel and product offerings, coordination of their sales and marketing and
research and development efforts and implementation of the manufacturing of
NexGen's products in AMD's facilities. There can be no assurance that the
integration will be accomplished smoothly or successfully. The difficulties of
the integration may be increased by the necessity of coordinating geographically
separated organizations. The integration of certain operations will require the
dedication of management resources which may divert the efforts of AMD personnel
from other matters. The inability of management to integrate the operations of
the two companies successfully could have a material adverse effect on the
business and results of operations of the Corporation. In addition, as commonly
occurs with mergers of technology companies, aggressive competitors may
undertake formal initiatives during the integration phase to attract customers
and to recruit key employees through various incentives.
Prior to the Merger, NexGen granted limited manufacturing rights regarding
certain of its current and future products, including the Nx586(R) and Nx686
(tm) microprocessors, to IBM and Compaq Computer Corporation (Compaq). The
rights of IBM and Compaq to produce NexGen products for their own use and the
rights of IBM to produce limited volumes of NexGen products for sale to third
parties could reduce the potential market for NexGen products produced by AMD,
the profit margin achievable with respect to such products, or both.
Products
AMD began over twenty-five years ago as an alternate-source manufacturer of
integrated circuits originally developed by other suppliers. Over time, AMD has
become a manufacturer of proprietary products. The Corporation has made a
significant investment in research and development, which has contributed to its
becoming a leader in manufacturing and process
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technology within the integrated circuit industry. The Corporation plans to
continue its significant commitment to research and development.
The Corporation's products primarily consist of industry-standard
integrated circuits, as opposed to custom circuits designed for a single
customer. While a substantial portion of AMD's products are standard items, its
products are increasingly designed for specific applications such as
telecommunications, personal computers, engineering workstations, multimedia or
local area networks. As a service to certain major customers, the Corporation
modifies portions of these application-specific devices to meet specific
customer needs. The resulting devices are produced in significant volumes for
such customers.
The Corporation is focusing its product development activities in two
areas: (1) Computation Products, including x86, K86 Superscalar and other
microprocessors, and I/O network products; and (2) Communications and
Components, including voice/data communications (World Network(R)), and high-
volume products such as programmable logic, non-volatile memory devices and
embedded processors for personal computers. Personal computer (PC) products
include microprocessors used in computers. High-volume products include Flash
memory, Erasable Programmable Read-Only Memories (EPROMs), programmable logic
devices (PLDs) and embedded processors. The Corporation's products are
typically subject to intense competition, in an industry characterized by rapid
technological advances and innovation.
Since most of the Corporation's products are used in personal computers and
related peripherals, the Corporation's future growth is closely tied to the
performance of the PC industry. From time to time, the PC industry has
experienced significant downturns, often in connection with, or in anticipation
of, declines in general economic conditions. These downturns have been
characterized by diminished product demand, production overcapacity and
resultant accelerated erosion of average selling prices. AMD's business could
be materially and adversely affected by future industry-wide fluctuations in the
PC marketplace.
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Computation Products
X86 Microprocessors. A microprocessor is the central processing unit (CPU)
of a computer. A microprocessor processes system data and controls input/output,
peripheral and memory devices. A microprocessor may also be used in connection
with other processors such as microcontrollers, which are embedded
microprocessors contained in peripherals or other coprocessors which perform
certain functions such as arithmetic calculations. The x86 architecture,
originally developed by Intel Corporation (Intel), has been the leading
architecture for personal computer microprocessors. AMD's x86 microprocessor
strategy has been to serve as an alternative source for x86 microprocessors,
introducing products with higher performance at comparable prices. Since 1993
the Corporation has been licensed by Microsoft, the personal computer industry's
leading supplier of operation systems software, to use the Microsoft(R)
Windows(R) -compatible logo on AMD's microprocessor packaging and advertising to
indicate that the Corporation's product is compatible with such software. The
Corporation believes that this approach is consistent with what it perceives to
be the computer industry's shift from an emphasis on hardware compatibility to
software compatibility.
In 1995, Am486(R) microprocessor sales decreased slightly primarily due to
average selling price declines, partially offset by increases in unit sales.
Am486 microprocessor products contributed a significant portion of the
Corporation's revenues and profits in 1994 and 1995. Price declines are
anticipated to continue in 1996 while unit shipments may be flat to down
depending on market demand. The Corporation, therefore, expects Am486
microprocessor revenues and profits in 1996 to be below those of 1995 as the
product life cycle of the fourth-generation x86 products draws to a close.
K86(tm) Microprocessors. The Corporation expects that it will offer in 1996
its next generation of microprocessor products known as the K86 microprocessors,
based on superscalar RISC-type architecture. The K86 products are designed to be
compatible with operating system
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software such as Microsoft Windows. The K86 products are not designed to use any
Intel copyrighted microcode; however, they do rely on patent licenses from
several companies, including Intel.
AMD expects 1996 to be a transitional year in the development of its next
generation of microprocessor products and believes that the acquisition of
NexGen is important to the development and introduction of K86 products. Future
generations of K86 products will face competition not only from x86 products
manufactured by Intel and others, but also from products based upon an
increasing number of different architectures which have been developed or are
under development by Hewlett Packard Company, IBM, Motorola, Inc., Sun
Microsystems, Inc. and other manufacturers of integrated circuits. No assurance
can be given that the K86 products will achieve market acceptance or be
introduced before the average selling prices of comparable products have
materially declined from their initial levels.
AMD has an agreement with Compaq under which it supplies Compaq with
microprocessor products, primarily the Am486 products; however, the agreement
does not require Compaq to purchase microprocessor products from AMD. AMD
believes that Compaq will consider the purchase of K86 microprocessors when they
become available. No assurance can be given that any purchases will be made or,
if they are, that they will not be terminated by Compaq due to the availability
of competing microprocessor products.
AMD plans to develop and produce NexGen's sixth-generation design as the
AMD-K6(tm) microprocessor. AMD does not expect any sales of the AMD-K6 products
in 1996.
Adherence to industry standards is important to AMD's marketing strategy
and product development effort. The establishment of standards is a function of
user acceptance, and such standards are therefore subject to change. Customer
acceptance of AMD's K86 products will depend upon the continued demand for x86-
based personal computers, including the continued
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development of application software programs for such computers. There can be no
assurance of the continued acceptance of the x86 standard or that software
developers will continue to develop software compatible with this standard.
For a discussion of the risk factors related to the Corporation's
microprocessor products, please see the ''Cautionary Statements and Risk
Factors'' section of Management's Discussion and Analysis of Results of
Operations and Financial Condition contained in the 1995 Annual Report to
Stockholders.
Personal Computer I/O and Local Area Networks. The Corporation offers a
range of integrated circuits that work with central processing units to manage
selected input/output system functions such as control disk drives, keyboards,
printers and communications and networking devices. The Corporation also
supplies a range of products specially designed to add additional functions,
improve performance and reduce costs in computer peripheral, interface or mass
storage applications. These are generally special-purpose products which are
designed for a specific application. In the case of some large customers, these
products are tailored for specific customer needs.
Communications and Components
Networks and Voice/Data Communications. The Corporation provides a wide
variety of products for a broad spectrum of connectivity solutions. These
include applications in central office switches, PBX equipment, voice/data
terminals, and different performance classes of Local Area Networks (LANs) used
to connect workstations and personal computers. In addition to providing the
integrated circuits for these applications, the Corporation also provides
various forms of hardware evaluation tools, development software and interface
software. The Corporation offers several Ethernet products designed for use on
personal computer motherboards and add-in cards. AMD is also a supplier of
chipsets to support the 100-megabit-
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per-second Fiber Distributed Data Interface (FDDI) local area network standard
which is primarily used in network backbones and to connect high performance
workstations and servers. The Corporation has also developed, in cooperation
with systems manufacturers, a family of devices for the 10Base-T standard, which
allows transmission of data using Ethernet protocols on twisted-pair wiring,
rather than on the more expensive coaxial cable.
The Subscriber Line Interface Circuit (SLIC) and the Subscriber Line Audio-
Processing Circuit (SLAC(tm)) are an integral part of a design for digital
telephone switching equipment. The SLIC connects the user's telephone wire to
the telephone company's digital switching equipment. The SLAC is a coder/decoder
which converts analog voice signals to a digital format and back.
Non-Volatile/Volatile Memories. Memory components are used to store
computer programs and data entered prior to or during system operation. There
are two types of memory storage capability: volatile and non-volatile. Volatile
memories include Dynamic and Static Random Access Memories (DRAMs and SRAMs).
Non-volatile memories retain data when system power is shut off, while volatile
memories do not. Non-volatile memories include EPROMs and Flash memories.
The Corporation's memory products are primarily non-volatile memories used
in a wide range of applications such as PCs, workstations, peripherals, cellular
telephones, instrumentation, PBX equipment, avionics and a variety of other
equipment where programmed data storage is needed. The Corporation has
developed a family of Flash memories to address the emerging market for PC
memory cards, solid-state disks, cellular communications and networking
applications. The Corporation offers Flash memory devices up to 16 megabits in
density. During 1995, Flash memory devices contributed, and are expected to
continue to contribute in 1996, a significant and increased portion of the
Corporation's revenues and profits. The Corporation also offers a family of
CMOS EPROM devices from 64K to 4 megabits in density.
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Programmable Logic Devices (PLDs). The Corporation is a supplier of high-
speed, field-programmable integrated circuits. PLDs generally afford a user
increased design flexibility relative to standard logic devices. The initial
design time and cost in customizing a programmable device is significantly less
than designing a custom integrated circuit or customizing a gate array logic
device. The Corporation is in the process of transferring its operations
relating to the design, development and marketing of PLDs to a wholly-owned
subsidiary dedicated solely to PLDs. The subsidiary will rely upon the
Corporation for manufacturing services.
Embedded Control Microprocessors. The Corporation's proprietary
Am29000(R) family of RISC microprocessors is used in applications which
include high-performance laser printer controllers, high-resolution graphics
controllers, communications controllers and accelerator cards. Although the
Corporation has discontinued development of new Am29000 products, it continues
to produce existing ones. The Corporation will develop new products for the
embedded control microprocessor market based on AMD's x86 microprocessors.
Marketing and Sales
AMD's products are marketed and sold under the AMD(R) trademark. AMD
markets and sells its products primarily to a broad base of original equipment
manufacturers (OEMs) of computation and communication equipment. No single OEM
customer accounted for more than ten percent (10%) of sales during the fiscal
year ended December 31, 1995. One of AMD's distributors, Arrow Electronics,
Inc., accounted for approximately twelve percent (12%) of net sales. AMD
employs a direct sales force through its principal facilities in Santa Clara
County, California, and field sales offices throughout the United States and
abroad (primarily Europe and the Asia-Pacific Basin). AMD also sells its
products through third-party distributors and independent representatives in
both domestic and international markets pursuant to nonexclusive agreements.
The distributors also sell products manufactured by AMD's competitors, including
those products for which AMD is an alternate source.
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Distributors typically maintain an inventory of AMD's products. Pursuant
to the Corporation's agreements with the distributors, AMD protects its
distributors' inventory of AMD's products against price reductions as well as
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 AMD'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 AMD's operating results. (See
Note 2 of Notes to Consolidated Financial Statements contained in the 1995
Annual Report to Stockholders.)
AMD derives a substantial portion of its revenues from its sales
subsidiaries located in Europe and the Pacific Rim. AMD subsidiaries have
offices in Australia, Belgium, Canada, China, Finland, France, Germany, Hong
Kong, Italy, Japan, Korea, Scotland, Singapore, Sweden, Switzerland, Taiwan, and
the United Kingdom. (See Note 12 of Notes to Consolidated Financial Statements
contained in the 1995 Annual Report to Stockholders.) The international sales
force also works with independent sales representatives and distributors in
approximately 32 countries, including those where AMD has sales subsidiaries.
AMD's international sales operations entail political and economic risks,
including expropriation, currency controls, exchange fluctuations, changes in
freight rates, and changes in rates and exemptions for taxes and tariffs.
While AMD derives more than half of its revenues from international sales,
only a portion of AMD's international sales are denominated in foreign
currencies. The Corporation enters into foreign exchange forward contracts to
buy and sell currencies as economic hedges of the Corporation's foreign net
monetary asset position including the Corporation's liabilities for products
purchased from Fujitsu AMD Semiconductor Limited (FASL). The hedging
transactions in 1995 were denominated in lira, yen, French franc, deutsche mark,
and pound sterling. The maturities of these contracts are generally short-term
in nature. (For more
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information, see Item 7, Footnotes 2 and 3, Management's Discussion and Analysis
of Results of Operations and Financial Condition.)
AMD'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 upon the
results of AMD's operations and financial condition.
Backlog
AMD manufactures and markets standard lines of products. Consequently, a
significant portion of its sales are made from inventory on a current basis.
Sales are made primarily pursuant to (1) purchase orders for current delivery,
or (2) agreements covering purchases over a period of time, which are frequently
subject to revision and cancellation. Generally, in light of current industry
practice and experience, AMD does not believe that such agreements provide
meaningful backlog figures or are necessarily indicative of actual sales for any
succeeding period.
Competition
The markets for AMD's products are characterized by rapid innovation and
technological developments, evolving industry standards, changes in customer
requirements, frequent new product introductions and enhancements and short
product life cycles. AMD's success substantially depends 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. An unexpected change in one or more of the technologies related to
its products or in market demand for products based on a particular technology
could have a material adverse effect on AMD's results of operations or financial
condition. There can be no assurance that AMD will be able to develop new
products in a timely and satisfactory manner to
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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.
Historically, the semiconductor industry has experienced rapid
technological advances 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 a successive generation of
products is developed and introduced for sale. AMD's future revenues and
profits may continue to be adversely affected by price reductions by Intel and
other competitors.
Numerous firms compete with AMD in the manufacture and sale of integrated
circuits. Some of these firms have resources greater than those of AMD and do
not depend upon integrated circuits as their principal source of revenue. There
is also significant captive production by certain large users of integrated
circuits, such as manufacturers of computers, telecommunications equipment and
consumer electronics products.
AMD competes for integrated circuit market share with, among others, Intel,
Texas Instruments, Motorola, National Semiconductor, IBM, Philips, Nippon
Electric Co., SGS-Thomson, Hitachi, Toshiba, Fujitsu Limited (Fujitsu),
Matsushita, Mitsubishi, Samsung, Hyundai and Siemens, all of whom are making
active efforts to increase their respective and collective worldwide market
shares. (For more information concerning Fujitsu, see the discussion on the
joint venture with Fujitsu below.) Intel, in particular, has long held a
dominant position in the market for microprocessors used in PCs. Intel's
dominant market position has to date allowed it to set x86 microprocessor
standards and thus dictate the type of product the market requires of Intel's
competitors. In addition, Intel'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 who are forced to reduce prices to maintain competitiveness. AMD
expects Intel to continue to spend substantial
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sums on research and development, on new manufacturing facilities, and to
maintain its dominant position through advertising campaigns designed to
engender brand loyalty to Intel among PC purchasers. As long as Intel remains in
this dominant position, its product introduction schedule and product pricing
strategy may have a material adverse effect on AMD's business, operating results
and financial condition.
With one exception, the above-mentioned competitors are either
substantially larger in both gross sales and total assets than AMD or are part
of larger corporate enterprises to whose resources, financial and otherwise, the
competitors have access. In addition to the above, many other companies
dedicated to only one or two process technologies and product types compete with
the Corporation in those technologies and product types.
Research and Development
The Corporation's expenses for research and development in 1993, 1994 and
1995, were $262,802,000, $279,984,000 and $397,555,000, respectively. Such
expenses represented 15.9%, 13.1%, and 16.4% of sales in 1993, 1994 and 1995,
respectively. AMD's research and development expenses are charged to operations
as incurred. Most of AMD's research and development personnel are integrated
into the engineering staff.
Manufacturing
The Corporation's wafer fabrication activities are currently conducted at
AMD's facilities in California and Texas. AMD also has formed a joint venture
and has entered into foundry agreements for the manufacture of integrated
circuits.
AMD Facilities. The Corporation's 900,000 square foot submicron
semiconductor manufacturing facility in Austin, Texas (Fab 25), began volume
production in its first phase in
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late 1995. The Corporation presently estimates that the cost of this facility
will be approximately $1.7 billion when fully equipped. The Corporation is
currently planning to construct an 875,000 square foot submicron wafer
fabrication and design facility in Dresden, Germany at a presently estimated
cost of approximately $1.5 billion over the next five years before German
government financing. Groundbreaking on the new facility is expected to occur in
the second half of 1996.
Joint Venture with Fujitsu Limited. In 1993, AMD and Fujitsu formed a
joint venture, Fujitsu AMD Semiconductor Limited (FASL), for the development and
manufacture of integrated circuits. Through FASL, the two companies have
constructed and are operating an $800 million wafer fabrication facility in
Aizu-Wakamatsu, Japan, to produce non-volatile memory devices such as Flash
memories and EPROMs. The facility began volume production in the first quarter
of 1995, and utilizes eight-inch wafer processing technologies capable of
producing products with geometries of one-half (0.5) micron or smaller.
Currently, the primary mission of FASL is the production of Flash memory
devices. AMD and Fujitsu will not independently produce Flash memory and EPROM
products with geometries of one-half (0.5) micron or smaller outside of the
joint venture.
In the third quarter of 1995, FASL approved construction of a second Flash
memory fab (FASL II) at a site contiguous to the existing facility.
Groundbreaking on the new facility occurred in the first quarter of 1996. The
planned $1.1 billion in capital expenditures for FASL II construction is
expected to be funded by cash anticipated to be generated from FASL operations
and, if necessary, bank borrowings by FASL. However, in the event that FASL is
unable to secure the necessary funds for FASL II, AMD is required to contribute
cash or guarantee third party loans in proportion to its 49.95 percentage
interest in FASL. The planned FASL II costs are denominated in yen and,
therefore, are subject to change due to foreign exchange rate fluctuations.
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In connection with FASL, AMD and Fujitsu have entered into various joint
development, cross-license and investment arrangements. Accordingly, AMD and
Fujitsu will provide their product designs and process and manufacturing
technologies to FASL. In addition, both companies will collaborate in
developing manufacturing processes and designing integrated circuits for FASL.
The right of each company to use the licensed intellectual property of the other
with respect to certain products is limited to certain geographic areas.
Consequently, AMD's ability to sell certain products incorporating Fujitsu
intellectual property, whether or not produced by FASL, is also limited in
certain territories, including the United Kingdom and Japan.
Foundries. AMD has foundry arrangements with third parties for the
production of products other than microprocessor and Flash products and may
increase its use of such foundry arrangements in the future.
If AMD is unable to generate sufficient manufacturing capabilities in its
own facilities or through foundry or similar arrangements with others, AMD may
not be able to produce sufficient products to meet demand. This could have an
adverse effect on AMD's results of operations. AMD anticipates that NexGen's
products and technology acquired in the Merger will eventually be manufactured
by AMD. There can be no assurance that AMD's manufacturing facilities and
processes will be compatible with the manufacturing of NexGen's products without
substantial reconfiguration, the timing of which might adversely affect the
results of AMD's operations and financial condition. If any substantial
interruption were to occur with respect to any of AMD's manufacturing
operations, either as a result of a labor dispute, equipment failure or other
cause, there could be a material adverse effect on AMD's results of operations.
AMD's operating results may also be materially adversely affected by
fluctuations in manufacturing yields.
Assembly and Testing. Nearly all product assembly and final testing are
performed at AMD's manufacturing facilities in Penang, Malaysia; Singapore; and
Bangkok, Thailand; or by
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subcontractors in Asia. In December 1995, AMD entered into an agreement to lease
land in Suzhou, China to be used for the construction and operation of an
additional test and assembly facility.
Foreign manufacture entails political and economic risks, including
political instability, expropriation, currency controls and fluctuations,
changes in freight rates and in interest rates, and exemptions for taxes and
tariffs. For example, if AMD were not able to assemble and test its products
abroad, or if air transportation between the United States, the Corporation's
overseas facilities and customers worldwide were disrupted, there could be a
material adverse effect on the Corporation's operations. The Corporation has
not experienced any material adverse effects associated with such risks.
Raw Materials. Certain of the raw materials used by the Corporation 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 such materials, it would be required to
reduce its manufacturing operations which could have a material adverse effect
upon its results of operations. To date, AMD has not experienced significant
difficulty in obtaining the necessary raw materials.
Environmental Regulations. AMD is subject to a variety of governmental
regulations related to the use, storage, handling, discharge or disposal of
toxic, volatile or otherwise hazardous chemicals used in the manufacturing
process. The Corporation believes that it is currently in compliance in all
material respects with these regulations and that it has obtained all necessary
environmental permits to conduct its business. Nevertheless, the failure to
comply with present or future regulations could result in fines being imposed on
the Corporation,
19
<PAGE>
suspension of production, alteration of the Corporation's manufacturing
processes or cessation of operations. Such regulations could require the
Corporation to acquire expensive remediation equipment or to incur other
expenses to comply with environmental regulations. (See Item 3, Legal
Proceedings, Number 1.) Any failure by the Corporation to control the use,
disposal or storage of, or adequately restrict the discharge of, hazardous
substances could subject the Corporation to future liabilities.
Key Personnel. AMD's future success depends in part upon the continued
service of its key engineering, sales, marketing and executive personnel in the
engineering design areas of AMD's activities. 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 AMD's product development programs or otherwise have a material
adverse effect on AMD's business and operating results. AMD has an employment
agreement with W. J. Sanders III, its Chairman and Chief Executive Officer,
which obligates Mr. Sanders not to compete with the Company following a
termination of his employment under certain circumstances. AMD has no
employment or noncompetition agreements with any of its other officers,
directors or key employees except S. Atiq Raza and Vinod Dham who entered into
noncompetition agreements with AMD upon consummation of the Merger.
Product Defects; Incompatibility. One or more of AMD's products may
possibly be found to be defective after AMD has already shipped in volume,
requiring a production 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 AMD. For its future
generations of K86 microprocessors, AMD intends to obtain Windows and Windows 95
certifications from Microsoft Corporation (Microsoft), Platinum certification
from XXCAL, a testing organization, and other appropriate certifications. While
AMD submits its products to rigorous internal and external testing, there can be
no assurance that AMD's products
20
<PAGE>
will be compatible with all standard PC software or hardware. Any inability of
AMD's customers to achieve such compatibility or compatibility with other
software or hardware after AMD's products are shipped in volume would have a
material adverse effect on AMD's business and operating results. There can be no
assurance that AMD will be able to successfully correct any such compatibility
or other product defect problems that are discovered or that such corrections
will be acceptable to customers or made in a timely manner. In addition, the
announcement of a product defect in AMD's products or incompatibility could have
a material adverse effect on AMD.
Earthquake Danger. AMD'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. AMD's operating results and financial condition could be
materially adversely affected in the event of a major earthquake.
Intellectual Property and Licensing
AMD and its subsidiaries have been granted 972 United States patents, and
approximately 872 patent applications are pending in the United States. In
certain cases, the Corporation has filed corresponding applications in foreign
jurisdictions. The Corporation expects to file future patent applications in
both the United States and abroad on significant inventions as it deems
appropriate.
On January 11, 1995, the Corporation and Intel reached an agreement to
settle all previously outstanding legal disputes between the two companies. As
part of the settlement, in December 1995, the Corporation signed a five-year,
comprehensive patent cross-license agreement with Intel which expires on
December 31, 2000. The agreement provides that after December 31, 1999, the
parties will negotiate in good faith a patent cross-license agreement to be
effective January 1, 2001. Effective January 1, 1996, the new agreement gives
the Corporation
21
<PAGE>
and Intel the rights to use each others' patents and certain copyrights,
exclusive of microprocessor microcode copyrights. The cross-license is royalty-
bearing for the Corporation's products that use certain Intel technologies. The
Corporation is required to pay Intel minimum non-refundable royalties during the
years 1997 to 2000.
In addition, AMD has entered into numerous cross-licensing and technology
exchange agreements with other companies under which it both transfers and
receives technology and intellectual property rights. Although the Corporation
attempts to protect its intellectual property rights through patents,
copyrights, trade secrets and other measures, there can be no assurance that the
Corporation will be able to protect its technology adequately or that
competitors will not be able to develop similar technology independently. There
can be no assurance that any patent applications that the Corporation may file
will be issued or that foreign intellectual property laws will protect the
Corporation's intellectual property rights. There can be no assurance that any
patent licensed by or issued to the Corporation will not be challenged,
invalidated or circumvented or that the rights granted thereunder will provide
competitive advantages to the Corporation. Furthermore, there can be no
assurance that others will not independently develop similar products, duplicate
the Corporation's products or design around the patents licensed by or issued to
the Corporation.
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 Corporation, the Corporation may seek to obtain a license under the third
party's intellectual property rights. The Corporation 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 Corporation's business, financial condition and results of
operations. No assurance can be given that all necessary licenses can be
obtained on satisfactory terms, nor that litigation may always be avoided or
successfully concluded. (See also Item 3, Legal Proceedings, Numbers 6 and 7.)
22
<PAGE>
Employees
On January 28, 1996, AMD and its subsidiaries employed approximately 12,797
employees.
ITEM 2. PROPERTIES
AMD's principal engineering, manufacturing, warehouse and administrative
facilities comprise approximately 3.07 million square feet and are located in
Santa Clara County, California and Austin, Texas. (See Item 1, Manufacturing
and Item 7, Management's Discussion and Analysis of Results of Operations and
Financial Condition.) Over 2.54 million square feet of this space is in
buildings owned by the Corporation.
The Corporation entered into certain operating leases for property
containing two buildings with approximately 360,000 square feet, located on 45.6
acres of land in Sunnyvale, California at One AMD Place and 991 Stewart Avenue
(One AMD Place). In 1994, the Corporation began utilizing One AMD Place for its
corporate sales, marketing and administrative offices. This lease provides the
Corporation with the option to purchase One AMD Place during the lease term. At
the end of the lease term in 1998, the Corporation is obligated to either
purchase One AMD Place or arrange for its sale to a third party with a guarantee
of residual value to the seller. In 1993, the Corporation entered into a lease
agreement for approximately 175,000 square feet located adjacent to One AMD
Place (known as AMD Square) to be used in connection with One AMD Place.
The Corporation also owns or leases facilities containing approximately
730,000 square feet for its operations in Malaysia, Singapore and Thailand (See
Item 1, Manufacturing and Item 7, Management's Discussion and Analysis of
Results of Operations and Financial Condition.) Of
23
<PAGE>
the entire worldwide facilities owned or leased by the Corporation,
approximately 580,000 square feet are currently vacant. In addition,
approximately 180,000 square feet are currently vacant until the construction of
Fab 25 is completed. The Corporation has entered into an agreement to lease 723
acres of land in Suzhou, China. The Corporation holds 74 undeveloped acres of
land in the Republic of Ireland. The Corporation also has an equity interest in
58 acres of land in Albuquerque, New Mexico, which it has under a contract to
sell that is expected to close in 1996.
AMD leases 34 sales offices in North America, six sales offices in Asia and
thirteen sales offices in Europe for its direct sales force. These offices are
located in cities in major electronics markets where concentrations of AMD's
customers are located.
Leases covering the Corporation's facilities expire over terms of generally
one to twenty years. The Corporation anticipates no difficulty in either
retaining occupancy of any of its facilities through lease renewals prior to
expiration or through month-to-month occupancy, or replacing them with
equivalent facilities. (See Note 14 of Notes to Consolidated Financial
Statements contained in the 1995 Annual Report to Stockholders.)
ITEM 3. LEGAL PROCEEDINGS
1. Environmental Matters. Since 1981, the Corporation has discovered,
investigated and begun remediation of three sites where releases from
underground chemical tanks at its facilities in Santa Clara County, California,
adversely affected the groundwater. The chemicals released into the groundwater
were commonly in use in the semiconductor industry in the wafer fabrication
process prior to 1979. At least one of the released chemicals (which is no
longer used by the Corporation) has been identified as a probable carcinogen.
24
<PAGE>
In 1991, the Corporation received four Final Site Clean-up Requirements
Orders from the California Regional Water Quality Control Board, San Francisco
Bay Region (RWQCB) relating to the three sites. One of the sites (Final Site
Clean-up Requirements Order No. 91-102) includes clean-up of groundwater
contamination from TRW Microwave, Inc. (TRW), Philips Semiconductors (formerly
Signetics Corporation) and AMD, which the RWQCB claims merged. AMD is
proceeding jointly with Philips and TRW to clean up the merged contamination and
the parties are contributing to the clean-up equally. However, there has been
no allocation of responsibility for the contamination between the parties.
Another of the sites (Final Site Clean-up Requirements Order Nos. 91-139 and 91-
140) includes clean-up of groundwater contamination from National Semiconductor
Corporation, AMD and others, which the RWQCB claims merged. National
Semiconductor Corporation and AMD have been named in the orders as primarily
responsible and have commenced clean-up efforts in accordance with their
respective orders. However, there has been no allocation of responsibility for
the groundwater contamination. The third site (Final Site Clean-up Requirements
Order No. 91-101) is primarily the responsibility of the Corporation.
In each instance mentioned above, the Corporation conducted appropriate
programs of remedial action that involved soil removal, installation of
monitoring and extraction wells and water treatment systems, disposal of
inoperative tank systems, and repair and alterations to existing facilities.
The final clean-up plans include continued groundwater monitoring, extraction
and treatment and, in one instance, soil vapor extraction. Federal and state
governmental agencies have approved the final clean-up plans being implemented.
The Corporation has not yet determined to what extent the costs of such remedial
actions will be covered by insurance. The three sites are on the National
Priorities List (Superfund).
If the Corporation fails to satisfy federal compliance requirements or
inadequately performs the compliance measures, the government (a) can bring an
action to enforce compliance, or (b) can undertake the desired response actions
itself and later bring an action to
25
<PAGE>
recover its costs and penalties, which is up to three times the costs of clean-
up activities, if appropriate. With regard to certain claims related to this
matter, the statute of limitations has been tolled. AMD has computed and
recorded the estimated environmental liability in accordance with applicable
accounting rules and has not recorded any potential insurance recoveries in
determining the estimated costs of the clean-up. The amount of environmental
charges to earnings has not been material during the last three fiscal years.
AMD believes that the potential liability, if any, in excess of amounts already
accrued with respect to the foregoing environmental matters will not have a
material adverse effect on the financial condition or results of operations of
AMD.
A notice dated October 3, 1994, was received by the Corporation from the
Department of Ecology of the State of Washington indicating that the Department
had determined the Corporation to be a potentially liable person for the release
of hazardous substances on a site located in Yakima, Washington. The
Corporation believes that the foregoing environmental matter will not have a
material adverse effect on the financial condition or results of operations of
the Corporation.
2. Edward McDaid v. Sanders, et al. (Case No. C-95-20750-JW, N.D. Cal.).
On November 3, 1995, an AMD shareholder filed a class action complaint against
AMD and several of its officers and directors. The complaint avers a single
claim for relief pursuant to Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 and Rule 10b-5 promulgated thereunder. The alleged class consists
of all purchasers of AMD common stock during the period April 11, 1995, through
September 22, 1995. The plaintiff alleges that during this class period the
defendants made or caused AMD to make misleading statements with respect to the
development of the Corporation's AMD-K5(tm) microprocessor. The complaint seeks
class damages in an unstated amount, equitable relief, plus interest, attorneys'
fees, expert witness fees and other litigation costs. AMD intends to contest
the litigation vigorously. Based upon information presently known to
management, the Corporation does not believe that the ultimate resolution of
26
<PAGE>
this lawsuit will have a material adverse effect upon the financial condition or
results of operations of the Corporation.
3. Caroline Kozlowski, et al. v. Sanders, et al. (Case No. C95-04081-MMC,
N.D. Cal.). On November 15, 1995, two AMD shareholders filed a class action
complaint against AMD and several of its officers and directors. The complaint
mirrors the McDaid complaint (described in Item 3, Number 2, above) in all
material respects and likewise avers a single claim for relief pursuant to
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. The alleged class consists of all purchasers of AMD
common stock during the period April 11, 1995, through September 22, 1995. The
plaintiffs allege that during this class period the defendants made or caused
AMD to make misleading statements with respect to the development of the
Corporation's AMD-K5 microprocessor. The complaint seeks class damages in an
unstated amount, equitable relief, plus interest, attorneys' fees, expert
witness fees and other litigation costs. AMD intends to contest the litigation
vigorously. Based upon information presently known to management, the
Corporation does not believe that the ultimate resolution of this lawsuit will
have a material adverse effect upon the financial condition or results of
operations of the Corporation.
4. SEC Investigation. The Securities and Exchange Commission (SEC) began
an informal investigation of the Corporation in 1993 regarding the Corporation's
disclosures about the development of its Am486SX microcode in a development
process and the extent to which it included access to Intel's 386 microcode.
These disclosures were the subject of securities class actions and a derivative
suit that were settled and dismissed with prejudice. The Corporation has been
cooperating fully with the SEC's requests for information. The investigation,
however, is not yet completed and no assurance can be given that the SEC will
not bring an action against the Corporation or any of its employees. There can
also be no assurance that any action taken by the SEC arising from its
investigation will not have a material adverse effect on the Corporation.
27
<PAGE>
5. Irving Karton and Jason Lyons v. S. Atiq Raza, et al. (Case No.
CV753583, Cal. Sup. Ct., County of Santa Clara, California). On November 1,
1995, two alleged shareholders of NexGen filed suit against NexGen, its board of
directors and a former director of NexGen. The complaint, as amended, alleged
that the consideration which NexGen stockholders would receive pursuant to the
Merger was inadequate; the defendants had therefore breached the directors'
fiduciary duties to the stockholders of NexGen; the Merger consideration was
below the fair or inherent value of NexGen; the defendants had not considered
other potential purchasers of NexGen or its stock; and there had been inadequate
disclosure of material facts concerning the business and prospects of NexGen as
they related to the Merger. The amended complaint sought an injunction against
the Merger, rescission of the Merger, if consummated, unspecified damages,
attorneys' fees and other relief. On December 12, 1995, all parties to the
litigation entered into a Memorandum of Understanding that contemplates the
settlement of the litigation, pursuant to which the agreement governing the
Merger was amended in certain respects; a stockholder rights plan adopted by
NexGen was amended in certain respects; and NexGen made certain disclosures to
its stockholders in connection with the Merger which were requested by the
plaintiffs. The Stipulation of Settlement pursuant to which the litigation will
be dismissed was preliminarily approved on January 11, 1996. AMD has succeeded
to the rights and obligations of NexGen under the Memorandum of Understanding
and the Stipulation of Settlement. Attorneys for the plaintiff class have
agreed to apply to the court for fees and expenses to be paid by the defendants.
The agreed upon amount is not material, and is payable in AMD common stock or,
at AMD's option, in cash.
6. Advanced Micro Devices, Inc. v. Altera Corporation (Case No. C-94-
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 Corporation's and Altera Corporation's programmable
logic devices. AMD intends to contest the counterclaim vigorously. Based upon
information presently known to management, the Corporation does not
28
<PAGE>
believe that the ultimate resolution of this lawsuit will have a material
adverse effect upon the financial condition or results of operations of the
Corporation.
7. Thorn EMI North America, Inc. v. Advanced Micro Devices, Inc. (Case
No. 95-199-RRM, U.S. District Ct., Wilmington, Delaware). This litigation was
filed in 1995 and alleges that AMD is infringing a patent owned by Thorn EMI
North America, Inc. relating to processes used by AMD to manufacture
microprocessors. The action seeks unspecified damages for past infringement and
an injunction against alleged further infringement. AMD intends to contest this
litigation vigorously. Based upon information presently known to management, the
Corporation does not believe that the ultimate resolution of this lawsuit will
have a material adverse effect upon the financial condition or results of
operations of the Corporation.
8. Other Matters. The Corporation is a defendant or plaintiff in various
other actions which arose in the normal course of business. In the opinion of
management, the ultimate disposition of these matters will not have a material
adverse effect on the financial condition or results of operations of the
Corporation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
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<PAGE>
<TABLE>
<CAPTION>
Executive Officers of the Registrant
Held
Name Age Position Since
---- --- -------- -----
<S> <C> <C> <C>
W. J. Sanders III 59 Chairman of the Board and Chief Executive Officer. 1969
Richard Previte 61 Director, President and Chief Operating Officer. 1989
Mr. Previte became Chief Operating Officer in 1989
and President in 1990. Mr. Previte was Chief
Financial Officer and Treasurer from 1969 to 1989.
Marvin D. Burkett 53 Senior Vice President, Chief Financial and 1989
Administrative Officer and Treasurer.
Mr. Burkett was Controller from 1972 until 1989.
Eugene D. Conner 52 Senior Vice President, Operations. Mr. Conner 1987
joined the Corporation in 1969, and was elected
an executive officer in 1981.
S. Atiq Raza 47 Director, Corporate Vice President and Chief 1996
Technical Officer. Formerly, Mr. Raza was
the Chairman of the Board, President, Chief
Executive Officer, and Secretary of NexGen, Inc.
Stanley Winvick 56 Senior Vice President, Human Resources. Mr. Winwick 1991
had been Vice President, Human Resources since 1980.
Stephen J. Zelencik 61 Senior Vice President and Chief Marketing 1979
Executive. Mr. Zelencik joined the Corporation
in 1970.
Thomas M. McCoy 45 Vice President, General Counsel and Secretary. 1995
Prior to joining the Corporation, Mr. McCoy was
with the law firm of O'Melveny and Myers where
he had been a partner since 1985.
</TABLE>
There is no family relationship between any executive officers
of the Corporation.
30
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The information regarding market price range, dividend information and
number of holders of common stock of AMD appearing under the caption "Financial
Data and Financial Summary" on pages 30 and 31 of the Corporation's 1995 Annual
Report to Stockholders is incorporated herein by reference.
On May 25, 1994, the Securities and Exchange Commission declared effective
the Corporation's shelf registration statement covering up to $400 million of
its securities, which may be either debt securities, preferred stock, depositary
shares representing fractions of shares of preferred stock, common stock,
warrants to purchase common stock, or any combination of the foregoing which the
Corporation may offer from time to time in the future. To date, the Corporation
has not offered or sold any securities registered under the $400 million
registration statement. The nature and terms of the securities will be
established at the time of their sale. The Corporation may offer the securities
through underwriters to be named in the future, through agents or otherwise.
The Corporation expects that the net proceeds of any offering would be used for
general corporate purposes including but not limited to the reduction of
outstanding indebtedness, working capital increases and capital expenditures.
In February 1990, the Corporation adopted a shareholder rights plan. In
accordance with this plan, the Corporation paid a dividend of one preferred
stock purchase right on each outstanding share of common stock pursuant to a
Rights Agreement. Each right entitled the registered holder to purchase from
the Corporation one-thousandth of a share of Series A Junior Participating
Preferred Stock, $0.10 par value, for a price of $65.00, subject to adjustment.
The rights were redeemable by the Corporation and would have expired on December
31, 2000. At a
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<PAGE>
meeting on February 16, 1995, the Board of Directors authorized and directed the
redemption of the preferred stock purchase rights. They were redeemed on May 3,
1995.
On February 10, 1995, the Corporation called all outstanding shares of its
preferred stock for redemption on March 13, 1995, at a redemption price of
$509.00 per share, plus $7.30 of accrued and unpaid dividends. Prior to the
redemption date, 343,427 shares of preferred stock were surrendered for
conversion which resulted in the issuance of 6,824,694 shares of the
Corporation's common stock. Pursuant to previous arrangements, on March 14,
1995, the Corporation sold 28,518 shares of its common stock to certain
institutions and used the proceeds to fund the redemption of 1,435 shares of
preferred stock which were not converted.
ITEM 6. SELECTED FINANCIAL DATA
The information regarding selected financial data for the fiscal years 1991
through 1995 under the caption "Financial Summary" on page 31 of the
Corporation's 1995 Annual Report to Stockholders is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The information appearing under the caption ''Management's Discussion and
Analysis of Results of Operations and Financial Condition'' on pages 8 through
12 of the Corporation's 1995 Annual Report to Stockholders is incorporated
herein by reference.
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<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA
AMD's consolidated financial statements at December 25, 1994, and December
31, 1995 and for each of the three fiscal years in the period ended December 31,
1995, and the report of independent auditors thereon, and the unaudited
quarterly financial data of AMD for the two-year period ended December 31, 1995,
on pages 13 through 30 of the Corporation's 1995 Annual Report to Stockholders
are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information appearing at the end of Part I under the caption "Executive
Officers of the Registrant" and under the captions "Proposal No. 1--Election of
Directors" and "Compliance with Section 16(a) of the Securities Exchange Act of
1934" in the Corporation's Proxy Statement for its Annual Meeting of
Stockholders to be held on April 25, 1996, is incorporated herein by reference.
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<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The information under the paragraphs entitled "Directors Fees and Expenses"
under the caption "Committees and Meetings of the Board of Directors," and the
information under the captions "Executive Compensation" (not including the
Compensation Committee Report or the performance graph), "Compensation
Agreements," "Change in Control Arrangements" and "Compensation Committee
Interlocks and Insider Participation" in the Corporation's Proxy Statement for
its Annual Meeting of Stockholders to be held on April 25, 1996, is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information appearing under the captions "Principal Stockholders" and
"Stock Ownership Table" in the Corporation's Proxy Statement for its Annual
Meeting of Stockholders to be held on April 25, 1996, is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing under the caption "Certain Relationships and
Related Transactions" in the Corporation's Proxy Statement for its Annual
Meeting of Stockholders to be held on April 25, 1996, is incorporated herein by
reference.
34
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a)
1. Financial Statements
The financial statements listed in the accompanying Index to Consolidated
Financial Statements and Financial Statement Schedule Covered by Report of
Independent Auditors are filed or incorporated by reference as part of this
annual report. The following is a list of such Financial Statements:
<TABLE>
<CAPTION>
Page References
------------------
1995 Annual
Form Report to
10-K Stockholders
---- ------------
<S> <C> <C>
Report of Ernst & Young LLP, Independent Auditors ___ 29
Consolidated Statements of Income for each of the
three fiscal years in the period ended
December 31, 1995 ___ 13
Consolidated Balance Sheets at December 25, 1994
and December 31, 1995 ___ 14
Consolidated Statements of Cash Flows for each of the
three fiscal years in the period ended
December 31, 1995 ___ 15
Notes to Consolidated Financial Statements ___ 16
Supplementary Financial Data:
Fiscal years 1994 and 1995 by quarter (unaudited) ___ 30
</TABLE>
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<PAGE>
2. Financial Statement Schedule
The financial statement schedule listed in the accompanying Index to
Consolidated Financial Statements and Financial Statement Schedule Covered by
Reports of Independent Auditors are filed or incorporated by reference as part
of this annual report. The following is a list of such Financial Statement
Schedule:
<TABLE>
<CAPTION>
Page References
---------------
1995 Annual
Form Report to
10-K Stockholders
---- ------------
<S> <C> <C>
Schedule II Valuation and Qualifying Accounts F-3 ___
</TABLE>
All other schedules have been omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedules, or because the information required is included in the consolidated
financial statements or notes thereto. With the exception of the information
incorporated by reference into Parts I, II and IV of this Form 10-K, the 1995
Annual Report to Stockholders is not to be deemed filed as part of this report.
36
<PAGE>
3. Exhibits
The exhibits listed in the accompanying Index to Exhibits are filed or
incorporated by reference as part of this annual report. The following is a
list of such Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
2 Agreement and Plan of Merger dated October 20,
1995, as amended, between the Corporation and
NexGen, Inc. as filed as Exhibit 2 to the
Corporation's Quarterly Report for the period
ended October 1, 1995, and as Exhibit 2.2 to the
Corporation's Current Report on Form 8-K dated
January 17, 1996, is hereby incorporated by
reference.
3.1 Certificate of Incorporation, as amended, filed as
Exhibit 3.1 to the Corporation's Quarterly Report
on Form 10-Q for the period ended July 2, 1995, is
hereby incorporated by reference.
3.2 By-Laws, as amended.
4 The Corporation hereby agrees to file on request
of the Commission a copy of all instruments not
otherwise filed with respect to long-term debt of
the Corporation or any of its subsidiaries for
which the total amount of securities authorized
under such instruments does not exceed 10% of the
total assets of the Corporation and its
subsidiaries on a consolidated basis.
*10.1 AMD 1982 Stock Option Plan, as amended, filed as
Exhibit 10.1 to the Corporation's Annual Report on
Form 10-K for the fiscal year ended December 26,
1993, is hereby incorporated by reference.
*10.2 AMD 1986 Stock Option Plan, as amended, filed as
Exhibit 10.2 to the Corporation's Annual Report on
Form 10-K for the fiscal year ended December 26,
1993, is hereby incorporated by reference.
*10.3 AMD 1992 Stock Incentive Plan, as amended, filed
as Exhibit 10.3 to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
26, 1993, is hereby incorporated by reference.
*10.4 AMD 1980 Stock Appreciation Rights Plan, as
amended, filed as Exhibit 10.4 to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 26, 1993, is hereby
incorporated by reference.
</TABLE>
37
<PAGE>
<TABLE>
<C> <S>
*10.5 AMD 1986 Stock Appreciation Rights Plan, as
amended, filed as Exhibit 10.5 to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 26, 1993, is hereby
incorporated by reference.
*10.6 Forms of Stock Option Agreements, filed as Exhibit
10.8 to the Corporation's Annual Report on Form
10-K for the fiscal year ended December 29, 1991,
are hereby incorporated by reference.
*10.7 Form of Limited Stock Appreciation Rights
Agreement, filed as Exhibit 4.11 to the
Corporation's Registration Statement on Form S-8
(No. 33-26266), is hereby incorporated by
reference.
*10.8 AMD 1987 Restricted Stock Award Plan, as amended,
filed as Exhibit 10.10 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 26, 1993, is hereby incorporated by
reference.
*10.9 Forms of Restricted Stock Agreements, filed as
Exhibit 10.11 to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
29, 1991, are hereby incorporated by reference.
*10.10 Resolution of Board of Directors on September 9,
1981, regarding acceleration of vesting of all
outstanding stock options and associated limited
stock appreciation rights held by officers under
certain circumstances, filed as Exhibit 10.10 to
the Corporation's Annual Report on Form 10-K for
the fiscal year ended March 31, 1985, is hereby
incorporated by reference.
*10.11(a) Employment Agreement dated July 1, 1991, between
the Corporation and W. J. Sanders III, filed as
Exhibit 10.1 to the Corporation's Form 8-K dated
September 3, 1991, is hereby incorporated by
reference.
*10.12(b) Amendment dated August 27, 1991, to Employment
Agreement between the Corporation and W. J.
Sanders III, filed as Exhibit 10.2 to the
Corporation's Form 8-K dated September 3, 1991, is
hereby incorporated by reference.
*10.12 Management Continuity Agreement between the
Corporation and W. J. Sanders III, filed as
Exhibit 10.14 to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
29, 1991, is hereby incorporated by reference.
*10.13 Bonus Agreement between the Corporation and
Richard Previte, filed as Exhibit 10.15 to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 29, 1991, is hereby
incorporated by reference.
*10.14 Executive Bonus Plan, as amended, filed as Exhibit
10.16 to the Corporation's Annual Report on Form
10-K for the fiscal year ended December 25, 1994,
is hereby incorporated by reference.
</TABLE>
38
<PAGE>
<TABLE>
<C> <S>
*10.15(a) Letter Agreement between the Corporation and
Anthony B. Holbrook dated August 24, 1994, filed
as Exhibit 10.17(b) to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 24, 1994, is hereby incorporated by
reference.
*10.15(b) Letter Agreement dated August 4, 1995, between the
Corporation and Anthony B. Holbrook (amending the
Letter Agreement filed as Exhibit 10.17(b) to the
Corporation's Annual Report on Form 10-K for the
fiscal year ending December 24, 1994).
*10.15(c) Letter Agreement dated November 29, 1995, between
the Corporation and Anthony B. Holbrook (amending
the Letter Agreement filed as Exhibit 10.17(b) to
the Corporation's Annual Report on Form 10K for
the fiscal year ended December 24, 1994).
*10.16 Form of Bonus Deferral Agreement, filed as Exhibit
10.12 to the Corporation's Annual Report on Form
10-K for the fiscal year ended March 30, 1986, is
hereby incorporated by reference.
*10.17 Form of Executive Deferral Agreement, filed as
Exhibit 10.17 to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
31, 1989, is hereby incorporated by reference.
*10.18 Director Deferral Agreement of R. Gene Brown,
filed as Exhibit 10.18 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1989, is hereby incorporated by
reference.
10.19 License Agreement with Western Electric Company,
Incorporated, filed as Exhibit 10.5 to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended 1979, is hereby incorporated by
reference.
10.20 Intellectual Property Agreements with Intel
Corporation, filed as Exhibit 10.21 to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 29, 1991, are hereby
incorporated by reference.
*10.21 Form of Indemnification Agreements with former
officers of Monolithic Memories, Inc., filed as
Exhibit 10.22 to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
27, 1987, is hereby incorporated by reference.
*10.22 Form of Management Continuity Agreement, filed as
Exhibit 10.25 to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
29, 1991, is hereby incorporated by reference.
</TABLE>
39
<PAGE>
<TABLE>
<C> <S>
**10.23(a) Joint Venture Agreement between the Corporation
and Fujitsu Limited, filed as Exhibit 10.27(a) to
the Corporation's Amendment No. 1 to its Annual
Report on Form 10K/A for the fiscal year ended
December 26, 1993, is hereby incorporated by
reference.
**10.23(b) Technology Cross-License Agreement between the
Corporation and Fujitsu Limited, filed as Exhibit
10.27(b) to the Corporation's Amendment No. 1 to
its Annual Report on Form 10K/A for the fiscal
year ended December 26, 1993, is hereby
incorporated by reference.
**10.23(c) AMD Investment Agreement between the Corporation
and Fujitsu Limited, filed as Exhibit 10.27(c) to
the Corporation's Amendment No. 1 to its Annual
Report on Form 10K/A for the fiscal year ended
December 26, 1993, is hereby incorporated by
reference.
**10.23(d) Fujitsu Investment Agreement between the
Corporation and Fujitsu Limited, filed as Exhibit
10.27(d) to the Corporation's Amendment No. 1 to
its Annual Report on Form 10K/A for the fiscal
year ended December 26, 1993, is hereby
incorporated by reference.
**10.23(e) Joint Venture License Agreement between the
Corporation and Fujitsu Limited, filed as Exhibit
10.27(e) to the Corporation's Amendment No. 1 to
its Annual Report on Form 10K/A for the fiscal
year ended December 26, 1993, is hereby
incorporated by reference.
**10.23(f) Joint Development Agreement between the
Corporation and Fujitsu Limited, filed as Exhibit
10.27(f) to the Corporation's Amendment No. 1 to
its Annual Report on Form 10K/A for the fiscal
year ended December 26, 1993, is hereby
incorporated by reference.
10.24 Credit Agreement dated as of September 21, 1994,
among the Corporation, Bank of America National
Trust and Savings Association as Agent, The First
National Bank of Boston as Co-Agent, filed as
Exhibit 10.1 to the Corporation's Quarterly Report
on Form 10-Q for the period ended September 25,
1994, is hereby incorporated by reference.
10.24(a) First Amendment to Credit Agreement, dated as of
April 7, 1995, amending the Credit Agreement dated
as of September 21, 1994, by and among the
Corporation, Bank of America National Trust and
Savings Association, as Agent, and the lenders
named therein filed as Exhibit 10.28 to the
Corporation's Quarterly Report on Form 10-Q for
the period ended October 1, 1995, is hereby
incorporated by reference.
</TABLE>
40
<PAGE>
<TABLE>
<C> <S>
10.24(b) Second Amendment to Amended and Restated Credit
Agreement, dated as of October 20, 1995, amending
the Credit Agreement dated as of September 21,
1994 (as amended by the First Amendment to Credit
Agreement dated as of April 7, 1995), filed herein
as Exhibit 10.28(a), by and among the Corporation,
Bank of America National Trust and Savings
Association, as Agent, and the lenders named
therein which was filed as Exhibit 10.28(b) to the
Corporation's Quarterly Report on Form 10-Q for
the period ended October 1, 1995, is hereby
incorporated by reference.
10.24(c) Third Amendment to Amended and Restated Credit
Agreement, dated as of January 12, 1996, amending
the Credit Agreement dated as of September 21,
1994, by and among the Corporation, Bank of
America National Trust and Savings Association, as
Agent, and the lenders named therein.
10.25(a) Third Amended and Restated Guaranty dated as of
August 21, 1995, by the Corporation in favor of
CIBC Inc. (replacing in entirety the Amended and
Restated Guaranty and the First Amendment thereto
filed as Exhibits 10.29(a) and 10.29(b),
respectively, to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
25, 1994) filed as Exhibit 10.29(a) to the
Corporation's Quarterly Report on Form 10-Q for
the period ended October 1, 1995, is hereby
incorporated by reference.
10.25(b) First Amendment to Third Amended and Restated
Guaranty, dated as of October 20, 1995, amending
the Third Amended and Restated Guaranty dated
August 21, 1995, made by the Corporation in favor
of CIBC Inc. and filed as Exhibit 10.29(a), as
filed as Exhibit 10.29(d) to the Corporation's
Quarterly Report on Form 10-Q for the period ended
October 1, 1995, is hereby incorporated by
reference.
10.25(c) Second Amendment to Third Amended and Restated
Guaranty, dated as of January 12, 1996 (amending
the Third Amended and Restated Guaranty dated
August 21, 1995, made by the Corporation in favor
of CIBC Inc.).
10.25(d) Building Lease by and between CIBC Inc. and AMD
International Sales & Service, Ltd. dated as of
September 22, 1992, filed as Exhibit 10.28(b) to
the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 27, 1992, is hereby
incorporated by reference.
10.25(e) First Amendment to Building Lease dated December
22, 1992, by and between CIBC Inc. and AMD
International Sales & Service, Ltd., filed as
Exhibit 10.28(c) to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 27, 1992, is hereby incorporated by
reference.
10.25(f) Second Amendment to Building Lease dated December
17, 1993, by and between CIBC Inc. and AMD
International Sales & Service, Ltd., filed as
Exhibit 10.29(e) to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 25, 1994, is hereby incorporated by
reference.
</TABLE>
41
<PAGE>
<TABLE>
<C> <S>
10.25(g) Third Amendment to Building Lease dated August 21,
1995, by and between CIBC Inc. and AMD
International Sales and Service, Inc. (amending
the Building Lease filed as Exhibit 10.29(c) to
the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 25, 1994), filed as
Exhibit 10.29(b) to the Corporation's Quarterly
Report on Form 10-Q for the period ended October
1, 1995, is hereby incorporated by reference.
10.25(h) Fourth Amendment to Building Lease, dated November
10, 1995, by and between CIBC Inc. and AMD
International Sales & Service, Inc. (amending the
Building Lease filed as Exhibit 10.29(c) to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 24, 1994).
10.25(i) Land Lease by and between CIBC Inc. and AMD
International Sales & Service, Ltd. dated as of
September 22, 1992, filed as Exhibit 10.28(d) to
the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 27, 1992, is hereby
incorporated by reference.
10.25(j) First Amendment to Land Lease dated December 22,
1992, by and between CIBC Inc. and AMD
International Sales & Service, Ltd., filed as
Exhibit 10.28(e) to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 27, 1992, is hereby incorporated by
reference.
10.25(k) Second Amendment to Land Lease dated December 17,
1993, by and between CIBC Inc. and AMD
International Sales & Service, Ltd., filed as
Exhibit 10.29(h) to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 25, 1994, is hereby incorporated by
reference.
10.25(l) Third Amendment to Land Lease dated August 21,
1995, by and between CIBC Inc. and AMD
International Sales and Service, Inc. (amending
the Land Lease filed as Exhibit 10.29(f) to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 25, 1994), filed as
Exhibit 10.29(c) to the Corporation's Quarterly
Report on Form 10-Q for the period ended October
1, 1995, is hereby incorporated by reference.
10.25(m) Fourth Amendment to Land Lease dated November 10,
1995, by and between CIBC Inc. and AMD
International Sales & Service, Ltd. (amending the
Land Lease filed as Exhibit 10.29(f) to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 25, 1994).
*10.26 Executive Savings Plan, as amended, filed as
Exhibit 10.30 to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
25, 1994, is hereby incorporated by reference.
*10.27 Form of Split Dollar Agreement, as amended, filed
as Exhibit 10.31 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 25, 1994, is hereby incorporated by
reference.
</TABLE>
42
<PAGE>
<TABLE>
<C> <S>
*10.28 Form of Collateral Security Assignment Agreement,
filed as Exhibit 10.32 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 26, 1993, is hereby incorporated by
reference.
*10.29 Forms of Stock Option Agreements to the 1992 Stock
Incentive Plan, filed as Exhibit 4.3 to the
Corporation's Registration Statement on Form S-8
(No. 33-46577), are hereby incorporated by
reference.
*10.30 1992 United Kingdom Share Option Scheme, filed as
Exhibit 4.2 to the Corporation's Registration
Statement on Form S-8 (No. 33-46577), is hereby
incorporated by reference.
**10.31 Compaq Computer Corporation/Advanced Micro
Devices, Inc. Agreement, filed as Exhibit 10.35 to
the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 25, 1994, is hereby
incorporated by reference.
**10.32 Foundry Agreement between the Corporation and
Taiwan Semiconductor Manufacturing Corporation,
Ltd., filed as Exhibit 10.37 to the Corporation's
Annual Report on Form 10-K for the fiscal year
ended December 25, 1994, is hereby incorporated by
reference.
*10.33 Form of indemnification agreements with current
officers and directors of the Corporation, filed
as Exhibit 10.38 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 25, 1994, is hereby incorporated by
reference.
10.34 Term Loan Agreement dated as of January 5, 1995,
among the Corporation, ABN-AMRO Bank, N.V., as
Administrative Agent, and ABN-AMRO Bank, N.V. and
CIBC Inc., as Co-Arrangers filed as Exhibit 10.39
to the Corporation's Annual Report on Form 10-K
for the fiscal year ended December 25, 1994, is
hereby incorporated by reference.
10.34(a) First Amendment to Term Loan Agreement, dated as
of October 20, 1995, amending the Term Loan
Agreement dated as of January 5, 1995, by and
among the Corporation, ABN-AMRO Bank, N.V., as
Administrative Agent, and the lenders named
therein which was filed as Exhibit 10.39 to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 25, 1994, as filed as
Exhibit 10.39(a) on Form 10-Q for the period ended
October 1, 1995, is hereby incorporated by
reference.
10.35 Secured Credit Agreement dated October 20, 1995,
between the Corporation and NexGen, Inc. and First
Amendement to Secured Credit Agreement dated as of
October 30, 1995 (incorporated by reference to
Annex 1 of the Agreement and Plan of Merger
attached as Exhibit 2 to this report), as filed as
Exhibit 10.40 on Form 10-Q for the period ended
October 1, 1995, is hereby incorporated by
reference.
</TABLE>
43
<PAGE>
<TABLE>
<C> <S>
*10.36 Agreement to Preserve Goodwill dated January 15,
1996, between the Corporation and S. Atiq Raza.
*10.37 1995 Stock Plan of NexGen, Inc., as amended, filed
as Exhibit 99.1 to the Corporation's Registration
Statement on Form S-8 (No. 333-00969), is
incorporated herein by reference.
***10.38 Patent Cross-License Agreement dated December 20,
1995, between the Corporation and Intel
Corporation.
10.39 Contract for Transfer of the Right to the Use of
Land between Advanced Micro Devices (Suzhou)
Limited and China-Singapore Suzhou Industrial Park
Development Co., Ltd.
10.40 NexGen, Inc. 1987 Employee Stock Plan, filed as
Exhibit 99.3 to Post-Effective Amendment No. 1 on
Form S-8 to the Corporation's Registration
Statement on Form S-4 (No. 33-64911), is hereby
incorporated by reference.
10.41 Form of indemnity agreement between NexGen, Inc.
and its directors and officers, filed as Exhibit
10.5 to the Registration Statement of NexGen, Inc.
on Form S-1 (No. 33-90750), is hereby incorporated
by reference.
10.42 Series E Preferred Stock Purchase Warrant of
NexGen, Inc. issued to Paine Webber Incorporated,
filed as Exhibit 10.14 to the Registration
Statement of NexGen, Inc. on Form S-1 (No.
33-90750), is hereby incorporated by reference.
10.43 Series F Preferred Stock Purchase Warrant of
NexGen, Inc., filed as Exhibit 10.15 to the
Registration Statement of NexGen, Inc. on Form S-1
(No. 33-90750), is hereby incorporated by
reference.
10.44 Series G Preferred Stock Purchase Warrant of
NexGen, Inc., filed as Exhibit 10.16 to the
Registration Statement of NexGen, Inc. on Form S-1
(No. 33-90750), is hereby incorporated by
reference.
***10.45 Agreement for Purchase of IBM Products between IBM
and NexGen, Inc. dated June 2, 1994, filed as
Exhibit 10.17 to the Registration Statement of
NexGen, Inc. on Form S-1 (No. 33-90750), is hereby
incorporated by reference.
*10.46 Letter Agreement dated as of September, 1988,
between NexGen, Inc. and S. Atiq Raza, First
Promissory Note dated October 17, 1988, and Second
Promissory Note dated October 17, 1988, as
amended, filed as Exhibit 10.20 to the
Registration Statement of NexGen, Inc. on Form S-1
(No. 33-90750), are hereby incorporated by
reference.
</TABLE>
44
<PAGE>
<TABLE>
<C> <S>
10.47 Series B Preferred Stock Purchase Warrant of
NexGen, Inc. issued to Kleiner, Perkins, Caufield
and Byers IV, as amended, filed as Exhibit 10.23
to the Registration Statement of NexGen, Inc. on
Form S-1 (No. 33-90750), is hereby incorporated by
reference.
11 Statement regarding computation of per share
earnings.
13 1995 Annual Report to Stockholders, portions of
which have been incorporated by reference into
Parts I, II and IV of this annual report.
21 List of AMD subsidiaries.
23 Consent of Ernst & Young LLP, Independent
Auditors, refer to page F-2 herein.
24 Power of Attorney.
27.1 Financial Data Schedule.
</TABLE>
The Corporation will furnish a copy of any exhibit on request and
payment of the Corporation's reasonable expenses of furnishing such exhibit.
* Management contracts and compensatory plans or arrangements required to be
filed as an Exhibit to comply with Item 14(a)(3).
** Confidential treatment has been granted as to certain portions of these
Exhibits.
*** Confidential treatment has been requested as to certain portions of these
Exhibits.
(b) Reports on Form 8-K.
1. A current Report on Form 8-K dated January 17, 1996, was filed
announcing the completion of the Merger of the Corporation and NexGen.
45
<PAGE>
2. A current Report on Form 8-K dated January 12, 1996, was filed
announcing NexGen's financial results of the second fiscal quarter ended
December 31, 1995.
3. A current Report on Form 8-K dated January 10, 1996, was filed
announcing the Corporation's year-end earnings results.
4. A current Report on Form 8-K dated January 5, 1996, was filed
announcing the patent cross-license agreement between the Corporation and Intel.
5. A current Report on Form 8-K dated December 18, 1995, was filed
announcing that the Corporation expected fourth quarter earnings to be lower
than the preceding quarter.
6. A current Report on Form 8-K dated November 6, 1995, was filed
announcing that a securities class action lawsuit had been filed against the
Corporation and certain officers and directors of the Corporation.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Advanced Micro Devices, Inc.
Registrant
March 18, 1996
By: /s/ MARVIN D. BURKETT
----------------------------------
Marvin D. Burkett
Senior Vice President, Chief
Financial and Administrative Officer and Treasurer
46
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons, on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ W. J. SANDERS III* Chairman of the Board and Chief March 18, 1996
- --------------------------- Executive Officer
W. J. Sanders III (Principal Executive Officer)
/s/ ANTHONY B. HOLBROOK* Vice Chairman of the Board March 18, 1996
- ---------------------------
Anthony B. Holbrook
/s/ RICHARD PREVITE* Director, President and Chief March 18, 1996
- --------------------------- Operating Officer
Richard Previte
s/ FRIEDRICH BAUR* Director March 18, 1996
- ---------------------------
Friedrich Baur
/s/ S. ATIQ RAZA* Director, Vice President and March 18, 1996
- --------------------------- Chief Technical Officer
S. Atiq Raza
/s/ CHARLES M. BLALACK* Director March 18, 1996
- ---------------------------
Charles M. Blalack
/s/ R. GENE BROWN* Director March 18, 1996
- ---------------------------
R. Gene Brown
/s/ JOE L. ROBY* Director March 18, 1996
- ---------------------------
Joe L. Roby
/s/ LEONARD SILVERMAN* Director March 18, 1996
- ---------------------------
Leonard Silverman
/s/ MARVIN D. BURKETT Senior Vice President, March 18, 1996
- --------------------------- Chief Administrative Officer;
Marvin D. Burkett Chief Financial Officer and
Treasurer (Principal Financial
Officer)
/s/ GEOFF RIBAR Vice President and Controller March 19, 1996
- --------------------------- (Principal Accounting Officer)
Geoff Ribar
</TABLE>
*By: /s/ MARVIN D. BURKETT
----------------------------------
Marvin D. Burkett
(Marvin D. Burkett, Attorney-in-Fact)
47
<PAGE>
ADVANCED MICRO DEVICES, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
COVERED BY REPORTS OF INDEPENDENT AUDITORS
ITEM 14(a)(1) AND (2)
The information under the following captions, which is included in the
Corporation's 1995 Annual Report to Stockholders, a copy of which is attached
hereto as Exhibit 13, is incorporated herein by reference:
<TABLE>
<CAPTION>
Page References
------------------
1995 Annual
Form Report to
10-K Stockholders
---- ------------
<S> <C> <C>
Report of Ernst & Young LLP, Independent Auditors __ 29
Consolidated Statements of Income for each of the
three fiscal years in the period ended
December 31, 1995 __ 13
Consolidated Balance Sheets at December 25,1994
and December 31,1995 __ 15
Consolidated Statements of Cash Flows for each of
the three fiscal years in the period ended
December 31, 1995 __ 16
Notes to Consolidated Financial Statements __ 30
Supplementary Financial Data:
Fiscal years 1994 and 1995 by quarter __ __
(unaudited)
Schedules for each of the three fiscal
years in the period ended
December 31, 1995:
Schedule II Valuation and Qualifying Accounts F-3 __
</TABLE>
All other schedules have been omitted since the required information is
not present or is not present in amounts sufficient to require submission of the
schedules, or because the information required is included in the consolidated
financial statements or notes thereto. With the exception of the information
incorporated by reference into Parts I, II and IV of this Form 10-K, the 1995
Annual Report to Stockholders is not to be deemed filed as part of this report.
<PAGE>
Schedule II
ADVANCED MICRO DEVICES, INC.
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 26, 1993, December 25, 1994, and December 31, 1995
(Thousands)
<TABLE>
<CAPTION>
Additions
Charged
(Reductions
Balance Credited) Balance
Beginning to End of
of Period Operations Deductions/(1)/ Period
--------- --------- ---------------- --------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Years ended:
December 26, 1993 $ 6,679 $1,595 $ (728) $ 7,492
December 25, 1994 7,492 3,723 (896) 10,319
December 31, 1995 10,319 2,475 (2,635) 10,159
</TABLE>
- -------- (1) Accounts (written off) recovered, net.
AMD-90275
<PAGE>
ADVANCED MICRO DEVICES, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
2 Agreement and Plan of Merger dated October 20,
1995, as amended, between the Corporation and
NexGen, Inc. as filed as Exhibit 2 to the
Corporation's Quarterly Report for the period
ended October 1, 1995, and as Exhibit 2.2 to the
Corporation's Current Report on Form 8-K dated
January 17, 1996, is hereby incorporated by
reference.
3.1 Certificate of Incorporation, as amended, filed as
Exhibit 3.1 to the Corporation's Quarterly Report
on Form 10-Q for the period ended July 2, 1995,
is hereby incorporated by reference.
3.2 By-Laws, as amended.
4 The Corporation hereby agrees to file on request
of the Commission a copy of all instruments not
otherwise filed with respect to long-term debt of
the Corporation or any of its subsidiaries for
which the total amount of securities authorized
under such instruments does not exceed 10% of the
total assets of the Corporation and its
subsidiaries on a consolidated basis.
*10.1 AMD 1982 Stock Option Plan, as amended, filed as
Exhibit 10.1 to the Corporation's Annual Report on
Form 10-K for the fiscal year ended December 26,
1993, is hereby incorporated by reference.
*10.2 AMD 1986 Stock Option Plan, as amended, filed as
Exhibit 10.2 to the Corporation's Annual Report on
Form 10-K for the fiscal year ended December 26,
1993, is hereby incorporated by reference.
*10.3 AMD 1992 Stock Incentive Plan, as amended, filed
as Exhibit 10.3 to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
26, 1993, is hereby incorporated by reference.
*10.4 AMD 1980 Stock Appreciation Rights Plan, as
amended, filed as Exhibit 10.4 to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 26, 1993, is hereby
incorporated by reference.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
*10.5 AMD 1986 Stock Appreciation Rights Plan, as
amended, filed as Exhibit 10.5 to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 26, 1993, is hereby
incorporated by reference.
*10.6 Forms of Stock Option Agreements, filed as Exhibit
10.8 to the Corporation's Annual Report on Form
10-K for the fiscal year ended December 29, 1991,
are hereby incorporated by reference.
*10.7 Form of Limited Stock Appreciation Rights
Agreement, filed as Exhibit 4.11 to the
Corporation's Registration Statement on Form S-8
(No. 33-26266), is hereby incorporated by
reference.
*10.8 AMD 1987 Restricted Stock Award Plan, as amended,
filed as Exhibit 10.10 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 26, 1993, is hereby incorporated by
reference.
*10.9 Forms of Restricted Stock Agreements, filed as
Exhibit 10.11 to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
29, 1991, are hereby incorporated by reference.
*10.10 Resolution of Board of Directors on September 9,
1981, regarding acceleration of vesting of all
outstanding stock options and associated limited
stock appreciation rights held by officers under
certain circumstances, filed as Exhibit 10.10 to
the Corporation's Annual Report on Form 10-K for
the fiscal year ended March 31, 1985, is hereby
incorporated by reference.
*10.11(a) Employment Agreement dated July 1, 1991, between
the Corporation and W. J. Sanders III, filed as
Exhibit 10.1 to the Corporation's Form 8-K dated
September 3, 1991, is hereby incorporated by
reference.
*10.12(b) Amendment dated August 27, 1991, to Employment
Agreement between the Corporation and W. J.
Sanders III, filed as Exhibit 10.2 to the
Corporation's Form 8-K dated September 3, 1991, is
hereby incorporated by reference.
*10.12 Management Continuity Agreement between the
Corporation and W. J. Sanders III, filed as
Exhibit 10.14 to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
29, 1991, is hereby incorporated by reference.
*10.13 Bonus Agreement between the Corporation and
Richard Previte, filed as Exhibit 10.15 to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 29, 1991, is hereby
incorporated by reference.
*10.14 Executive Bonus Plan, as amended, filed as Exhibit
10.16 to the Corporation's Annual Report on Form
10-K for the fiscal year ended December 25, 1994,
is hereby incorporated by reference.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
*10.15(a) Letter Agreement between the Corporation and
Anthony B. Holbrook dated August 24, 1994, filed
as Exhibit 10.17(b) to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 24, 1994, is hereby incorporated by
reference.
*10.15(b) Letter Agreement dated August 4, 1995, between the
Corporation and Anthony B. Holbrook (amending the
Letter Agreement filed as Exhibit 10.17(b) to the
Corporation's Annual Report on Form 10-K for the
fiscal year ending December 24, 1994).
*10.15(c) Letter Agreement dated November 29, 1995, between
the Corporation and Anthony B. Holbrook (amending
the Letter Agreement filed as Exhibit 10.17(b) to
the Corporation's Annual Report on Form 10K for
the fiscal year ended December 24, 1994).
*10.16 Form of Bonus Deferral Agreement, filed as Exhibit
10.12 to the Corporation's Annual Report on Form
10-K for the fiscal year ended March 30, 1986, is
hereby incorporated by reference.
*10.17 Form of Executive Deferral Agreement, filed as
Exhibit 10.17 to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
31, 1989, is hereby incorporated by reference.
*10.18 Director Deferral Agreement of R. Gene Brown,
filed as Exhibit 10.18 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1989, is hereby incorporated by
reference.
10.19 License Agreement with Western Electric Company,
Incorporated, filed as Exhibit 10.5 to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended 1979, is hereby incorporated by
reference.
10.20 Intellectual Property Agreements with Intel
Corporation, filed as Exhibit 10.21 to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 29, 1991, are hereby
incorporated by reference.
*10.21 Form of Indemnification Agreements with former
officers of Monolithic Memories, Inc., filed as
Exhibit 10.22 to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
27, 1987, is hereby incorporated by reference.
*10.22 Form of Management Continuity Agreement, filed as
Exhibit 10.25 to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
29, 1991, is hereby incorporated by reference.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
**10.23(a) Joint Venture Agreement between the Corporation
and Fujitsu Limited, filed as Exhibit 10.27(a) to
the Corporation's Amendment No. 1 to its Annual
Report on Form 10K/A for the fiscal year ended
December 26, 1993, is hereby incorporated by
reference.
**10.23(b) Technology Cross-License Agreement between the
Corporation and Fujitsu Limited, filed as Exhibit
10.27(b) to the Corporation's Amendment No. 1 to
its Annual Report on Form 10K/A for the fiscal
year ended December 26, 1993, is hereby
incorporated by reference.
**10.23(c) AMD Investment Agreement between the Corporation
and Fujitsu Limited, filed as Exhibit 10.27(c) to
the Corporation's Amendment No. 1 to its Annual
Report on Form 10K/A for the fiscal year ended
December 26, 1993, is hereby incorporated by
reference.
**10.23(d) Fujitsu Investment Agreement between the
Corporation and Fujitsu Limited, filed as Exhibit
10.27(d) to the Corporation's Amendment No. 1 to
its Annual Report on Form 10K/A for the fiscal
year ended December 26, 1993, is hereby
incorporated by reference.
**10.23(e) Joint Venture License Agreement between the
Corporation and Fujitsu Limited, filed as Exhibit
10.27(e) to the Corporation's Amendment No. 1 to
its Annual Report on Form 10K/A for the fiscal
year ended December 26, 1993, is hereby
incorporated by reference.
**10.23(f) Joint Development Agreement between the
Corporation and Fujitsu Limited, filed as Exhibit
10.27(f) to the Corporation's Amendment No. 1 to
its Annual Report on Form 10K/A for the fiscal
year ended December 26, 1993, is hereby
incorporated by reference.
10.24 Credit Agreement dated as of September 21, 1994,
among the Corporation, Bank of America National
Trust and Savings Association as Agent, The First
National Bank of Boston as Co-Agent, filed as
Exhibit 10.1 to the Corporation's Quarterly Report
on Form 10-Q for the period ended September 25,
1994, is hereby incorporated by reference.
10.24(a) First Amendment to Credit Agreement, dated as of
April 7, 1995, amending the Credit Agreement dated
as of September 21, 1994, by and among the
Corporation, Bank of America National Trust and
Savings Association, as Agent, and the lenders
named therein filed as Exhibit 10.28 to the
Corporation's Quarterly Report on Form 10-Q for
the period ended October 1, 1995, is hereby
incorporated by reference.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
10.24(b) Second Amendment to Amended and Restated Credit
Agreement, dated as of October 20, 1995, amending
the Credit Agreement dated as of September 21,
1994 (as amended by the First Amendment to Credit
Agreement dated as of April 7, 1995), filed herein
as Exhibit 10.28(a), by and among the Corporation,
Bank of America National Trust and Savings
Association, as Agent, and the lenders named
therein which was filed as Exhibit 10.28(b) to the
Corporation's Quarterly Report on Form 10-Q for
the period ended October 1, 1995, is hereby
incorporated by reference.
10.24(c) Third Amendment to Amended and Restated Credit
Agreement, dated as of January 12, 1996, amending
the Credit Agreement dated as of September 21,
1994, by and among the Corporation, Bank of
America National Trust and Savings Association, as
Agent, and the lenders named therein.
10.25(a) Third Amended and Restated Guaranty dated as of
August 21, 1995, by the Corporation in favor of
CIBC Inc. (replacing in entirety the Amended and
Restated Guaranty and the First Amendment thereto
filed as Exhibits 10.29(a) and 10.29(b),
respectively, to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
25, 1994) filed as Exhibit 10.29(a) to the
Corporation's Quarterly Report on Form 10-Q for
the period ended October 1, 1995, is hereby
incorporated by reference.
10.25(b) First Amendment to Third Amended and Restated
Guaranty, dated as of October 20, 1995, amending
the Third Amended and Restated Guaranty dated
August 21, 1995, made by the Corporation in favor
of CIBC Inc. and filed as Exhibit 10.29(a), as
filed as Exhibit 10.29(d) to the Corporation's
Quarterly Report on Form 10-Q for the period ended
October 1, 1995, is hereby incorporated by
reference.
10.25(c) Second Amendment to Third Amended and Restated
Guaranty, dated as of January 12, 1996 (amending
the Third Amended and Restated Guaranty dated
August 21, 1995, made by the Corporation in favor
of CIBC Inc.).
10.25(d) Building Lease by and between CIBC Inc. and AMD
International Sales & Service, Ltd. dated as of
September 22, 1992, filed as Exhibit 10.28(b) to
the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 27, 1992, is hereby
incorporated by reference.
10.25(e) First Amendment to Building Lease dated December
22, 1992, by and between CIBC Inc. and AMD
International Sales & Service, Ltd., filed as
Exhibit 10.28(c) to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 27, 1992, is hereby incorporated by
reference.
10.25(f) Second Amendment to Building Lease dated December
17, 1993, by and between CIBC Inc. and AMD
International Sales & Service, Ltd., filed as
Exhibit 10.29(e) to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 25, 1994, is hereby incorporated by
reference.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
10.25(g) Third Amendment to Building Lease dated August 21,
1995, by and between CIBC Inc. and AMD
International Sales and Service, Inc. (amending
the Building Lease filed as Exhibit 10.29(c) to
the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 25, 1994), filed as
Exhibit 10.29(b) to the Corporation's Quarterly
Report on Form 10-Q for the period ended October
1, 1995, is hereby incorporated by reference.
10.25(h) Fourth Amendment to Building Lease, dated November
10, 1995, by and between CIBC Inc. and AMD
International Sales & Service, Inc. (amending the
Building Lease filed as Exhibit 10.29(c) to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 24, 1994).
10.25(i) Land Lease by and between CIBC Inc. and AMD
International Sales & Service, Ltd. dated as of
September 22, 1992, filed as Exhibit 10.28(d) to
the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 27, 1992, is hereby
incorporated by reference.
10.25(j) First Amendment to Land Lease dated December 22,
1992, by and between CIBC Inc. and AMD
International Sales & Service, Ltd., filed as
Exhibit 10.28(e) to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 27, 1992, is hereby incorporated by
reference.
10.25(k) Second Amendment to Land Lease dated December 17,
1993, by and between CIBC Inc. and AMD
International Sales & Service, Ltd., filed as
Exhibit 10.29(h) to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 25, 1994, is hereby incorporated by
reference.
10.25(l) Third Amendment to Land Lease dated August 21,
1995, by and between CIBC Inc. and AMD
International Sales and Service, Inc. (amending
the Land Lease filed as Exhibit 10.29(f) to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 25, 1994), filed as
Exhibit 10.29(c) to the Corporation's Quarterly
Report on Form 10-Q for the period ended October
1, 1995, is hereby incorporated by reference.
10.25(m) Fourth Amendment to Land Lease dated November 10,
1995, by and between CIBC Inc. and AMD
International Sales & Service, Ltd. (amending the
Land Lease filed as Exhibit 10.29(f) to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 25, 1994).
*10.26 Executive Savings Plan, as amended, filed as
Exhibit 10.30 to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December
25, 1994, is hereby incorporated by reference.
*10.27 Form of Split Dollar Agreement, as amended, filed
as Exhibit 10.31 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 25, 1994, is hereby incorporated by
reference.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
*10.28 Form of Collateral Security Assignment Agreement,
filed as Exhibit 10.32 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 26, 1993, is hereby incorporated by
reference.
*10.29 Forms of Stock Option Agreements to the 1992 Stock
Incentive Plan, filed as Exhibit 4.3 to the
Corporation's Registration Statement on Form S-8
(No. 33-46577), are hereby incorporated by
reference.
*10.30 1992 United Kingdom Share Option Scheme, filed as
Exhibit 4.2 to the Corporation's Registration
Statement on Form S-8 (No. 33-46577), is hereby
incorporated by reference.
**10.31 Compaq Computer Corporation/Advanced Micro
Devices, Inc. Agreement, filed as Exhibit 10.35 to
the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 25, 1994, is hereby
incorporated by reference.
**10.32 Foundry Agreement between the Corporation and
Taiwan Semiconductor Manufacturing Corporation,
Ltd., filed as Exhibit 10.37 to the Corporation's
Annual Report on Form 10-K for the fiscal year
ended December 25, 1994, is hereby incorporated by
reference.
*10.33 Form of indemnification agreements with current
officers and directors of the Corporation, filed
as Exhibit 10.38 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 25, 1994, is hereby incorporated by
reference.
10.34 Term Loan Agreement dated as of January 5, 1995,
among the Corporation, ABN-AMRO Bank, N.V., as
Administrative Agent, and ABN-AMRO Bank, N.V. and
CIBC Inc., as Co-Arrangers filed as Exhibit 10.39
to the Corporation's Annual Report on Form 10-K
for the fiscal year ended December 25, 1994, is
hereby incorporated by reference.
10.34(a) First Amendment to Term Loan Agreement, dated as
of October 20, 1995, amending the Term Loan
Agreement dated as of January 5, 1995, by and
among the Corporation, ABN-AMRO Bank, N.V., as
Administrative Agent, and the lenders named
therein which was filed as Exhibit 10.39 to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 25, 1994, as filed as
Exhibit 10.39(a) on Form 10-Q for the period ended
October 1, 1995, is hereby incorporated by
reference.
10.35 Secured Credit Agreement dated October 20, 1995,
between the Corporation and NexGen, Inc. and First
Amendement to Secured Credit Agreement dated as of
October 30, 1995 (incorporated by reference to
Annex 1 of the Agreement and Plan of Merger
attached as Exhibit 2 to this report), as filed as
Exhibit 10.40 on Form 10-Q for the period ended
October 1, 1995, is hereby incorporated by
reference.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
*10.36 Agreement to Preserve Goodwill dated January 15,
1996, between the Corporation and S. Atiq Raza.
*10.37 1995 Stock Plan of NexGen, Inc., as amended, filed
as Exhibit 99.1 to the Corporation's Registration
Statement on Form S-8 (No. 333-00969), is
incorporated herein by reference.
***10.38 Patent Cross-License Agreement dated December 20,
1995, between the Corporation and Intel
Corporation.
10.39 Contract for Transfer of the Right to the Use of
Land between Advanced Micro Devices (Suzhou)
Limited and China-Singapore Suzhou Industrial Park
Development Co., Ltd.
10.40 NexGen, Inc. 1987 Employee Stock Plan, filed as
Exhibit 99.3 to Post-Effective Amendment No. 1 on
Form S-8 to the Corporation's Registration
Statement on Form S-4 (No. 33-64911), is hereby
incorporated by reference.
10.41 Form of indemnity agreement between NexGen, Inc.
and its directors and officers, filed as Exhibit
10.5 to the Registration Statement of NexGen, Inc.
on Form S-1 (No. 33-90750), is hereby incorporated
by reference.
10.42 Series E Preferred Stock Purchase Warrant of
NexGen, Inc. issued to Paine Webber Incorporated,
filed as Exhibit 10.14 to the Registration
Statement of NexGen, Inc. on Form S-1 (No.
33-90750), is hereby incorporated by reference.
10.43 Series F Preferred Stock Purchase Warrant of
NexGen, Inc., filed as Exhibit 10.15 to the
Registration Statement of NexGen, Inc. on Form S-1
(No. 33-90750), is hereby incorporated by
reference.
10.44 Series G Preferred Stock Purchase Warrant of
NexGen, Inc., filed as Exhibit 10.16 to the
Registration Statement of NexGen, Inc. on Form S-1
(No. 33-90750), is hereby incorporated by
reference.
***10.45 Agreement for Purchase of IBM Products between IBM
and NexGen, Inc. dated June 2, 1994, filed as
Exhibit 10.17 to the Registration Statement of
NexGen, Inc. on Form S-1 (No. 33-90750), is hereby
incorporated by reference.
*10.46 Letter Agreement dated as of September, 1988,
between NexGen, Inc. and S. Atiq Raza, First
Promissory Note dated October 17, 1988, and Second
Promissory Note dated October 17, 1988, as
amended, filed as Exhibit 10.20 to the
Registration Statement of NexGen, Inc. on Form S-1
(No. 33-90750), are hereby incorporated by
reference.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------- -----------------------
<C> <S>
10.47 Series B Preferred Stock Purchase Warrant of
NexGen, Inc. issued to Kleiner, Perkins, Caufield
and Byers IV, as amended, filed as Exhibit 10.23
to the Registration Statement of NexGen, Inc. on
Form S-1 (No. 33-90750), is hereby incorporated by
reference.
11 Statement regarding computation of per share
earnings.
13 1995 Annual Report to Stockholders, portions of
which have been incorporated by reference into
Parts I, II and IV of this annual report.
21 List of AMD subsidiaries.
23 Consent of Ernst & Young LLP, Independent
Auditors, refer to page F-2 herein.
24 Power of Attorney.
27.1 Financial Data Schedule.
</TABLE>
The Corporation will furnish a copy of any exhibit on request and
payment of the Corporation's reasonable expenses of furnishing such exhibit.
* Management contracts and compensatory plans or arrangements required to be
filed as an Exhibit to comply with Item 14(a)(3).
** Confidential treatment has been granted as to certain portions of these
Exhibits.
*** Confidential treatment has been requested as to certain portions of these
Exhibits.
(b) Reports on Form 8-K.
1. A current Report on Form 8-K dated January 17, 1996, was filed
announcing the completion of the Merger of the Corporation and NexGen.
<PAGE>
ADVANCED MICRO DEVICES, INC.
BY-LAWS
-------
(AS AMENDED)
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Sunnyvale, State of California, at such
place as may be fixed from time to time by the Board of Directors, or at such
other place either within or without the State of Delaware as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting. Meetings of stockholders for any other purpose may be held at
such time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
Nomination for election of members of the Board of Directors may be
made by the Board of Directors or by any stockholder of any outstanding class of
capital stock of the corporation entitled to vote for the election of directors.
Notice of intention to make any nominations shall be made in writing and shall
be delivered or mailed to the President of the corporation not less than 21 days
nor more than 60 days prior to any meeting of stockholders called for the
election of directors; provided, however, that if less than 21 days notice of
the meeting be given to shareholders, such notice of intention to nominate shall
be mailed or delivered to the President of the corporation not later than the
close of business on the 7th day following the day on which the notice of
meeting was mailed.
1
<PAGE>
Section 2. Annual meetings of the stockholders shall be held on the
third Wednesday in May if not a legal holiday, and if a legal holiday, then at
the next secular day following, at 4:00 p.m., or at such other date and time as
shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting, at which they shall elect by plurality vote, a Board
of Directors, and transact such other business as may properly be brought before
the meeting.
Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to vote
at such meeting not less than ten nor more than sixty days before the date of
the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the chairman and shall be called by the chairman
or secretary at the request in writing of a majority of the Board of Directors.
Section 6. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given not less than ten nor more than sixty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings
2
<PAGE>
of the stockholders for the transaction of business except as otherwise provided
by statute or by the Certificate of Incorporation. If, however, such quorum
shall not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting, at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the Certificate of Incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder, but no proxy shall
be voted on after three years from its date, unless the proxy provides for a
longer period.
Section 11. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken for or in connection with any corporate
action, the meeting and vote of stockholders may be dispensed with if the
written consent of the stockholders having not less than such percentage of the
number of votes as may be required by the Certificate of Incorporation,
applicable law, rule or regulation is delivered to the corporation at its
registered office in the State of Delaware or at its principal place of business
or to an officer or agent of the corporation having custody of the books in
which the proceedings of the stockholders are recorded; provided that in no case
shall the written consent be by the holders of stock having less than the
minimum percentage of the vote required by statute for the proposed corporate
action, and provided that prompt notice must be given to all stockholders of the
taking of corporate action without a meeting and by less than unanimous written
consent.
3
<PAGE>
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be not less than three (3) nor more than eleven (11). The first
board shall consist of three (3) directors. Thereafter, within the limits above
specified, the number of directors shall be determined by resolution of the
Board of Directors or by the stockholders at the annual meeting. The directors
shall be elected at the annual meeting of the stockholders, except as provided
in Section 2 of this Article, and each director elected shall hold office until
his successor is elected and qualified. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
annual election and until their successors are duly elected and shall qualify,
unless sooner displaced. If there are no directors in office, then an election
of directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by its
Board of Directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these By-Laws directed or required to be exercised or done
by the stockholders.
Section 4. The provisions of Sections 1 and 2 of this Article are
subject to the rights, if any, of the holders of shares of any series of the
Preferred Serial Stock of the Corporation with respect to the election of
directors in the event the corporation defaults in the payment of dividends, the
term of office of any director so elected and the filling of any vacancy in the
office of any director so elected. In connection therewith, so long as any
shares of any such series are outstanding, the number of directors authorized by
resolution of the Board of Directors or by the stockholders at the annual
meeting pursuant to Section 1 of this Article shall be such that upon the
exercise of the holders of shares of any such series of any right to elect a
specified number of
4
<PAGE>
directors the number of directors of the corporation would not exceed the
maximum number of directors designated in Section 1 of this Article.
MEETINGS OF THE BOARD OF DIRECTORS
Section 5. Board of Directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 6. The first meeting of each newly elected Board of Directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given hereinafter provided for special
meetings of the Board of Directors, or as shall be specified in a written waiver
signed by all of the directors.
Section 7. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time to time be
determined by the Board.
Section 8. Special meetings of the board may be called by the
chairman upon notice thereof given to each director either by mail not less than
48 hours before the date of the meeting, by telephone or telegram on 24 hours
notice, or on such shorter notice as the person or persons calling such meeting
may deem necessary or appropriate in the circumstances. Special meetings shall
be called by the chairman, the president or the secretary in like manner or on
like notice on the written request of two directors.
Section 9. At all meetings of the board a majority of the directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
5
<PAGE>
Section 10. Pursuant to Section 141(i) of the Delaware Corporation
Law, meetings of the Board of Directors may be held by use of conference
telephone communications equipment by means of which all persons participating
in the meeting can hear each other.
Section 11. Unless otherwise restricted by the Certificate of
Incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
COMMITTEES OF DIRECTORS
Section 12. The Board of Directors may, in the manner provided by
law, designate one or more committees of the board. Any such committee, to the
extent provided in the enabling resolution, shall have and may exercise the
powers of the Board of Directors in the management of the business and affairs
of the corporation, and may authorize the seal of the corporation to be affixed
to all papers which may require it; provided that in the absence or
disqualification of any member of such committee or committees, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member. Such committee or committees shall have such name or names
as may be determined from time to time by resolution adopted by the Board of
Directors.
Section 13. Meetings of a committee may be called by any member of
the committee upon notice thereof given to each member either by mail not less
than 48 hours before the date of the meeting, by telephone or telegram on 24
hours notice, or on such shorter notice as the person or persons calling such
meeting may deem necessary or appropriate in the circumstances. Except as may
be otherwise specifically provided by the Board, at all Committee meetings a
majority of the members of the committee shall constitute a quorum for the
transaction of business and the act of a majority of the members voting at any
meeting at which there is a quorum shall be the act of the committee; if a
quorum shall not be present at any committee meeting the members present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present. Each committee
shall keep regular minutes of its meetings and report the same to the Board of
Directors when required.
6
<PAGE>
COMPENSATION OF DIRECTORS
Section 14. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Certificate of Incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
Board of Directors and shall be a chairman of the board, a president, a vice-
president, a secretary and a treasurer. The Board of Directors may also choose
additional vice-presidents, and one or more assistant secretaries and assistant
treasurers. Any number of offices may be held by the same person, unless the
Certificate of Incorporation or these by-laws otherwise provide.
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Section 2. The Board of Directors at its first meeting after each
annual meeting of stockholders shall choose a chairman of the board, a
president, one or more vice-presidents, a secretary and a treasurer.
Section 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors, or by the officers under authority
granted by the Board of Directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring in any office of the
corporation shall be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
Section 6. The chairman of the board shall be the chief executive
officer of the corporation; he shall preside at all meetings of the stockholders
and directors, shall have general and active management of the business of the
corporation, shall see that all orders and resolutions of the board are carried
into effect and shall perform such other duties as the Board of Directors shall
prescribe. The chairman of the board shall be a full time employee and subject
to such compensation as the Board of Directors shall determine.
THE PRESIDENT
Section 7. The president of the corporation shall be the principal
operating and administrative officer of the corporation. If there is no
chairman of the board or during the absence or disability of the chairman of the
board, he shall exercise all of the powers and discharge all of the duties of
the chairman of the board. He shall possess power to sign all certificates,
contracts and other instruments of the corporation. He shall, in the absence of
the chairman of the board, preside at all meetings of the stockholders and of
the Board of Directors. He shall perform all such other duties as are incident
to his office or are properly required of him by the Board of Directors.
8
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THE VICE PRESIDENTS
Section 8. Unless otherwise provided by the Board of Directors, each
senior vice president may, in the absence of the president and the chairman of
the Board of Directors, perform the duties and exercise the powers of the
president. Each vice president shall at all times possess power to sign all
certificates, contracts and other instruments of the corporation, except as
otherwise limited in writing by the chairman of the board or the president of
the corporation, and shall have such other authority and perform such other
duties as these by-laws or the Board of Directors, executive committee, chairman
of the board or present shall prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the Board of Directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the secretary or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
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THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation to
such depositories as may be designated by the Board of Directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the Board of Directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the Board of Directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of the corporation by, the
chairman or vice-chairman of the Board of Directors or the president or a vice-
president and the treasurer or an assistant treasurer, or the secretary or an
assistant secretary of the corporation, certifying the number of shares owned by
him in the corporation.
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Section 2. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5(a). In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date
which shall be not more than sixty nor less than ten days before the date of
such meeting, nor more than sixty
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<PAGE>
days prior to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting, provided; however, that the Board of Directors may
fix a new record date of the adjourned meeting.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. Any stockholder of record seeking to have the stockholders authorize
or take corporate action by written consent shall, by written notice to the
Secretary, request the Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within ten (10) days after the date
on which such a request is received, adopt a resolution fixing the record date.
If no record date has been fixed by the Board of Directors within ten (10) days
of the date on which such a request is received, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the corporation having
custody of the book in which proceedings of stockholders' meetings are recorded,
to the attention of the Secretary of the corporation. Delivery shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by applicable law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the date on which the Board of
Directors adopts the resolution taking such prior action.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
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<PAGE>
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the Certificate of Incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The Board of Directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the corporation.
CHECKS
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the Board of Directors.
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SEAL
Section 6. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 1. Subject to Section 3 of this Article VIII, the corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he is or was a
director, officer or employee of the corporation, or is or was serving at the
request of the corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, against all expenses, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) actually and reasonably incurred by
him in connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
---------------
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 2. Subject to Section 3 of this Article VIII, the corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer or employee of the corporation, or is or was
serving at the request of the corporation as a director, officer or employee of
another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the
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<PAGE>
corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
AUTHORIZATION OF INDEMNIFICATION
Section 3. Any indemnification under this Article VIII (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director, officer
or employee is proper in the circumstances because he has met the applicable
standard of conduct set forth in Section 1 or Section 2 of this Article VIII, as
the case may be. Such determination shall be made (i) by a majority vote of
the directors who were not parties to such action, suit or proceeding, even
though less than a quorum, or (ii) if there are no such directors or if such
directors so direct, by independent legal counsel in a written opinion, or (iii)
by the stockholders. To the extent, however, that a director, officer or
employee of the corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding, described above, or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith, without the necessity of authorization in the specific
case.
GOOD FAITH DEFINED
Section 4. For the purposes of any determination under Section 3 of
this Article VIII, a person shall be deemed to have acted or refrained from
acting in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe his
action or forbearance from acting was unlawful, if his action, or forbearance as
the case may be, is based on the records or books of account of the corporation
or other enterprise, or on information supplied to him by the officers of the
corporation or other enterprise in the course of their duties, or on the advice
of legal counsel for the corporation or other enterprise or on information or
records given or reports made to the corporation or other enterprise by an
independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the corporation or other enterprise. The term
"other enterprise" as used in this
15
<PAGE>
Section 4 shall mean any other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise which such person is or was
serving at the request of the corporation as a director, officer or employee.
The provisions of this Section 4 shall not be deemed to be exclusive or to limit
in any way the circumstances in which a person may be deemed to have met the
applicable standard of conduct set forth in Sections 1 or 2 of this Article
VIII, as the case may be.
PROCEDURES FOR INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
Section 5(a). Any indemnification under Sections 1 or 2 or
advancement of expenses under Section 6 of this Article VIII shall be made
promptly, and in any event within ninety days, upon the written request of the
person seeking indemnification or advancement of expense, unless a determination
is reasonably and promptly made by the Board of Directors by a majority vote of
the directors who are not parties to the action, suit or proceeding in question
that such person acted in a manner set forth in such Sections as to justify the
corporation's not indemnifying or making an advancement of expenses to such
person. In the event there are no such directors or if such directors so
direct, the Board of Directors shall promptly direct that independent legal
counsel shall give its opinion in writing whether such person acted in the
manner set forth in such Sections as to justify the corporation's not
indemnifying or making an advancement of expenses to such person.
(b) The right to indemnification or advancement of expenses
granted by this Article shall be enforceable by such person in the Court of
Chancery of the State of Delaware, if the Board of Directors or independent
legal counsel denies the claim, in whole or in part, or if no disposition of
such claim is made within ninety days. The costs and expenses incurred by such
person in connection with successfully establishing his right to
indemnification, in whole or in part, in any such proceeding shall also be
indemnified by the corporation.
EXPENSES PAYABLE IN ADVANCE
Section 6. Except as limited by Section 5 of this Article, expenses
incurred in defending or investigating a threatened or pending action, suit or
proceeding shall be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director, officer or employee to repay such amount if it
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<PAGE>
shall ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this Article VIII.
NON-EXCLUSIVITY AND SURVIVAL OF INDEMNIFICATION
Section 7. The indemnification and advancement of expenses provided
by or granted pursuant to the other Sections of this Article VIII shall not be
deemed exclusive of any other rights to which any person seeking indemnification
or advancement of expenses may be entitled under any by-law, agreement,
contract, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office, it being the policy of the corporation that indemnification
of the persons specified in Sections 1 and 2 of this Article VIII shall be made
to the fullest extent permitted by Delaware law. The provisions of this Article
VIII shall not be deemed to preclude the indemnification of any person who is
not specified in Sections 1 or 2 of this Article VIII but whom the Corporation
has the power or obligation to indemnify under the provisions of Delaware law or
otherwise. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall, unless otherwise provided or
ratified, continue as to a person who has ceased to be a director, officer or
employee and shall inure to the benefit of the heirs, executors and
administrators of such person.
INSURANCE
Section 8. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer or employee of the
Corporation, or is or was serving at the request of the corporation as a
director, officer or employee of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the corporation would have the power or the
obligation to indemnify him against such liability under the provisions of this
Article VIII, or otherwise under Delaware law.
MEANING OF "CORPORATION" FOR PURPOSES OF ARTICLE VIII
Section 9. For purposes of this Article VIII, references to "the
Corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any
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constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers or employees, so that any person who is or was
a director, officer or employee, of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, shall stand in the same position under the
provisions of this Article VIII with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
ARTICLE IX
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the Board of Directors, when
such power is conferred upon the Board of Directors, by the Certificate of
Incorporation, at any regular meeting of the stockholders or of the Board of
Directors or at any special meeting of the stockholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new by-
laws be contained in the notice of such special meeting.
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[LETTERHEAD OF ADVANCED MICRO DEVICES INC. APPEARS HERE]
August 4, 1995
Anthony B. Holbrook
41 Hollins Drive
Santa Cruz, CA 95060
Dear Tony:
We are pleased that you have decided to continue your part time employment
arrangement with Advanced Micro Devices, Inc. (the "Company") until November 30,
1995, upon the terms set forth in the certain agreement dated August 24, 1994,
between you and the company, a copy of which is attached hereto (the
"Agreement"). This letter amends the Agreement by substituting the date "July
31, 1995" in paragraphs 2, 3 and 8 of the Agreement with the date "November 30,
1995". All other terms of the Agreement will remain in effect throughout the
extended term of the Agreement. This amendment will be deemed effective July
31, 1995.
If the above meets with your approval, please sign the enclosed copy and
return it to me.
Very truly yours,
/s/ Stanley Winvick
Stanley Winvick
Senior Vice President,
Human Resources
Accepted and Agreed:
/s/ Anthony B. Holbrook
- -----------------------
Anthony B. Holbrook
SW/pom
encl.
cc: W.J. Sanders III
<PAGE>
[LETTERHEAD OF ADVANCED MICRO DEVICES INC APPEARS HERE]
November 29, 1995
Anthony B. Holbrook
41 Hollins Drive
Santa Cruz, CA 95060
RE: Second Amendment to Employment Agreement
----------------------------------------
Dear Tony:
We are pleased that you have decided to continue your part time employment
arrangement with Advanced Micro Devices, Inc. (the "Company") until April 25,
1996, upon the terms set forth in the certain agreement dated August 24, 1994,
between you and the Company (the "Agreement"), as amended by the letter from me
to you dated August 4, 1995. This letter further amends the Agreement by
substituting the date "November 30, 1995" in paragraphs 2,3, and 8 of the
Agreement with the date "April 25, 1996". All other terms of the Agreement will
remain in effect throughout the extended term of the Agreement. This amendment
will be deemed effective November 30, 1995.
If the above meets with your approval, please sign the enclosed copy and
return it to me.
Very truly yours,
/s/ Stan Winvick
Stan Winvick
Senior Vice President,
Human Resources
Accepted and Agreed:
/s/ Anthony B. Holbrook
- --------------------------
Anthony B. Holbrook
SW/pom
encl.
cc: W.J. Sanders III
<PAGE>
THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
--------------------------------------------------------
THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the
"Amendment"), dated as of January 12, 1996 is entered into by and among ADVANCED
---------
MICRO DEVICES, INC. a Delaware corporation (the "Company"), the several
-------
financial institutions party to the Credit Agreement referred to in the Recitals
to this Amendment (collectively, the "Banks"), BANK OF AMERICA NATIONAL TRUST
-----
AND SAVINGS ASSOCIATION, as agent for the Banks (the "Agent"), and THE FIRST
-----
NATIONAL BANK OF BOSTON, as co-agent for the Banks (the "Co-Agent").
--------
RECITALS
--------
A. The Company, the Banks, the Agent and the Co-Agent are parties to the
Amended and Restated Credit Agreement dated as of September 21, 1994, as amended
by that certain First Amendment to Amended and Restated Credit Agreement dated
as of April 7, 1995, and that certain Second Amendment to Amended and Restated
Credit Agreement - dated as of October 20, 1995 (as so amended, the "Credit
------
Agreement"), pursuant to which the Banks have extended certain credit
- ----------
facilities to the Company.
B. The Company has requested that the Banks agree to a certain amendment
of the Credit Agreement.
C. The Banks are willing to amend the Credit Agreement, subject to the
terms and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms not otherwise defined herein shall
-------------
have the meanings given to them in the Credit Agreement and in Section 2 hereof.
2. Amendment to the Credit Agreement. Section 7.03 of the Credit
---------------------------------
Agreement is hereby amended to add the following new subsection (d) thereto:
"(d) the merger of the Target with and into the Company, whereupon the
separate existence of the Target shall cease and the Company shall be the
surviving corporation; provided, that (i) such merger shall have been
--------
consummated on or before June 30, 1996, (ii) such merger shall qualify as a
tax-free reorganization within the meaning of Section 368 of the Code,
(iii) such merger is being undertaken in accordance with all applicable
Requirements of Law, and (iv) such merger shall not result in any Default
or Event of Default."
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In addition, "; and" shall replace the period at the end of subsection (c) of
such section 7.03.
3. Representations and Warranties. The Company hereby represents and
------------------------------
warrants to the Agent and the Banks as follows:
(a) No Default or Event of Default has occurred and is continuing.
(b) The execution, delivery and performance by the Company of this
Amendment have been duly authorized by all necessary corporate and other action
and do not and will not require any registration with, consent or approval of,
notice to or action by, any Person (including any Governmental Authority) in
order to be effective and enforceable. The Credit Agreement as amended by this
Amendment constitutes the legal, valid and binding obligations of the Company,
enforceable against it in accordance with its respective terms, without defense,
counterclaim or offset.
(c) All representations and warranties of the Company contained in
the Credit Agreement are true and correct.
(d) The Company is entering into this Amendment on the basis of its
own investigation and for its own reasons, without reliance upon the Agent and
the Banks or any other Person.
4. Conditions to Effectiveness of Amendment. This Amendment will become
----------------------------------------
effective as of January 12, 1996; provided that each of the following conditions
--------
precedent is satisfied:
(a) The Agent shall have received from the Company and each of the
Majority Banks a duly executed original (or, if elected by the Agent, an
executed facsimile copy) of this Amendment; and
(b) Each of the representations and warranties set forth in Section 3
of this Amendment shall be true and correct as of such date.
5. Reservation of Rights. The Company acknowledges and agrees that the
---------------------
execution and delivery by the Agent and the Banks of this Amendment shall not
be deemed to create a course of dealing or otherwise obligate the Agent or the
Banks to forbear or execute similar amendments under the same or similar
circumstances in the future.
6. Miscellaneous.
-------------
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Credit Agreement are and shall remain in full force and effect
and all references therein to
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<PAGE>
such Credit Agreement shall henceforth refer to the Credit Agreement as amended
by this Amendment. This Amendment shall be deemed incorporated into, and a part
of, the Credit Agreement.
(b) This Amendment shall be binding upon and inure to the benefit of
the parties hereto and thereto and their respective successors and assigns. No
third party beneficiaries are intended in connection with this Amendment.
(c) This Amendment shall be governed by and construed in accordance
with the law of the State of California.
(d) This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument. Each of the parties hereto
understands and agrees that this document (and any other document required
herein) may be delivered by any party thereto either in the form of an executed
original or an executed original sent by facsimile transmission to be followed
promptly by mailing of a hard copy original, and that receipt by the Agent of a
facsimile transmitted document purportedly bearing the signature of a Bank or
the Company shall bind such Bank or the Company, respectively, with the same
force and effect as the delivery of a hard copy original. Any failure by the
Agent to receive the hard copy executed original of such document shall not
diminish the binding effect of receipt of the facsimile transmitted executed
original of such document of the party whose hard copy page was not received by
the Agent.
(e) This Amendment, together with the Credit Agreement, contains the
entire and exclusive agreement of the parties hereto with reference to the
matters discussed herein and therein. This Amendment supersedes all prior
drafts and communications with respect thereto. This Amendment may not be
amended except in accordance with the provisions of Section 10.01 of the Credit
Agreement.
(f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment
of Credit Agreement, respectively.
(g) The Company covenants to pay to or reimburse the Agent and
the Banks, upon demand, for all costs and expenses (including allocated cost
of in-house counsel) incurred in connection with the development, preparation,
negotiation, execution and delivery of this Amendment.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment as of the date first above written.
ADVANCED MICRO DEVICES, INC.
By: /s/ Marvin D. Burkett
---------------------------------
Marvin D. Burkett
Senior Vice President and
Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Agent
By: /s/ Wendy M. Young
-----------------------------------
Wendy M. Young
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON, as Co-Agent
By: /s/ signature appears here
-----------------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as a Bank
By: /s/ Kevin McMahon
-----------------------------------
Kevin McMahon
Title: Vice President
BANQUE NATIONALE de PARIS
By: /s/ Katherine Wolfe
-----------------------------------
Katherine Wolfe
Title: Vice President
By: /s/ Jeffrey S. Kajisa
-----------------------------------
Jeffrey S. Kajisa
Title: Vice President
CHEMICAL BANK
By: /s/ John J. Hubin
-----------------------------------
Title: Managing Director
4
<PAGE>
NATIONAL WESTMINSTER BANK, PLC
Nassau Branch
By: /s/ signature appears here
-----------------------------------
Title: VICE PRESIDENT
NATIONAL WESTMINSTER BANK, PLC
New York Branch
By: /s/ signature appears here
-----------------------------------
Title: VICE PRESIDENT
ROYAL BANK OF CANADA
By: /s/ Michael A. Cole
-----------------------------------
Title: Michael A. Cole
Manager
SHAWMUT BANK, N.A.
By: /s/ Frank H. Benesh
-----------------------------------
Title: Frank H. Benesh
Vice President
TEXAS COMMERCE BANK
By: /s/ Neil H. Gainer
-----------------------------------
Title: Neil H. Gainer
Executive Vice President
THE FIRST NATIONAL BANK OF BOSTON,
as a Bank
By: /s/ signature appears here
-----------------------------------
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ Makoto Masuda
-----------------------------------
Title: Makoto Masuda
Joint General Manager
5
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, Los Angeles Agency
By: /s/ B. Lewathon
------------------------------------
Title: Deputy General Manager
UNION BANK
By: /s/ Bresati Dios
------------------------------------
Title: Vice President and District Manager
6
<PAGE>
SECOND AMENDMENT TO TERM LOAN AGREEMENT
---------------------------------------
THIS SECOND AMENDMENT TO TERM LOAN AGREEMENT (this
"Amendment"), dated as of January 12, 1996 is entered into by and among
- -----------
ADVANCED MICRO DEVICES, INC., a Delaware corporation (the "Company"), the
---------
several financial institutions party to the Term Loan Agreement referred to in
the Recitals to this Amendment (the "Banks"), ABN AMRO Bank N.V., as
Administrative Agent, and ABN AMRO Bank N.V. and CIBC Inc., as Co-Arrangers.
RECITALS
--------
A. The Company, the Banks, the Administrative Agent and the Co-Arrangers
are parties to the Term Loan Agreement dated as of January 5, 1995, as amended
by that certain First Amendment to Term Loan Agreement dated as of October
20, 1995 (as so amended, the "Term Loan Agreement"), pursuant to which the Banks
---------------------
have extended certain credit facilities to the Company.
B. The Company has requested that the Banks agree to certain amendments
of the Term Loan Agreement.
C. The Banks are willing to amend the Term Loan Agreement, subject to the
terms and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms not otherwise defined herein shall
-------------
have the meanings given to them in the Term Loan Agreement.
2. Amendment to the Term Loan Agreement. Section 7.3 of the Term Loan
------------------------------------
Agreement is hereby amended to add the following new subsection (d) thereto:
"(d) the merger of the Target with and into the Company,
whereupon the separate existence of the Target shall cease and the
Company shall be the surviving corporation; provided, that (i) such
--------
merger shall have been consummated on or before June 30, 1996, (ii)
such merger shall qualify as a tax-free reorganization within the
meaning of Section 368 of the Code, (iii) such merger is being
1.
<PAGE>
undertaken in accordance with all applicable Requirements of Law, and
(iv) such merger shall not result in any Default or Event of Default."
In addition, "; and" shall replace the period at the end of subsection (c) of
such Section 7.3.
3. Representations and Warranties.
------------------------------
The Company hereby represents and warrants to the Administrative Agent
and the Banks as follows:
(a) No Default or Event of Default has occurred and is continuing.
(b) The execution, delivery and performance by the Company of this
Amendment have been duly authorized by all necessary corporate and other action
and do not and will not require any registration with, consent or approval of,
notice to or action by, any Person (including any Governmental Authority) in
order to be effective and enforceable. The Term Loan Agreement as amended by
this Amendment constitutes the legal, valid and binding obligations of the
Company, enforceable against it in accordance with its respective terms, without
defense, counterclaim or offset.
(c) All representations and warranties of the Company contained in
the Term Loan Agreement are true and correct.
(d) The Company is entering into this Amendment on the basis of its
own investigation and for its own reasons, without reliance upon the
Administrative Agent and the Banks or any other Person.
4. Conditions to Effectiveness of Amendment.
----------------------------------------
This Amendment will become effective on January 12, 1996; provided
--------
that each of the following conditions precedent is satisfied:
(a) The Administrative Agent shall have received from each of the
Company and the Majority Banks a duly executed original (or, if elected by the
Administrative Agent, an executed facsimile copy) of this Amendment; and
(b) Each of the representations and warranties set forth in Section 3
of this Amendment shall be true and correct on such date.
2.
<PAGE>
5. Reservation of Rights. The Company acknowledges and agrees that the
---------------------
execution and delivery by the Administrative Agent and the Banks of this
Amendment shall not be deemed to create a course of dealing or otherwise
obligate the Administrative Agent or the Banks to forbear or execute similar
amendments under the same or similar circumstances in the future.
6. Miscellaneous.
-------------
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Term Loan Agreement are and shall remain in full force and
effect and all references therein to such Term Loan Agreement shall henceforth
refer to the Term Loan Agreement as amended by this Amendment. This Amendment
shall be deemed incorporated into, and a part of, the Term Loan Agreement.
(b) This Amendment shall be binding upon and inure to the benefit of
the parties hereto and thereto and their respective successors and assigns. No
third party beneficiaries are intended in connection with this Amendment.
(c) This Amendment shall be governed by and construed in accordance
with the law of the State of California.
(d) This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument. Each of the parties hereto
understands and agrees that this document (and any other document required
herein) may be delivered by any party thereto either in the form of an executed
original or an executed original sent by facsimile transmission to be followed
promptly by mailing of a hard copy original, and that receipt by the
Administrative Agent of a facsimile transmitted document purportedly bearing
the signature of a Bank or the Company shall bind such Bank or the Company,
respectively, with the same force and effect as the delivery of a hard copy
original. Any failure by the Administrative Agent to receive the hard copy
executed original of such document shall not diminish the binding effect of
receipt of the facsimile transmitted executed original of such document of the
party whose hard copy page was not received by the Administrative Agent.
(e) This Amendment, together with Term Loan Agreement, contains the
entire and exclusive agreement of the parties hereto with reference to the
matters discussed herein and therein. This Amendment supersedes all prior drafts
and communications with respect thereto. This Amendment may not be amended
except in accordance with the provisions of Section 10.01 of the Term Loan
Agreement.
(f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated
3.
<PAGE>
without affecting the remaining provisions of this Amendment or the Term Loan
Agreement, respectively.
(g) The Company covenants to pay to or reimburse the Administrative
Agent and the Banks, upon demand, for all costs and expenses (including
allocated costs of in-house counsel) incurred in connection with the
development, preparation, negotiation, execution and delivery of this Amendment.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment as of the date first above written.
ADVANCED MICRO DEVICES, INC.
By /s/ Marvin D. Burkett
----------------------
Marvin D. Burkett
Senior Vice President and
Chief Financial Officer
ABN AMRO BANK N.V.
By /s/ signature appears here
---------------------
Title: Officer
By /s/ signature appears here
---------------------
Title: GVP & Director
CIBC Inc.
By /s/ Tom R. Wagner
---------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Kevin McMahon
---------------------
Title: Vice President
4.
<PAGE>
BANQUE NATIONALE DE PARIS
By /s/ Jennifer Y. Cho
----------------------
Title: Jennifer Y. Cho
Vice President
By /s/ Jeffrey S. Kajisa
----------------------
Title: Jeffrey S. Kajisa
Assistant Vice President
FIRST INTERSTATE BANK OF
CALIFORNIA
By /s/ signature appears here
----------------------
Title: Vice President
By /s/ Marianne McIntosh
----------------------
Title: Vice President
FLEET BANK OF MASSACHUSETTS,
NATIONAL ASSOCIATION
By /s/ signature appears here
----------------------
Title: Vice President
INDUSTRIAL BANK OF JAPAN
By /s/ Makoto Masuda
----------------------
Title: Joint General Manager
THE NIPPON CREDIT BANK, LTD.
By /s/ signature appears here
----------------------
Title: Vice President
5.
<PAGE>
Recording Requested By
and When Recorded, Return to:
Mayer, Brown & Platt [STAMP OF BRENDA DAVIS
350 South Grand Avenue RECORDER APPEARS HERE]
25th Floor
Los Angeles, California 90071-1563
Attention: Leslie T. Tedrow
(213) 229-9500
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOURTH AMENDMENT TO BUILDING LEASE
THIS FOURTH AMENDMENT TO BUILDING LEASE (this "Fourth Amendment") is
----------------
entered into as of November 10, 1995, between CIBC INC., a Delaware corporation
("Lessor"), and AMD INTERNATIONAL SALES & SERVICE, LTD., a Delaware corporation
------
("Lessee").
------
RECITALS
--------
A. For purposes of the financing by Lessor of the acquisition of a
certain Building, Lessor and Lessee entered into a certain Building Lease, dated
as of September 22, 1992, and recorded on September 22, 1992 as Instrument No.
11550954 in the Official Records of the Recorder of Santa Clara County,
California, as amended by that certain First Amendment to Building Lease, dated
as of December 22, 1992, and recorded on January 5, 1993 as Instrument No.
11720034 in Official Records of the Recorder of Santa Clara County, California
(such Building Lease, as so amended, is referred to herein as the "First Amended
-------------
Building Lease"), pursuant to which Lessor leases the Building (as defined
- ----------------
therein) to Lessee and Lessee leases the Building from Lessor.
B. Lessor and Lessee entered into that certain Second Amendment to
Building Lease, dated as of December 17, 1993, and recorded on December 20, 1993
as Instrument No. 12271738 in the Official Records of Santa Clara County,
California (the "Second Amendment to Building Lease"), pursuant to which Lessor
------------------------------------
financed certain renovations to the Building. The First Amended Building Lease,
as amended by the Second Amendment to Building Lease, is referred to herein as
the "Second Amended Building Lease."
------------------------------
C. The Second Amended Building Lease was modified by a certain Third
Amendment to Building Lease, dated as of August 21, 1995 and recorded on
September 20, 1995 in the Official Records of Santa Clara County, California, as
Document No. 13020001 (the "Third Amendment to Building Lease"). The Second
-----------------------------------
Amended Building
<PAGE>
Lease, as amended by the Third Amendment to Building Lease, is referred to
herein as the "Third Amended Building Lease."
-----------------------------
D. Advanced Micro Devices, Inc., a Delaware corporation (the "Guarantor"),
executed and delivered to Lessor a Third Amended and Restated Guaranty, dated as
of August 21, 1995 and accepted by Lessor as of August 21, 1995 (the "Third
-----
Restated Guaranty"), pursuant to which the Guarantor guarantied to Lessor
- -------------------
the obligations of Lessee under the Third Amended Building Lease and under the
Third Amended Land Lease (defined below).
E. The Third Restated Guaranty was modified by a certain
First Amendment to Third Amended and Restated Guaranty (the "First
-----
Guaranty Amendment"), dated as of October 20, 1995 (the Third
- --------------------
Restated Guaranty, as amended by the First Guaranty Amendment, is
referred to herein as the "First Amended Guaranty").
-----------------------
F. Lessor and Lessee desire to amend the Third Amended Building Lease to
(i) reflect that the Third Restated Guaranty was amended by the First Guaranty
Amendment, and (ii) incorporate certain other changes and modifications that
have been agreed to by Lessor and Lessee.
G. Concurrently herewith, Lessor and Lessee also are amending that
certain Land Lease between Lessor and Lessee dated as of September 22, 1992,
and recorded on September 22, 1992 as Instrument No. 11550953 in the Official
Records of the Recorder of Santa Clara County, California, as amended by (i) a
certain First Amendment to Land Lease, dated as of December 22, 1992, and
recorded on January 5, 1993 in the Official Records of the Recorder of Santa
Clara County, California as Document No. 11720033, (ii) a certain Second
Amendment to Land Lease dated as of December 17, 1993, and recorded on December
20, 1993 in the Official Records of Santa Clara County, California, as Document
No. 12271737, and (iii) a certain Third Amendment to Land Lease, dated as of
August 21, 1995 and recorded on September 20, 1995 in the Official Records of
Santa Clara County, California, as Document No. 13020000 (as so amended, the
"Third Amended Land Lease"), pursuant to which Lessor leases to Lessee certain
- ---------------------------
land described in Appendix 1 attached hereto.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Lessor and Lessee hereby agree as follows (terms used but not
expressly defined herein shall have the meaning provided in the Third Amended
Building Lease):
-2-
<PAGE>
A. MODIFICATIONS TO BUILDING LEASE
Lessor and Lessee hereby amend the Third Amended Building Lease as follows:
1. Definitions.
-----------
(a) All references in the Third Amended Building Lease to "this Lease" or
"the Lease" will hereafter refer to the Third Amended Building Lease as amended
by this Fourth Amendment.
(b) The definition of Guaranty is hereby deleted and replaced with the
--------
following:
Guaranty: that certain Third Amended and Restated Guaranty, dated as
--------
of August 21, 1995, made by Guarantor in favor of Lessor, as amended by
that certain First Amendment to Third Amended and Restated Guaranty, dated
as of October 20, 1995, and as the same may be further amended, modified,
restated or supplemented from time to time.
(c) The definition of Land Lease is hereby deleted and replaced with the
----------
following:
Land Lease: that certain Land Lease between Lessor and
----------
Lessee dated as of September 22, 1992, and recorded on September 22, 1992
as Instrument No. 11550953 in the Official Records of the Recorder of Santa
Clara County, California, as amended by that certain First Amendment to
Land Lease, dated as of December 22, 1992, and recorded on January 5, 1993
in the Official Records of the Recorder of Santa Clara County, California
as Document No.11720034, and as further amended by a certain Second
Amendment to Land Lease, dated as of December 17, 1993, and recorded on
December 20, 1993 in the Official Records of the Recorder of Santa Clara
County, California as Document No. 12271737, and as further amended by a
certain Third Amendment to Land Lease, dated as of August 21, 1995, and
recorded on September 20, 1995 in the Official Records of the Recorder of
Santa Clara County, California as Document No. 13020000, and as further
amended by a certain Fourth Amendment to Land Lease, dated as of November
10, 1995.
B. AFFIRMATION OF STATUS OF BUILDING LEASE
Except as amended by this Fourth Amendment, the Third Amended Building
Lease is unchanged; and, as amended by this Fourth Amendment, the Third Amended
Building Lease is hereby ratified and affirmed, and remains in full force and
effect.
-3-
<PAGE>
IN WITNESS WHEREOF, all parties hereto have caused this Fourth Amendment
to be duly executed as of the date first set forth above.
LESSOR: CIBC INC., a Delaware corporation
By /s/ Peter Tavlin
-------------------------------
Name: Peter Tavlin
Title: Vice President
LESSEE: AMD INTERNATIONAL SALES & SERVICE, LTD., a
Delaware corporation
By /s/ Marvin D. Burkett
--------------------------------
Name: Marvin D. Burkett
Title: President
Guarantor hereby consents to the foregoing amendment, and acknowledges
and agrees that all references in the First Amended Guaranty to the "Amended
Building Lease" or to the "Amended Land Lease" will hereafter refer to such
Amended Building Lease and Amended Land Lease, as the case may be, as
respectively amended by this Fourth Amendment to Building Lease and by the
Fourth Amendment to Land Lease, dated as of the date of the foregoing
amendment, between Lessor and Lessee. Except as modified by this paragraph,
the First Amended Guaranty is unmodified; and, as modified by this paragraph,
the First Amended Guaranty remains in full force and effect and is hereby
reaffirmed by the Guarantor.
Guarantor:
ADVANCED MICRO DEVICES, INC.
By: /s/ Marvin D. Burkett
--------------------------------
Name: Marvin D. Burkett
Title: SR. VICE PRESIDENT, CHIEF FINANCIAL AND
ADMINISTRATIVE OFFICER
Date: November 10, 1995
<PAGE>
Reference is made to the Loan Agreement, dated as of December 17,
1993 (the "Loan Agreement"), between CIBC INC., a Delaware
----------------
corporation, and THE LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS
ANGELES AGENCY ("Lender"). In accordance with Section 8(b) of the
------
Loan Agreement, Lender hereby consents to the foregoing Fourth
Amendment to Building Lease.
THE LONG-TERM CREDIT BANK OF
JAPAN, LOS ANGELES AGENCY
By: /s/ Motokazu Uematsu
--------------------------
Name: Motokazu Uematsu
----------------
Title: Deputy General Manager
----------------------
Date: November 27, 1995
-----------
<PAGE>
ACKNOWLEDGEMENT FOR CIBC INC.
STATE OF NEW YORK
COUNTY OF NEW YORK
On November 16, 1995, before me, Elvira A. D'Amore, personally appeared
Peter Tavlin, personally known to me to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the persons acted, executed the instrument.
WITNESS my hand and official seal.
[NOTARIAL SEAL OF
ELVIRA A. D'AMORE
STATE OF NEW YORK
APPEARS HERE]
Signature:/s/ Elvira A. D'Amore
-----------------------
(Seal)
ACKNOWLEDGEMENT FOR AMD INTERNATIONAL SALES & SERVICE, LTD.
STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
On November 10, 1995, before me, Janis V. Cahill, personally appeared
Marvin D. Burkett, personally known to me to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Signature:/s/ Janis V. Cahill
-------------------
[NOTARIAL SEAL OF JANIS V. CAHILL
STATE OF CALIFORNIA SANTA CLARA
(Seal) COUNTY APPEARS HERE]
<PAGE>
ACKNOWLEDGEMENT FOR ADVANCED MICRO DEVICES, INC.
STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
On November 10, 1995, before me, Janis V. Cahill, personally appeared
Marvin D. Burkett, personally known to me to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
[NOTARIAL SEAL OF JANIS V. CAHILL
STATE OF CALIFORNIA SANTA CLARA
COUNTY APPEARS HERE]
Signature:/s/ Janis V. Cahill
-------------------
(Seal)
ACKNOWLEDGEMENT FOR
THE LONG-TERM CREDIT BANK OF JAPAN, LOS ANGELES AGENCY
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On November 27, 1995, before me, Diane D. Fortney, personally appeared
Motokazu Uematsu, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature:/s/ Diane D. Fortney
--------------------
[NOTARIAL SEAL OF DIANE D. FORTNEY
STATE OF CALIFORNIA LOS ANGELES
(Seal) COUNTY APPEARS HERE]
<PAGE>
APPENDIX 1
Legal Description of Land
The land referred to herein is situated in the State of California, County of
Santa Clara, City of Sunnyvale and is described as follows:
Parcel A as shown upon that certain Parcel Map filed for Record February 26,
1975 in the Office of the Recorder, County of Santa Clara, in Book 351 of Maps
at Pages 54 and 55.
APN: 205-22-020, 021
ARB: 206-60-015, 018, 035, 042, 014, 013, 012, 053, 052, 057
<PAGE>
Recording Requested By
and When Recorded, Return to:
Mayer, Brown & Platt
350 South Grand Avenue
25th Floor
Los Angeles, California 90071-1563
Attention: Leslie T. Tedrow
(213) 229-9500
================================================================================
FOURTH AMENDMENT TO LAND LEASE
THIS FOURTH AMENDMENT TO LAND LEASE (this "Fourth Amendment")
----------------
is entered into as of November 10, 1995, between CIBC INC., a
Delaware corporation ("Lessor"), and AMD INTERNATIONAL SALES &
------
SERVICE, LTD., a Delaware corporation ("Lessee").
------
RECITALS
--------
A. For purposes of the financing by Lessor of the acquisition of
the Land described in Appendix 1 attached hereto, Lessor and Lessee entered into
a certain Land Lease, dated as of September 22, 1992, and recorded on
September 22, 1992 as Instrument No. 11550953 in the Official Records of the
Recorder of Santa Clara County, California, as amended by that certain First
Amendment to Land Lease, dated as of December 22, 1992, and recorded on
January 5, 1993 as Instrument No. 11720033 in Official Records of the Recorder
of Santa Clara County, California (such Land Lease, as so amended, is referred
to herein as the "First Amended Land Lease"), pursuant to which Lessor leases
------------------------
the Land (as defined therein) to Lessee and Lessee leases the Land from Lessor.
B. The First Amended Land Lease was modified by a certain Second Amendment
to Land Lease dated as of December 17, 1993, and recorded on December 20, 1993
in the Official Records of Santa Clara County, California, as Document No.
12271737 (the "Second Amendment to Land Lease"). The First Amended Land Lease,
------------------------------
as amended by the Second Amendment to Land Lease, is referred to herein as the
"Second Amended Land Lease."
-------------------------
C. The Second Amended Land Lease was modified by a certain Third Amendment
to Land Lease, dated as of August 21, 1995 and recorded on September 20, 1995 in
the Official Records of Santa Clara County, California, as Document No. 13020000
(the "Third Amendment to Land Lease"). The Second Amended Land Lease, as
-----------------------------
amended by the Third Amendment to Land Lease, is referred to herein as the
"Third Amended Land Lease."
------------------------
<PAGE>
D. Advanced Micro Devices, Inc., a Delaware corporation (the "Guarantor"),
---------
executed and delivered to Lessor a Third Amended and Restated Guaranty, dated as
of August 21, 1995 and accepted by Lessor as of August 21, 1995 (the "Third
-----
Restated Guaranty"), pursuant to which the Guarantor guarantied to Lessor
- -----------------
the obligations of Lessee under the Third Amended Land Lease and under the Third
Amended Building Lease (defined below).
E. The Third Restated Guaranty was modified by a certain
First Amendment to Third Amended and Restated Guaranty (the "First
-----
Guaranty Amendment"), dated as of October, 20, 1995 (the Third
- ------------------
Restated Guaranty, as amended by the First Guaranty Amendment, is
referred to herein as the "First Amended Guaranty")
----------------------
F. Lessor and Lessee desire to amend the Third Amended Land Lease to (i)
reflect that the Third Restated Guaranty was amended by the First Guaranty
Amendment, and (ii) incorporate certain other changes and modifications that
have been agreed to by Lessor and Lessee.
G. Concurrently herewith, Lessor and Lessee also are amending that
certain Building Lease between Lessor and Lessee dated as of September 22, 1992,
and recorded on September 22, 1992 as Instrument No. 11550954 in the Official
Records of the Recorder of Santa Clara County, California, as amended by (i) a
certain First Amendment to Building Lease, dated as of December 22, 1992, and
recorded on January 5, 1993 in the Official Records of the Recorder of Santa
Clara County, California as Document No. 11720034, (ii) a certain Second
Amendment to Building Lease dated as of December 17, 1993, and recorded on
December 20, 1993 in the Official Records of Santa Clara County, California, as
Document No. 12271738, and (iii) a certain Third Amendment to Building Lease
dated as of August 21, 1995, and recorded on September 20, 1995 in the Official
Records of Santa Clara County, California, as Document No. 13020001 (as so
amended, the "Third Amended Building Lease" ).
----------------------------
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Lessor and Lessee hereby agree as follows (terms used but not
expressly defined herein shall have the meaning provided in the Third Amended
Land Lease):
-2-
<PAGE>
A. MODIFICATIONS TO LAND LEASE
Lessor and Lessee hereby amend the Third Amended Land Lease as
follows:
1. Definitions.
-----------
(a) All references in the Third Amended Land Lease to "this
Lease" or "the Lease" will hereafter refer to the Third Amended Land
Lease as amended by this Fourth Amendment.
(b) The definition of Building Lease is hereby deleted and replaced
--------------
with the following:
Building Lease: that certain Building Lease entered into between
--------------
Lessor and Lessee on September 22, 1992 and recorded September 22, 1992
in the Official Records of the Recorder of Santa Clara County,
California as Document No. 11550954, as amended by that certain First
Amendment to Building Lease dated as of December 22, 1992, and
recorded January 5, 1993 in the Official Records of the Recorder of
Santa Clara County, California as Document No. 11720034, and as
further amended by a certain Second Amendment to Building Lease, dated
as of December 17, 1993, and recorded on December 20, 1993 in the
Official Records of the Recorder of Santa Clara County, California as
Document No.12271738, and as further amended by a certain Third
Amendment to Building Lease, dated as of August 21, 1995 and recorded
on September 20, 1995 in the Official Records of the Recorder of Santa
Clara County, California as Document No. 13020001, and as further
amended by a certain Fourth Amendment to Building Lease, dated as of
November 10, 1995.
(c) The definition of Guaranty is hereby deleted and replaced with the
--------
following:
Guaranty: that certain Third Amended and Restated Guaranty,
--------
dated as of August 21, 1995, made by Guarantor in favor of Lessor, as
amended by that certain First Amendment to Third Amended and Restated
Guaranty, dated as of October 20, 1995, and as the same may be further
amended, modified, restated or supplemented from time to time.
B. AFFIRMATION OF STATUS OF LAND LEASE
Except as amended by this Fourth Amendment, the Third Amended Land
Lease is unchanged; and, as amended by this Fourth Amendment, the Third Amended
Land Lease is hereby ratified and affirmed, and remains in full force and
effect.
-3-
<PAGE>
IN WITNESS WHEREOF, all parties hereto have caused this Fourth Amendment to
be duly executed as of the date first set forth above.
LESSOR: CIBC INC., a Delaware corporation
By /s/ Peter Tavlin
-----------------------------------------------
Name: Peter Tavlin
Title: Vice President
LESSEE: AMD INTERNATIONAL SALES & SERVICE,
LTD., a Delaware corporation
By /s/ Marvin D. Burkett
-----------------------------------------------
Name : Marvin D. Burkett
Title: President
Guarantor hereby consents to the foregoing amendment, and acknowledges and
agrees that all references in the First Amended Guaranty to the "Amended Land
Lease" or to the "Amended Building Lease" will hereafter refer to such Amended
Land Lease and Amended Building Lease, as the case may be, as respectively
amended by this Fourth Amendment to Land Lease and by the Fourth Amendment to
Building Lease, dated as of the date of the foregoing amendment, between Lessor
and Lessee. Except as modified by this paragraph, the First Amended Guaranty is
unmodified; and, as modified by this paragraph, the First Amended Guaranty
remains in full force and effect and is hereby reaffirmed by the Guarantor.
Guarantor:
ADVANCED MICRO DEVICES, INC.
By /s/ Marvin D. Burkett
-----------------------------
Name : Marvin D. Burkett
Title: Sr. Vice President,
Chief Financial and Administrative Officer
Date: November 10, 1995
<PAGE>
Reference is made to the Loan Agreement, dated as of December 17,
1993 (the "Loan Agreement"), between CIBC INC., a Delaware
--------------
corporation, and THE LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS
ANGELES AGENCY ("Lender"). In accordance with Section 8(b) of the
------
Loan Agreement, Lender hereby consents to the foregoing Fourth
Amendment to Land Lease.
THE LONG-TERM CREDIT BANK OF
JAPAN, LOS ANGELES AGENCY
By: /s/ Motokazu Uematsu
-----------------------
Name: Motokazu Uematsu
Title: Deputy General Manager
Date: November 27, 1995
<PAGE>
ACKNOWLEDGEMENT FOR CIBC INC.
STATE OF NEW YORK
COUNTY OF NEW YORK
On November 16, 1995, before me, Elvira A. D'Amore, personally appeared
Peter Tavlin, personally known to me to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the persons acted, executed the instrument.
WITNESS my hand and official seal.
[NOTARIAL SEAL OF
ELVIRA A. D'AMORE
STATE OF NEW YORK
APPEARS HERE]
Signature:/s/ Elvira A. D'Amore
----------------------
(Seal)
ACKNOWLEDGEMENT FOR AMD INTERNATIONAL SALES & SERVICE, LTD.
STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
On November 10, 1995, before me, Janis V. Cahill, personally appeared
Marvin B. Burkett, personally known to me to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Signature:/s/ Janis V. Cahill
-------------------
[NOTARIAL SEAL OF JANIS V. CAHILL
STATE OF CALIFORNIA SANTA CLARA
(Seal) COUNTY APPEARS HERE]
<PAGE>
ACKNOWLEDGEMENT FOR ADVANCED MICRO DEVICES, INC.
STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
On November 10, 1995, before me, Janis V. Cahill, personally appeared
Marvin D. Burkett, personally known to me to be the person whose name is
subscribed to the within instrument and acknowledged to me that, he executed
the same in his authorized capacity, and that by his signature on the instrument
the person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
[NOTARIAL SEAL OF
JANIS V. CAHILL
STATE OF CALIFORNIA
SANTA CLARA COUNTY
APPEARS HERE]
Signature: /s/ Janis V. Cahill
-------------------
(Seal)
ACKNOWLEDGEMENT FOR
THE LONG-TERM CREDIT BANK OF JAPAN, LOS ANGELES AGENCY
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On November 27, 1995, before me, Diane D. Fortney, personally appeared
Motokazu Uematsu, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal
Signature: /s/ Diane D. Fortney
--------------------
[NOTORIAL SEAL OF DIANE D. FORTNEY
STATE OF CALIFORNIA LOS ANGELES
(Seal) COUNTY APPEARS HERE]
<PAGE>
APPENDIX 1
Legal Description of Land
The land referred to herein is situated in the State of California, County of
Santa Clara, City of Sunnyvale and is described as follows:
Parcel A as shown upon that certain Parcel Map filed for Record February 26,
1975 in the Office of the Recorder, County of Santa Clara, in Book 351 of Maps
at Pages 54 and 55.
APN: 205-22-020, 021
ARB: 206-60-015, 018, 035, 042, 014, 013, 012, 053, 052, 057
<PAGE>
AGREEMENT TO PRESERVE GOODWILL
------------------------------
This Agreement To Preserve Goodwill (the "Agreement") is being entered into
between Advanced Micro Devices, Inc. ("AMD") and Mr. S. Atiq Raza ("Raza").
WHEREAS NexGen, Inc. ("NexGen") entered into an Agreement and Plan of
Merger ("Merger Agreement") on October 20, 1995 with AMD and AMD Merger
Corporation, which agreement is incorporated herein by reference, whereby NexGen
agreed to be merged with AMD at the Effective Time, as defined by Section 1.2 of
the Merger Agreement;
WHEREAS NexGen is engaged in the business of designing, marketing and
selling microprocessors compatible with the X86 instruction set and architecture
and personal computer boards based on such microprocessors throughout the United
States, Europe, Latin America and Asia;
WHEREAS Raza is currently the Chairman of the Board, President and Chief
Executive Officer of NexGen and owns 750,485* shares of NexGen Common Stock, as
well as options to purchase 200,000 shares of NexGen Common Stock, which options
shall be exercisable upon the Effective Time of the Merger;
WHEREAS pursuant to the Merger Agreement, Raza has agreed to sell for
valuable consideration his entire interest in NexGen to AMD at the Effective
Time of the Merger, including (1) the goodwill associated with the business
conducted by NexGen and the right to use the trade name "NexGen, Inc.;" and (2)
all of Raza's shares of stock in NexGen, which shares shall be converted into
shares of AMD stock;
*As of September 30, 1995
<PAGE>
WHEREAS AMD carries on and intends to continue carrying on a like business
to that carried on by NexGen throughout the United States, Europe, Latin
America, Asia and elsewhere;
WHEREAS, following the merger, Raza will become a member of the Board of
Directors of AMD as well as its Corporate Vice President and Chief Technical
Officer;
WHEREAS, in order to induce AMD to enter into the Merger Agreement and to
preserve the goodwill of NexGen transferred to AMD pursuant to the Merger
Agreement, Raza has agreed to refrain from certain competition with AMD and its
successors in interest;
IT IS HEREBY AGREED AS FOLLOWS:
1. Raza agrees not to use or cause to be used or grant to any person, firm
or corporation, the right to use at any time the name "NexGen" or "NexGen, Inc."
except in the normal course of business on behalf of AMD or its successors in
interest or with the prior written consent of AMD.
2. In the event that Raza terminates his employment with AMD or AMD
terminates Raza's employment with AMD, and for a 12 month period following such
termination of employment, Raza hereby agrees to refrain from each and all of
the following:
(a) Establishing, owning, managing, operating, financing, or controlling a
comparable business for a period of twelve months following the
termination of his employment with AMD or its successors in interest,
in the United States, Europe, Latin America or Asia;
(b) Becoming a director, officer, employee, salesman, agent,
representative, or consultant for a comparable business for a period of
12 months following the termination of his employment;
(c) Soliciting any customer, prospect, supplier, employee, salesman, agent,
<PAGE>
representative or consultant of AMD's business in any manner which
interferes or is intended to interfere with such person's relationship
with AMD, or in an effort to obtain such person as a customer,
supplier, employee, salesman, agent or representative of, or a
consultant to, any other person that conducts a business competitive
with AMD's business; and
(d) Marketing or selling the products of a comparable business.
For purposes of this Paragraph 2 and each of its subsections, the term
"comparable business" shall mean the business of designing, marketing and
selling microprocessors compatible with the X86 instruction set and architecture
and personal computer boards based on such microprocessors.
3. During the 12 month period following the termination of Raza's
employment, AMD shall have the right to retain Raza as a consultant at a rate of
compensation equal to his regular monthly salary in effect on the date his
employment terminates. In the event that AMD terminates Raza without cause, AMD
shall retain Raza as a consultant at a rate of compensation equal to his regular
monthly salary in effect on the date his employment terminates for a period of
12 months or shall pay 12 months of salary in a lump sum upon termination. For
purposes of this paragraph "cause" shall be defined as any one of the following:
(a) failure to perform to the expectations of the Chief Executive
Officer, which failure shall be determined by AMD in its sole discretion;
(b) failure to abide by any of the policies and procedures, worldwide
standards of business conduct or other employee conduct guidelines of the
company, which failure shall be determined by AMD in its sole discretion;
(c) death of the employee;
(d) change in business focus away from development and/or manufacture
of microprocessors compatible with the X86 instruction set and architecture;
<PAGE>
(e) change in ownership or control of the corporation.
4. In the event of any breach by Raza of any provision of this Agreement,
Raza agrees, in addition to any other remedy available at law or in equity, to
consent to the entry of an order restraining and enjoining Raza from further
violations of such provisions. Raza agrees that AMD may be irreparably injured
if any provision in this Agreement is breached because money damages may not be
adequate to make AMD whole. Therefore, if Raza breaches any provision of this
Agreement and AMD is required to seek an order restraining and enjoining him
from further violations, Raza agrees to pay any and all attorneys' and court
fees incurred by AMD in obtaining the order. Alternatively, if Raza should
prevail in any legal proceeding brought by AMD to obtain such an order, AMD
agrees to pay any and all attorneys' and court fees incurred by Raza in
responding to such AMD initiated legal proceedings. Raza further agrees that
the period of time applicable to any such breached provisions shall be extended
by one day for each day such violation continues.
5. In the event AMD is required to seek an order restraining and enjoining
Raza from violating any provision of this Agreement, Raza consents to
jurisdiction in Santa Clara County Superior Court.
6. In the event that any provision hereof shall be determined to be
unenforceable or invalid, such unenforceability or invalidity shall not affect
the validity or enforceability of the other provisions hereof. In the event
that any geographic territory covered by the application of this agreement
cannot legally be included in the scope of the restrictions set forth, such fact
shall not affect the applicability of such restrictions for a reasonable
geographic area. In the event that any of the restrictions set forth herein
cannot legally be enforced for the period of time specified, such fact shall not
affect the applicability of such restrictions for a reasonable period of time.
<PAGE>
7. This Agreement shall be governed by and construed in accordance with
the laws of the State of California applicable to contracts made in California.
8. This Agreement shall constitute the entire Agreement between both
parties with respect to the terms and subject matter contained herein. No term
of this Agreement may be altered except by express written consent of both AMD
and Raza.
Executed on this 15th day of January, 1996.
ADVANCED MICRO DEVICES, INC.
By: /s/ S. Atiq Raza By: /s/ Stanley Winvick
--------------------------- -------------------------------
S. Atiq Raza Stanley Winvick
Senior Vice President
Human Resources
<PAGE>
CONFIDENTIAL PORTIONS OF THIS DOCUMENT
HAVE BEEN DELETED AND FILED SEPARATELY AMD and Intel Confidential
WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
CROSS LICENSE AGREEMENT
BETWEEN
ADVANCED MICRO DEVICES, INC., AND INTEL CORPORATION
This agreement ("Agreement") is made by and between ADVANCED MICRO DEVICES,
INC., a Delaware corporation, having an office at One AMD Place, P.O. Box 3453,
Sunnyvale, California 94088, (hereinafter collectively referred to as "AMD") and
INTEL Corporation, a Delaware corporation, having an office at 2200 Mission
College Blvd., Santa Clara, California 95052 ("INTEL").
WITNESSETH
----------
WHEREAS, AMD and INTEL each own patents and patent applications covering
inventions pertinent to the design and manufacture of semiconductor, integrated
circuit, and computer related products; and
WHEREAS, AMD and INTEL are both engaged in their respective continuing programs
of research and development of semiconductor, integrated circuit, and computer
related technology, which will result in new discoveries and inventions many of
which will become the subject of new patent applications and patents; and
WHEREAS, AMD and INTEL each want to respect the technology contributions of the
other and want to increase their freedom to design and manufacture their own new
products without infringing the rights of the other under any patent or patent
application owned or controlled by the other;
NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein, the parties agree as follows:
1.0 DEFINITIONS
-----------
1.1 "Subsidiary" shall mean any corporation, company or other entity with
regard to which a) more than fifty percent (50%) of whose outstanding
shares or stock entitled to vote for the election of directors or similar
managing authority is directly or indirectly owned or controlled by a
party hereto, or b) which does not have outstanding shares or securities
but greater than fifty percent (50%) of whose ownership interest
representing the right to make the decisions for such entity is, now or
hereafter, owned or controlled, directly or indirectly, by a party
hereto; provided, however, that in each case such corporation, company or
other entity shall be deemed to be a Subsidiary only so long as such
ownership or control exists and exceeds fifty percent (50%).
1
<PAGE>
AMD and Intel Confidential
1.2 "Controlling Interest" shall mean an ownership interest by a third party
in one party to this Agreement with regard to which more than thirty
percent (30%) of the outstanding shares or stock entitled to vote for the
election of directors or similar managing authority is directly or
indirectly owned or controlled by the acquiring third party.
1.3 "Effective Date" shall mean January 1, 1996.
1.4 "Excluded AMD Product" shall mean any digital logic product that is
object code compatible with a new instruction set first introduced in an
AMD digital logic product having at least 64-bit internal processing.
1.5 "Excluded INTEL Product" shall mean any digital logic product, alone or
in combination with software, having at least 32-bit internal processing
that is object code compatible with the INTEL 80386, 80486, P5, or P6
microprocessor families or a microprocessor family later introduced by
INTEL, and such digital logic product
Notwithstanding the foregoing, a microprocessor having less than
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] shall not constitute an Excluded
INTEL Product.
1.6 [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] shall mean [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
executed by [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] or a [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
and not described [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION]
1.7 [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] shall mean [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
for [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] having [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
set forth in [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] and all derivatives of or
additions thereto.
1.8 [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] shall mean [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
used by [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] for [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] a
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] by the [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
These [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] will be defined, for the purposes of
this definition, at a level of technical detail sufficient to
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] For example, the [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] shall contain sufficient detail to specify [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION]
1.9 [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] shall mean a [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] comprising one or more Integrated Circuits having a
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] substantially compatible with the
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] or a [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
that functions to [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION] and to [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] to the [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION] The substantially compatible
nature of a [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] shall be determined in
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] A rebuttable presumption shall exist
that a [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] has a substantially compatible
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] in the event that such [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] alone or in combination with [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
2
<PAGE>
AMD and Intel Confidential
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] functions substantially with
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] that also functions substantially
with an [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] A [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
configured to [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] configured to [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] or [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION] shall not be deemed to be
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] unless such [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
has a [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] substantially compatible with an
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] or a [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
The [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] for the [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
as originally introduced, constitutes an example of a [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] that is not compatible with the [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
of the [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]
1.10 [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] shall mean a circuit that
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] a [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] and a
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] for connection with [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION]
1.11 "Semiconductor Material" shall mean any material whose conductivity is
intermediate to that of metals and insulators at room temperature and
whose conductivity, over some temperature range, increases with increases
in temperature. Such materials shall include, but not be limited to,
refined products, reaction products, reduced products, mixtures and
compounds.
1.12 "Semiconductor Device" shall mean a device and any material therefor,
comprising a body of one or more Semiconductor Materials and one or more
electrodes associated therewith, and, if provided therewith, housing
and/or supporting means therefore.
1.13 "Integrated Circuit" shall mean an integral unit comprising a plurality
of active and/or passive circuit elements associated on one or more
substrates, such unit forming, or contributing to the formation of, a
circuit for performing electrical functions and, if provided therewith,
housing and/or supporting means therefor.
1.14 "Circuit Assembly" shall mean (a) a circuit or a circuit system,
including hardware and/or software, in which one or more Semiconductor
Devices and/or one or more Integrated Circuits are interconnected in one
or more paths (including passive circuit elements, if any), for
performing electrical functions, and (/b) a combination of such circuits
or circuit systems and (c) if provided therewith, I/O devices or housing
and/or supporting means therefor.
1.15 "AMD Patents" shall mean all classes or types of patents, utility models
and design patents (including, without limitation, originals or
divisions, continuations, continuations-in-part or reissues), and
applications for these classes or types of all countries of the world
owned or controlled by AMD or its Subsidiaries at any time during the
term of this Agreement which (a) have a first effective filing date prior
to the expiration or termination of this Agreement and (b) except for
consideration paid to employees, have no requirement to pay consideration
to another for the grant of a license under this Agreement.
1.16 "INTEL Patents" shall mean all classes or types of patents, utility
models and design patents (including, without limitation, originals or
divisions, continuations, continuations-
3
<PAGE>
AMD and Intel Confidential
in-part or reissues), and applications for these classes or types of all
countries of the world owned or controlled by INTEL or its Subsidiaries
at any time during the term of this Agreement which (a) have a first
effective filing date prior to the expiration or termination of this
Agreement and (b) except for consideration paid to employees, have no
requirement to pay consideration to another for the grant of a license
under this Agreement.
1.17 "AMD Licensed Products" shall mean any AMD products constituting: (a) a
Semiconductor Device, (b) an Integrated Circuit, or (c) a Circuit
Assembly, all of the above excluding Excluded INTEL Products.
1.18 "INTEL Licensed Products" shall mean any INTEL products constituting: (a)
a Semiconductor Device, (b) an Integrated Circuit, or (c) a Circuit
Assembly, all of the above excluding Excluded AMD Product.
1.19 "AMD Facility" shall mean a manufacturing plant wholly owned and operated
by AMD or a qualified Subsidiary of AMD.
1.20 "Net Revenue" shall mean the amount actually invoiced, less separately
itemized charges for duty, freight and taxes, for product shipped to a
third party less actual returns and price adjustments. Amounts reserved
for accounting purposes but not actually incurred (such as a distributor
reserve) shall not be deducted in the calculation of Net Revenue. Sales
or transfers to a Subsidiary shall not be considered as Net Revenue until
the product is sold or transferred to a third party. All currency
transactions shall be translated to United States dollars using standard
accounting practices.
1.21 "Original Royalty Product" shall mean an AMD Licensed Product that
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] an [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] but in
no event shall include product that constitutes an [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] product.
1.22 "Continuing Royalty Product" shall mean Original Royalty Product other
than any [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] that is [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
with an [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] in an [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
1.23 "Royalty Product" shall mean either Original Royalty Product or
Continuing Royalty Product as appropriate.
2.0 MUTUAL RELEASES
------ --------
2.1 AMD hereby releases, acquits and forever discharges INTEL and its
Subsidiaries from any and all claims or liability for infringement of any
AMD Patents arising prior to the Effective Date of this Agreement.
4
<PAGE>
AMD and Intel Confidential
2.2 INTEL hereby releases, acquits and forever discharges AMD and its
Subsidiaries from any and all claims or liability for infringement of any
INTEL Patents arising prior to the Effective Date of this Agreement.
3.0 GRANT OF LICENSES AND COVENANT BY AMD
------------------------------------
3.1 Subject to the terms and conditions of this Agreement, AMD hereby grants
to INTEL non-exclusive, non-transferable, royalty-free, worldwide
licenses without the right to sublicense, under AMD Patents, to make, to
have made, to use, to import, to sell (either directly or indirectly) and
offer to sell (either directly or indirectly), to lease and to otherwise
dispose of INTEL Licensed Products, to do such other acts in regard to
INTEL Licensed Products as may, during the term of such licenses, be
within the scope of the patent grant and to have made and/or use any
equipment, or practice any method or process for the manufacture and sale
thereof of INTEL Licensed Products.
3.2 Subject to the terms and conditions of this Agreement, AMD grants a
limited covenant not to sue any purchaser of an INTEL Licensed Product
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] This covenant shall not apply to
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] Furthermore, this covenant shall
apply only to the extent that [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] The covenant
shall not apply in the event that a binding decision in a legal
proceeding, including an arbitration, [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
3.3 With respect to the foundry activities of INTEL to manufacture products
for a third party based on a design supplied by that third party, the
licenses granted under AMD Patents shall not extend to those portions of
the product provided to the third party that represent designs provided
by such third party. The exclusion stated in this paragraph shall not
apply to [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]
3.4 Except as provided in Paragraph 3.5, nothing in this grant to INTEL or
otherwise contained in this Agreement shall give INTEL either the express
or implied right to license AMD Patents to others. Nor shall sale of
INTEL Integrated Circuits, Semiconductor Devices, and/or Circuit
Assemblies subject to a license grant herein provide or give rise to an
implied license, by estoppel or otherwise, in favor of third parties to
any AMD Patents covering combinations of Integrated Circuits,
Semiconductor Devices, and/or Circuit Assemblies or methods of using
such combinations. Nothing contained in this Paragraph shall limit the
covenant of Paragraph 3.2.
5
<PAGE>
AMD and Intel Confidential
3.5 The licenses granted to INTEL under this Section 3 shall also extend to
those qualified INTEL Subsidiaries in existence during the term of this
Agreement upon the condition that such Subsidiaries are bound by the
terms and conditions of this Agreement and that the patents of such
Subsidiaries, covering both utility models and design patents, and
applications therefore shall be included in INTEL Patents licensed in
this Agreement. The extension to an INTEL Subsidiary shall apply only
during the time period when the business entity meets all requirements of
a Subsidiary, and the rights extended to AMD remain in effect. Upon
written request by AMD, INTEL will give AMD written notice to identify
any INTEL Subsidiary to which such a license has been extended.
3.6 Nothing in this Section 3 shall be deemed as an agreement or prohibition
against the manufacture, use or sale of any product. However, the
licenses granted to INTEL under this Section 3 do not include a license
under AMD patents or other intellectual property to make, to have made,
to use, to import, to sell, offer to sell (either directly or
indirectly), to lease, or otherwise dispose of an Excluded AMD Product.
4.0 GRANT OF LICENSES AND COVENANT BY INTEL
---------------------------------------
4.1 Subject to the terms and conditions of this Agreement, INTEL hereby
grants to AMD non-exclusive, non-transferable, royalty-free, worldwide
licenses without the right to sublicense, under INTEL Patents, to make,
to have made, to use, to import, to sell (either directly or
indirectly), and offer to sell (either directly or indirectly), to lease
and to otherwise dispose of AMD Licensed Products, to do such other acts
in regard to AMD Licensed Products as may, during the term of such
licenses, be within the scope of the patent grant and to have made and/or
use any equipment, or practice any method or process for the manufacture
or sale thereof of AMD Licensed Products.
4.2 Subject to the terms and conditions of this Agreement, INTEL grants a
limited covenant not to sue any purchaser of an AMD Licensed Product
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] This covenant shall not apply to
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] Furthermore, this covenant shall
apply only to the extent that [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] The covenant
shall not apply in the event that a binding decision in a legal
proceeding, including an arbitration, [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
4.3 With respect to the foundry activities of AMD to manufacture products for
a third party based on a product design supplied by that third party, the
licenses granted under Intel
6
<PAGE>
AMD and Intel Confidential
patents shall not extend to those portions of the product provided to the
third party that represent designs provided by such third party. The
exclusion stated in this paragraph shall not apply to [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION]
4.4 Except as provided in Paragraph 4.5, nothing in this grant to AMD or
otherwise contained in this Agreement shall give AMD either the express
or implied right to license INTEL Patents to others. Nor shall sale of
AMD Integrated Circuits, Semiconductor Devices, and/or Circuit Assemblies
subject to a license grant herein provide or give rise to an implied
license, by estoppel or otherwise, in favor of third parties to any INTEL
Patents covering combinations of Integrated Circuits, Semiconductor
Devices, and/or Circuit Assemblies or methods of using such combinations.
Nothing contained in this Paragraph shall limit the covenant of Paragraph
4.2.
4.5 The licenses granted to AMD under this Section 4 shall also extend to
those qualified AMD Subsidiaries in existence during the term of this
Agreement, upon the condition that such Subsidiaries are bound by the
terms and conditions of this Agreement and that the patents of such
Subsidiaries, covering both utility models and design patents, and
applications therefor, shall be included in the AMD Patents licensed by
this Agreement. The extension to an AMD Subsidiary shall apply only
during the time period when the business entity meets all requirements of
a Subsidiary, and the rights extended to INTEL remain in effect. Upon
written request by INTEL, AMD will give INTEL written notice to identify
any AMD Subsidiary to which such a license has been extended.
4.6 Nothing in this Section 4 shall be deemed as an agreement or prohibition
against the manufacture, use or sale of any product. However, the
licenses granted to AMD under this Section 4 do not include a license
under INTEL patents or other intellectual property to make, to have made,
to use, to import, to sell, offer to sell (either directly or
indirectly), to lease, or otherwise dispose of an Excluded INTEL Product.
4.7 Notwithstanding the limitations of this Section 4, the licenses granted
under INTEL Patents shall, during the term of this Agreement, extend to
Original Royalty Product made by AMD in an AMD Facility and to Original
Royalty Product made for AMD only to the extent of no more than
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] of the annual total units of Original
Royalty Product shipped to a third party, upon payment by AMD of the
royalties contained in Section 5.
4.8 Notwithstanding the limitations of this Section 4, the licenses granted
under INTEL Patents shall, after the expiration of this Agreement under
the provisions of Paragraph 8.1, extend to a Continuing Royalty Product
made by AMD in an AMD Facility and to Continuing Royalty Product made for
AMD only to the extent of no more than [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] of the
annual total units of Continuing Royalty Product shipped to a third
party, upon payment by AMD of the royalties contained in Section 5. In
the event that
7
<PAGE>
AMD and Intel Confidential
AMD elects to pay the royalties contained in Section 5, [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION]
5.0 ROYALTY PAYMENTS BY AMD
-----------------------
5.1(a) AMD agrees to pay INTEL a royalty of [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] for all
units of Royalty Products sold by AMD or its Subsidiaries to an unrelated
party anywhere in the world. Notwithstanding the foregoing, the royalty
rate for Royalty Products having [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
5.1(b) Intel represents that for the term of this agreement, [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] excluding, without limitation, [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
by the operation of law, [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] The parties agree
that in no event shall INTEL's performance under the terms of this
provision be a cause of legal action or termination for material breach.
5.2 AMD agrees to pay INTEL a minimum [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] royalty of
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] upon execution of this Agreement and
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] per year during the years
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] payable in four equal quarterly
installments with the Royalty Statement, and applied as a credit on an
AMD accounting year basis against the percentage royalty due on Original
Royalty Products in that accounting year. No minimum, annual royalty is
due for any period [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION]
5.3 The sales price used to determine royalty due for units of Royalty
Product transferred internally by AMD for use in construction of a
combination for sale to another party shall be calculated using the
average unit selling price, of units having similar specifications and
sold during the royalty reporting period.
5.4 All royalties under this Section 5.0 will be payable in US dollars on a
quarterly basis thirty (30) days after the close of the AMD accounting
quarter commencing at the end of the first quarter of 1996. AMD shall
deliver to INTEL a written Royalty Statement showing the royalty
calculation. Royalty Statements shall be sent to Post Contract
Management, SC4-210, 2200 Mission College Blvd., Santa Clara, California
95052. Royalty payments shall be made in US dollars by wire transfer to
Citibank, New York, New York, for the account of INTEL Corporation
General Account Number [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
5.5 All payments shall be made free and clear without deduction for any and
all present and future taxes imposed by any taxing authority. In the
event that AMD is prohibited by law from making such payments unless such
deductions are made or withheld therefrom, then AMD shall pay such
additional amounts as are necessary in order that the net amounts
8
<PAGE>
AMD and Intel Confidential
received by INTEL, after such deduction or withholding, equal the amounts
which would have been received if such deduction or withholding had not
occurred. AMD shall promptly furnish INTEL with a copy of an official tax
receipt or other appropriate evidence of any taxes imposed on payments
made under this Agreement, including taxes on any additional amounts
paid. In cases other than taxes referred to above including but not
limited to sales and use taxes, stamp taxes, value added taxes, property
taxes and other taxes or duties imposed by any taxing authority on or
with respect to the Agreement, the costs of such taxes or duties shall be
borne by AMD. In the event that such taxes or duties are legally imposed
initially on INTEL or INTEL is later assessed by any taxing authority,
then INTEL will be promptly reimbursed by AMD for such taxes or duties
together with any penalties, fines and interest thereon, except for
interest, fines and/or penalties assessed due to the negligence, failure
or fault of INTEL which interest, fines and/or penalties remain the sole
obligation of INTEL. This clause shall survive the termination of the
Agreement. Notwithstanding the foregoing, AMD shall not be responsible
for taxes on or measured by INTEL's net income.
INTEL agrees to make every good faith effort to notify AMD's tax
department within ten (10) days of any audit, notice, assessment or other
action affecting sales, use, stamp, value added, property or other taxes
to paid directly or indirectly by AMD. INTEL agrees to cooperate in a
reasonable manner with AMD for the purpose of minimizing taxes, that
pursuant to this section are to be paid directly or indirectly by AMD.
INTEL grants AMD the right to pursue a separate action against any
governmental unit that asserts such taxes against INTEL and INTEL agrees
to cooperate in a reasonable manner with AMD if such action is taken.
5.6 AMD agrees that any payments required under the terms of this Agreement
which are not paid when due will accrue interest at [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] commencing thirty (30) days after the due date as established
by this Agreement. The right to collect interest on such late payments
shall be in addition to any other rights that INTEL may have herein.
5.7 AMD agrees to maintain adequate accounting records of all production and
sales of the products subject to a royalty sufficient to permit a
confirmation of AMD's royalty obligations herein for a period of three
(3) years after manufacture for purposes of audit.
5.8 The parties agree that INTEL shall have the right to conduct audits of
AMD for the purpose of determining that the terms of this Agreement are
being met. Such audit shall be held at any reasonable time during
business hours but no more than once in each calendar year by an
independent certified public accountant selected and paid by INTEL and
reasonably satisfactory to AMD, to the extent necessary to verify that
the terms of this Agreement are being met, including the Royalty
Statements and payments provided herein. In this regard, AMD agrees to
provide such certified public accountant with reasonable access to
accounting records and information requested during an audit. The
information will be made available to the independent accounting firm
under conditions of
9
<PAGE>
AMD and Intel Confidential
confidentiality and it will report to INTEL and to AMD only whether the
terms of this Agreement are being met, including without limitation that
payments have been properly reported on and paid or, if not, the amount
of any overpayment or underpayment. This provision will survive the last
payment of a royalty under this Agreement for a period of three (3)
years.
6.0 COPYRIGHT LICENSES
------------------
6.1 Subject to the terms and conditions of this Agreement, INTEL grants to
AMD licenses under INTEL copyrights in both [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
described in the [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION] and the [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] and [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION] for [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] to copy, have copied, import, prepare derivative works of,
perform, display, and sell or otherwise distribute such mnemonics and the
related opcodes in user manuals and other technical documentation.
6.2 Subject to the terms and conditions of this Agreement, AMD grants to
INTEL licenses under AMD copyrights in [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] for an
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] developed by AMD, including without
limitation a derivative work of an [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] and the
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] for the [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
to copy, have copied, import, prepare derivative works of, perform,
display, and sell or otherwise distribute such mnemonics and the related
opcodes in user manuals and other technical documentation.
7.0 PRIOR LICENSE
-------------
7.1 This Agreement shall govern all patent license grants between INTEL and
AMD for all patents having an issue date, in the country of issue, after
December 31, 1995. The License Agreement dated September 21, 1976,
between INTEL and AMD, and extensions thereof, as modified in Paragraph
7.2 of this Agreement shall govern all patent license grants between
INTEL and AMD for all patents having an issue date in the country of
issue on or before December 31, 1995. Notwithstanding the foregoing,
specific and special purpose patent licenses such as those contained in
the Settlement Agreement between INTEL and AMD dated January 11, 1995;
the PCI Special Interest Group Agreement; or other such agreements shall
control in addition to the provisions in this Paragraph 7.1 for the
purpose of providing broader patent rights licensed in such agreements.
7.2 All prior licenses granted in the License Agreement date September 21,
1976, between INTEL and AMD, and extensions thereof, that apply to the
foundry activities of AMD or INTEL to manufacture products for a third
party based on a design supplied by that third party to AMD or INTEL are
revoked for those portions of the product provided to the third party by
AMD or INTEL that represent designs provided by such third party. The
revocation stated in this paragraph shall not apply to [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] or [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION] of
10
<PAGE>
AMD and Intel Confidential
AMD or INTEL that either party incorporates into any [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] that AMD or INTEL manufactures for its customers.
8.0 EFFECTIVE DATE, TERM AND TERMINATION
------------------------------------
8.1 This Agreement shall become effective on the Effective Date, and shall
continue in effect, unless sooner terminated as elsewhere provided in
this Agreement, through December 31, 2000, expiring at the end of such
day.
8.2 If either party hereto commits a material breach of this Agreement and
does not correct such breach within forty-five (45) days after written
notice complaining thereof is given to such party, this Agreement may be
terminated forthwith by written notice to that effect from the
complaining party.
8.3 This Agreement is a license for "Intellectual Property" as that term is
defined under Section 365(n) of the Bankruptcy Code.
8.4 If this Agreement is terminated pursuant to Paragraph 8.2, all licenses
granted to the defaulting party and its Subsidiaries shall terminate
forthwith, but the licenses granted to the party not in default and its
Subsidiaries shall survive such termination of this Agreement for the
life or lives of AMD Patents or INTEL Patents, as the case may be.
8.5 Upon the expiration of this Agreement, the licenses extended under
Paragraph 4.7 shall end and the other licenses granted pursuant to this
Agreement by one party hereto and its Subsidiaries, to the other party
hereto and its Subsidiaries under AMD Patents or INTEL Patents, as the
case may be, shall survive for the life or lives of AMD Patents or INTEL
Patents, as the case may be. In addition, upon the expiration of this
Agreement, the licenses granted pursuant to this Agreement by one party
hereto and its Subsidiaries, to the other party hereto and its
Subsidiaries under AMD copyrights or INTEL copyrights, as the case may
be, shall survive for the life or lives of AMD copyrights or INTEL
copyrights, as the case may be.
8.6 Upon expiration or termination of this Agreement the provisions of
Sections 5, 7 and 9 shall survive.
9.0 MISCELLANEOUS PROVISIONS
------------------------
9.1 Each of the parties hereto represents and warrants that it has the right
to grant the other the licenses granted herein.
9.2 If AMD completes an acquisition of NexGen, Inc. (NexGen), then AMD shall
take appropriate action to assure that all patents and patent
applications owned by NexGen at any time prior to or after the
acquisition shall be included as AMD Patents licensed to INTEL under this
Agreement. AMD presently intends to acquire all such patents and patent
applications owned by NexGen in the event of such acquisition. Prior to
such
11
<PAGE>
AMD and Intel Confidential
acquisition, AMD shall take no action to prevent all such patents and
patent applications owned by NexGen from being included as AMD Patents
licensed to Intel under this Agreement. If after AMD completes the
acquisition of NexGen, such patents and patent applications owned by
NexGen do not become AMD Patents under this Agreement within a reasonable
time, then all AMD products based on designs provided by NexGen shall be
excluded from the license grants and all other rights provided to AMD in
this Agreement.
9.3 Nothing contained in this Agreement shall be construed as:
(a) a warranty or representation by any of the parties to this Agreement
as to the validity or scope of any class or type of patent, utility
model and/or design patent; or
(b) a warranty or representation that any manufacture, sale, lease, use
or other disposition of Licensed Products herein will be free from
infringement of patents, utility models and/or design patents other
than those under which licenses have been granted; or
(c) an agreement to bring or prosecute actions or suits against third
parties for infringement or conferring any right to bring or
prosecute actions or suits against third parties for infringement; or
(d) conferring any right to use in advertising, publicity, or otherwise,
any trademark, trade name or names, or any contraction, abbreviation
or simulation thereof, of either party; or
(e) conferring by implication, estoppel or otherwise, upon any party
licensed herein, any license or other right under any class or type
of patent, utility model or design patent except the licenses and
rights expressly granted herein; or
(f) conferring by implication, estoppel or otherwise, upon any party
licensed herein, any license or other right under any copyright
(except for the express grants contained in Section 6.0), maskwork,
or trade secret right; or
(g) an obligation to furnish any technical information or know-how.
9.4 This Agreement is personal to the parties, and the Agreement or any right
or obligation herein, cannot be assigned, whether in conjunction with a
change in ownership, or the sale or transfer of the whole or any part of
a party's business or assets, either voluntarily, by operation of law, or
otherwise, without the prior written consent of the other party. Any such
purported assignment or transfer shall be null and void. In the event
that a third party reaches an agreement to acquire a Controlling Interest
in either party then the party being acquired shall deliver an
acquisition agreement notice to the non-acquired party, providing the
terms of the acquisition agreement and the identity of the acquiring
third party in strict confidence to the executive management and legal
counsel of the non-acquired party. The non-acquired party shall have the
right to terminate this Agreement
12
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AMD and Intel Confidential
by the delivery of written notice to the party being acquired within
thirty (30) days after the non-acquired party receives the acquisition
agreement notice from the party being acquired. Such termination by the
non-acquired party shall be effective nine (9) months after the date of
closing for the acquisition of the Controlling Interest in the party
being acquired, with both parties to this Agreement retaining the license
grants of a party not in default set forth in Paragraph 8.4 but not
including the extensions of Paragraph 4.7 and 4.8. Assignment by either
party of any of its patents, or the applications thereof, which qualify
as Licensed Patents as defined herein, shall not affect the license
rights acquired herein to such patent(s), and any such assignment shall
be subject to the continuing license rights of the other party.
9.5 All notices required or permitted to be given herein shall be in writing
and shall be valid and sufficient if dispatched by prepaid air express
or by registered airmail, postage prepaid, addressed as follows:
If to AMD: If to INTEL:
---------- ------------
General Counsel General Counsel
Advanced Micro Devices INTEL Corporation
One AMD Place 2200 Mission College Blvd.
P.O. Box 3453, M/S 150 Santa Clara, CA 95052
Sunnyvale, CA 94088-3453 United States of America
Either party may give written notice of a change of address and, after
notice of such change has been received, any notice or request shall
thereafter be given to such party as above provided at such changed
address.
9.6 This Agreement embodies the entire understanding of the parties with
respect to the subject matter hereof, and merges all prior discussions
between them, and neither of the parties shall be bound by any
conditions, definitions, warranties, understandings, or representations
with respect to the subject matter hereof other than as expressly
provided herein. No oral explanation or oral information by either party
hereto shall alter the meaning or interpretation of this Agreement. No
modification, alteration, addition or change in the terms hereof shall be
binding on either party unless reduced to writing and duly executed by
the parties.
9.7 This Agreement and matters connected with the performance thereof shall
be construed, interpreted, applied and governed in all respects in
accordance with the laws of the United States of America and the State of
Delaware.
9.8 The parties hereto shall keep the terms of this Agreement confidential
and shall not now or hereafter divulge these terms to any third party
except:
(a) with the prior written consent of the other party; or
13
<PAGE>
AMD and Intel Confidential
(b) to any governmental body having jurisdiction to call therefor; or
(c) as otherwise may be required by law or legal process; or
(d) during the course of litigation so long as the disclosure of such
terms and conditions are restricted in the same manner as is the
confidential information of other parties and so long as (a) the
restrictions are embodied in a court-entered Protective Order and (b)
the disclosing party informs the other party in writing in advance of
the disclosure.
The parties shall cooperate in preparing and releasing an announcement
relating to this Agreement within fourteen (14) days after execution. The
parties may disclose the existence of this Agreement to third parties,
including whether a product is licensed herein, but not the details of
this Agreement except as otherwise provided in this Paragraph 9.8.
9.9 Anything contained in this Agreement to the contrary notwithstanding, the
obligations of the parties hereto and of their Subsidiaries shall be
subject to all laws, present and future, of any government having
jurisdiction over the parties hereto or their Subsidiaries, and to
orders, regulations, directions or requests of any such government. The
parties hereto shall be excused from any failure to perform any
obligation herein to the extent such failure is caused by war, acts of
public enemies, strikes or other labor disturbances, fires, floods, acts
of God, or any causes of like or different kind beyond the control of the
parties.
9.10 All disputes arising directly under the express terms of this Agreement
shall be resolved as follows: First, the senior management of both
parties shall meet within a reasonable time after a notice of dispute to
attempt to resolve such disputes. If the disputes cannot be resolved by
the senior management, either party may make a written demand for formal
dispute resolution. Within thirty (30) days after such written
notification, the parties shall meet for one (1) day with an impartial
mediator and consider dispute resolution alternatives other than
litigation. If an alternative method of dispute resolution is not agreed
upon within thirty (30) days after the one (1) day mediation, either
party may begin litigation proceedings.
14
<PAGE>
9.11 The parties agree to begin negotiating in good faith after the fourth
anniversary of this Agreement a patent cross license agreement to be
effective January 1, 2001.
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the date below written.
INTEL CORPORATION ADVANCED MICRO DEVICES, INC.
By: /s/ CRAIG R. BARRETT By: /s/ RICHARD PREVITE
--------------------------------- -------------------------------
Craig R. Barrett Richard Previte
Executive Vice President, President,
Chief Operating Officer Chief Operating Officer
December 20, 1995 December 20, 1995
- ------------------------------------ ----------------------------------
Date Date
15
<PAGE>
ADVANCED MICRO DEVICES, INC.
SECRETARY'S CERTIFICATE
The undersigned, Thomas M. McCoy, certifies that he is the Secretary of
Advanced Micro Devices, Inc., a Delaware Corporation ("the Company"), and that,
as such, he is authorized to execute this Certificate on behalf of the Company,
and further certifies that the attached is a fair and accurate translation of
the Contract for Transfer of the Right to the Use of the Land in the
Singapore Suzhou Township between China-Singapore Suzhou Industrial Park
Development Co., Ltd. and Advanced Micro Devices (Suzhou) Limited.
WITNESS the signature of the undersigned this 5th day of March, 1996.
---
/s/ Thomas M. McCoy
---------------------------
Thomas M. McCoy
Secretary
<PAGE>
Dated December 1995
----------------------------
CHINA-SINGAPORE SUZHOU INDUSTRIAL
PARK DEVELOPMENT C0., LTD.
And
ADVANCED MICRO DEVICES (SUZHOU) LIMITED
---------------------------------------
CONTRACT FOR TRANSFER
OF THE RIGHT TO THE USE OF THE LAND
IN THE SINGAPORE-SUZHOU TOWNSHIP
---------------------------------------
Contract No: 1I0018
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
---------------------------------------------
<S> <C> <C>
CHAPTER 1 GENERAL PRINCIPLES 2
CHAPTER 2 AREA, TENURE AND USE OF THE LAND PARCEL 3
CHAPTER 3 LAND PRICE AND METHOD OF PAYMENT 4
CHAPTER 4 MATTERS RELATING TO TRANSFER AND
REGISTRATION 6
CHAPTER 5 LAND CONDITION AND INFRASTRUCTURE 7
CHAPTER 6 FORCE MAJEURE 8
CHAPTER 7 NOTICE 9
CHAPTER 8 APPLICABLE LAW AND DISPUTE RESOLUTION 10
CHAPTER 9 REPRESENTATIONS AND WARRANTIES OF THE PARTIES 11
CHAPTER 10 ASSIGNMENT AND LETTING 11
CHAPTER 11 VALIDITY OF CONTRACT AND OTHER MATTERS 12
</TABLE>
ANNEXURE:
1 LAND SURVEY PLAN FOR THE LAND PARCEL
2 CONTRACT FOR THE ASSIGNMENT OF THE RIGHT TO THE USE OF THE STATE-
OWNED LAND IN THE SUZHOU INDUSTRIAL PARK
3 LAND USE CERTIFICATE FOR THE RIGHT TO THE USE OF 2,927,777 SQUARE
METRES OF LAND ISSUED BY THE LAND ADMINISTRATION BUREAU OF THE
MUNICIPALITY OF SUZHOU, THE PROVINCE OF JIANGSU
4 LAND USE CONDITIONS
5 PAYMENT OF LAND PRICE
6 GUARANTEE TO BE GIVEN BY ADVANCED MICRO DEVICES, INC.
7 RESULTS OF SOIL TESTS CONDUCTED BY PARTY B
8 DESIGN SPECIFICATIONS OF PUBLIC BASIC INFRASTRUCTURE
<PAGE>
<TABLE>
<CAPTION>
THIS CONTRACT is made on December 1995
<S> <C> <C> <C> <C>
BETWEEN:
The Transferor : China-Singapore Suzhou Industrial Park
Development Co., Ltd. (hereinafter referred
to as "Party A")
Place of Registration : the Municipality of Suzhou, the Province of
Jiangsu, The People's Republic of China
Legal Address : Jin Ji Lake Holiday Resort, Sanxin Lu, Postal
Code 215001, the Municipality of Suzhou, the
Province of Jiangsu, The People's Republic of
China
Legal Representative : Name : Lim Chee Onn
Position : Chairman
Nationality : Singapore
AND
The Transferee : Advanced Micro Devices (Suzhou) Limited
(hereinafter referred to as "Party B")
Place of Registration : the Municipality of Suzhou, the Province of
Jiangsu, The People's Republic of China
Legal Address : Suzhou Industrial Park Startup Area
Advance Plot No, 21-19, the Municipality of
Suzhou, the Province of Jiangsu, The People's
Republic of China
Legal Representative : Name : Donald Matthew Brettner
Position : Chairman
Nationality : U.S.A.
</TABLE>
WHEREAS:
(1) Party A and Advanced Micro Devices, Inc. (hereinafter referred to as "AMD")
had entered into a Memorandum of Understanding on 14 September 1994 and
four Agreements for the Extension of the Memorandum of Understanding
(hereinafter collectively referred to as "the Memorandum"). In
consideration of the intention expressed by AMD in the Memorandum to invest
in an industrial township developed or to be developed in the Municipality
of Suzhou known as the Suzhou Industrial Park (hereinafter referred to as
"the SIP"), Party A had agreed to reserve for AMD a parcel of land of
approximately 5.9 hectares in the SIP.
<PAGE>
2
(2) Pursuant to the provisions of the Memorandum, the "Interim Regulations of
The People's Republic of China Concerning the Assignment and Transfer of
the Right to the Use of State-Owned Land in Urban Areas" hereinafter
referred to as "the Interim Regulations"), the Interim Measures for the
Administration of Foreign-Invested Development and Management of Tracts of
Land" (hereinafter referred to as "the Interim Measures"), the "Law of
The People's Republic of China on the Administration of Urban Real
Property" (hereinafter referred to as "the Administration Law"), and the
relevant national and local stipulations, Party A, AMD and Party B have
entered into friendly negotiations and have reached a mutual understanding
with regard to the transfer of the right to the use of the land situated in
the SIP containing an area of 59,090.21 square metres and more particularly
delineated and coloured red on the plan attached hereto as Annexure 1
(hereinafter referred to as "the Land Parcel") and Party A and Party B
hereby agree to enter into this Contract.
(3) At the request of AMD) and Party B, Party A hereby agrees to transfer to
Party B the right to the use of the Land Parcel in accordance with the
provisions of this Contract.
CHAPTER 1 GENERAL PRINCIPLES
1.1 Party A and the Land Administration Bureau of the Municipality of Suzhou,
the Province of Jiangsu (hereinafter referred to as "SLAB") have, in
accordance with the Interim Regulations, Interim Measures and the relevant
national and local stipulations, entered into a "Contract for the
Assignment of the Right to the Use of State-owned Land in the Suzhou
Industrial Park" (Contract Reference Number: Suzhou Industrial Park
Assignment No. 001; hereinafter referred to as "the Assignment Contract" as
the same may be amended modified or supplemented from time to time) and
SLAB has agreed to assign to Party A the right to the use of the land in
the SIP of an area of approximately 8,000,000 square metres (a copy of the
Assignment Contract is annexed hereto and marked as Annexure 2 of this
Contract) and Party A has obtained the land use certificate (a copy of
which is annexed hereto and marked as Annexure 3 of this Contract) for the
right to the use of 2,927,777 square metres of the said area of which the
Land Parcel forms part, and Party A is hereby permitted to transfer the
right to the use of the Land Parcel to Party B.
1.2 Party A shall sell and transfer to Party B for valuable consideration the
right to the use of the Land Parcel in accordance with the provisions of
this Contract.
1.3 Party B shall purchase with valuable consideration and accept the transfer
of the right to the use of the Land Parcel from Party A in accordance with
the provisions of this Contract.
<PAGE>
3
CHAPTER 2 AREA, TENURE AND USE OF THE LAND PARCEL
2.1 The area of the Land Parcel is 59,090.21 square metres which said area has
been duly surveyed by the competent authority and accepted by Party A and
Party B as final and conclusive.
2.2 Party A shall use its best efforts in assisting Party B in its procurement
of the issue or a Certificate for the right to the use of the Land Parcel
hereinafter referred to as the "Title Documents") from the Suzhou
Industrial Park (Township) Administrative Committee hereinafter referred to
as "SIPAC") or the relevant authority of the SIP for a term of fifty (50)
years commencing from 1 January 1997 up to and including 31 December 2046
(hereinafter referred to as the "Tenure"). Notwithstanding the date of
commencement of the Tenure, Party B shall have the right to use the Land
Parcel during the period commencing from the date of issue of the Title
Documents and up to and including 31 December 1996.
2.3 The Assignment Contract shall form an integral part of this Contract and
Party B hereby agrees to be bound by the terms and conditions of the
Assignment Contract and to perform and observe all terms, conditions and
covenants therein on the part of Party A and/or the Land User (as defined
in the Assignment Contract) as limited herein and only so far as the same
relates to the Land Parcel unless Party A has otherwise agreed in writing
to assume such terms, conditions and covenants. Party B shall use the Land
Parcel only in accordance with the Assignment Contract and the land use
conditions (hereinafter referred to as "the Land Use Conditions") for the
Land Parcel formulated by SIPAC as described in Annexure 4.
2.4 Notwithstanding the provisions of Clause 2.3 above but subject to the other
provisions of this Contract, so long as Party B remains transferee of the
right to the use of the Land Parcel or any portion thereof, Party B
expressly does not assume any of the obligations set forth in the following
clauses of the Assignment Contract:
(a) Clause 8;
(b) Clause 9 except where the obligations relate to the Land
Parcel:
(c) Clause 11 except where the obligations relate to the matters set
out in Clause 4.4 hereof;
(d) Clause 13;
(e) Clause 14;
(f) Clause 17; and
(g) Clause 38 except where the obligations relate to the Land Use
Conditions.
2.5 Except for obligations relating to the Land Parcel, Party B does not assume
Party A's obligations under the Assignment Contract to develop other parts
of the SIP.
<PAGE>
4
2.6 Except for air and underground easements on the Land Parcel imposed by the
relevant government agencies pursuant to legal procedures, any new
obligations to be imposed on Party B and the Land Parcel pursuant to an
annexure to the Assignment Contract shall, in order to be enforceable by
Party A against Party B or the Land Parcel, require the prior written
consent of Party B.
2.7 Party B shall use the Land Parcel for industrial purpose only. If Party B
wishes to change the use of the Land Parcel during the Tenure, Party B
shall obtain the prior approval of the planning and construction bureau and
land administration bureau of SIP, and shall complete the formalities for
examination and approval in accordance with the relevant stipulations.
2.8 Party B shall at its own cost and expense apply for the permits required
for inter alia, the investment, development and construction of the Land
Parcel. Prior to the signing of this Contract, Party B shall first submit
to Party A for its approval and endorsement and then to SIPAC building
plans and specifications and the construction schedule of the buildings
proposed to be erected on the Land Parcel. Party A hereby agrees that its
aforesaid approval will not be unreasonably withheld.
CHAPTER 3 LAND PRICE AND METHOD OF PAYMENT
3.1 Party A and Party B hereby agree that the purchase price for the right to
the use of the Land Parcel shall be United States Dollars Two Million Eight
Hundred Thirty Six Thousand Three Hundred and Thirty (US$2,836,330)
(hereinafter referred to as "the Land Price").
3.2 Party B shall pay the Land Price to Party A at the times and in the manner
set out in the annexure hereto and marked as Annexure 5 of this Contract
and accordingly shall within seven (7) days from the signing of this
Contract pay a sum equal to 25% of the Land Price to Party A and procure
and deliver to Party A a guarantee given by AMD for securing payment to
Party A of the instalments for the Land Price together with penalty
payable thereon, such guarantee to be in the form annexed hereto and marked
as Annexure 6 of this Contract.
3.3 If Party B delays in paying any of the installments referred to in Annexure
5 of this Contract, penalty on any such unpaid instalment(s) shall commence
to be payable on the day after the due date of such instalment and shall
continue to be payable by Party B until:
(a) such time as the unpaid instalment is paid; or
(b) the date of issue of the notice to terminate this Contract given by
Party A pursuant to Clause 3.5.1(a)(i) or Clause 3.6(a).
<PAGE>
3.4 The penalty payable under Clause 3.3 shall be calculated from day to day
at the rate of 10% per annum.
3.5.1 Prior to the issue of the Title Documents, if any such unpaid
instalment(s) or penalty shall remain unpaid for any period in excess of
thirty (30) days after the due date of such instalment or penalty
(including Saturdays, Sundays and public holidays) without prejudice to
any other rights or remedies available to Party A:
(a) Party A shall be entitled to:
(i) unilaterally terminate this Contract by giving notice in
writing to Party B; and
(ii) resell or otherwise dispose of or deal with the right to the
use of the Land Parcel in accordance with applicable law as it
shall see fit; and
(b) Party B shall be liable to pay to Party A:
(i) a sum equal to fifteen per cent (15%) of the Land Price by way
of compensation; and
(ii) all penalties calculated in accordance with Clause 3.3 owing
and unpaid and all losses, damages, costs and expenses
whatsoever resulting from any breach of any of the provisions
of this Contract by Party B
and Party A shall be entitled to deduct all or any of the aforesaid
amounts from the instalments (excluding penalty) previously paid by
Party B Provided That such deduction shall not prejudice Party A's
rights to claim against Party B for any shortfall after such
deduction.
3.5.2 The balance, if any, of the instalments previously paid by Party B after
making deductions in accordance with Clause 3.5.1(b) shall be refunded to
Party B.
3.5,3 In the event of any re-sale in accordance with Clause 3.5.1(a)(ii) Party
A shall be entitled to retain any difference between the Land Price and
the net proceeds of sale (after deducting all costs and expenses incurred
in any such re-sale).
3.6 After the issue of the Title Documents, if any such unpaid instalment(s)
or penalty shall remain unpaid for any period in excess of thirty (30)
days after the due date of such instalment or penalty (including
Saturdays, Sundays and public holidays) and thirty (30) days' notice in
writing has been given to AMD and AMD had not made the required payment
before the expiry of the said notice, without prejudice to any other
rights or
<PAGE>
6
remedies available to Party A:
(a) Party A shall be entitled to unilaterally terminate this Contract by
giving notice in writing to Party B but without prejudice to any remedy
or right of action of Party A in respect of any antecedent breach of
any of the provisions of this Contract by Party B; and
(b) Party B shall be liable to Party A for all penalties calculated in
accordance with Clause 3.3 owing and unpaid and all losses, damages,
expenses and costs whatsoever resulting from any breach of this
Contract by Party B.
3.7 Party B shall make payment to SIPAC of the fee for the use of the Land
Parcel at the rate as stipulated by SIPAC from time to time. Party B shall
make a one time payment of this fee.
CHAPTER 4 MATTERS RELATING TO TRANSFER AND
REGISTRATION
4.1 Party A shall deliver vacant possession of the levelled and compacted Land
Parcel to Party B upon receipt of the sum referred to in paragraph 1(a) of
Annexure 5 provided always that Party A reserves the right before the date
of issue of the Title Documents to enter upon the Land Parcel upon giving
reasonable notice to Party B. As used herein, "vacant possession" shall
mean that the Land Parcel is delivered by Party A to Party B free from all
occupants and structures.
4.2 Subject to Party B observing and performing the several covenants and
stipulations herein contained, Party A shall assist Party B in:
(i) its submission for examination and notarization of this Contract; and
(ii) its procurement of the issue of the Title Documents.
4.3 With the exception of the land appreciation tax applicable to the Land
Parcel (if any) and business tax payable by Party A for the transfer of the
right to the use or the Land Parcel, Party B shall pay all relevant taxes,
fees and charges relating to the transfer of the right to the use of the
Land Parcel, including but not limited to pegging and survey fees,
valuation charges, stamp duty, notarization fees and documentation fees.
4.4 Party A and Party B hereby acknowledge and agree that upon the date of
delivery of vacant possession the rights, interests and obligations set out
in the Assignment Contract and the Land Use Conditions insofar as they
relate to the Land Parcel shall be transferred to Party B together with the
right to the use of the Land Parcel subject always to Clause 2.3. Party B
shall bear all taxes, outgoings and penalties relating to the Land Parcel
as
<PAGE>
7
from the date of delivery or vacant possession and shall on demand
reimburse Party A for such taxes, outgoings and penalties as may have been
paid by Party A with Party B's prior consent on Party B's behalf upon
showing of an appropriate receipt or other evidence of such payments.
4.5 In the event that Party B fails to perform any of the obligations which
have been transferred to it or any of the obligations imposed on it by this
Contract, or is in breach of any of the provisions of this Contract, Party
B shall indemnify Party A from and against all losses, damages, expenses,
penalties, costs, claims or liabilities whatsoever which Party A may
sustain suffer or incur as a result thereof:
4.6 Party B has carried out topographical survey and soil tests on the Land
Parcel before the signing of this Contract and the results of the survey
and tests are annexed hereto and marked as Annexure 7 of this Contract for
record purposes only. Party B hereby confirms that it has no claims
whatsoever against Party A in respect of the location, state, condition,
access and all other respects of the Land Parcel, including but not limited
to its ground levels, topography and soil conditions. Party B shall not be
entitled to raise any objection against Party A with regard to the same.
CHAPTER 5 LAND CONDITION AND INFRASTRUCTURE
5.1 Party A will at its own cost and expense level and compact the Land Parcel.
5.2 Party B will at its own cost and expense :-
(a) engage a professional engineer to carry out soil investigations to
advise on the soil conditions of the Land Parcel and to design
structurally sound buildings proposed to be erected thereon, taking
into consideration the condition of the Land Parcel;
(b) execute such work as may be required to be done in respect of the
state and condition of the Land Parcel.
5.3 Party A shall cause to be constructed up to the boundary of the Land Parcel
electrical power supply cable, town gas pipe, sewer pipe, water pipe and
access road in accordance to the specifications more particularly detailed
in Annexure 8 of this Contract (hereinafter referred to as "the Public
Basic Infrastructure").
5.4 Party A shall complete the construction of the Public Basic Infrastructure
not later than 30 September 1996. In the event that the Public Basic
Infrastructure is not completed by the aforesaid date, Party B shall be
entitled, after giving to Party A three (3) months' notice in writing, to
carry out any necessary works to complete the Public Basic Infrastructure,
the cost of which shall be borne by Party A.
<PAGE>
8
5.5 Party B shall at its own cost and expense apply, with the reasonable
assistance of Party A, to the relevant authorities and comply with all
conditions set by such authorities for the supply of electricity, town gas,
water and other utility supplies (hereinafter referred to as "Utilities")
it needs for the Land Parcel.
5.6 Party B agrees that if its requirements for the supply of the Utilities
exceed the capacity which the Public Basic Infrastructure is designed to
meet, it shall notify Party A of such requirements and submit to Party A
for its approval its proposal in respect of the additional works or
infrastructure facilities which it intends to undertake to meet such
requirements, such approval shall not be unreasonably withheld. Party B
shall not carry out any such additional works unless they have been
approved by Party A and the relevant authorities.
5.7 Party B shall be liable for the costs of the construction or installation
of such works or facilities referred to in Clause 5.6 hereof and shall pay
for all fees, including but not limited to turning on fees, engineering
fees, increased capacity fees and all such other fees payable for the
supply of all such electricity, town gas, water and other utility supplies
to the Land Parcel.
5.8 Party A shall use reasonable efforts in assisting Party B in its
application to the relevant authorities for the aforesaid matters and for
the connection of telecommunication lines up to the boundary of the Land
Parcel.
CHAPTER 6 FORCE MAJEURE
6.1 No Party shall be liable for any loss or damage caused by delay in the
performance or non-performance of any of its obligations under this
Contract when the same is occasioned by an "Event or Force Majeure" -- that
is to say any circumstances whatsoever beyond the reasonable control or the
affected Party which directly or indirectly prevent or impede the due
performance of this Contract, including but not to be limited to the
following matters:
(a) war or hostilities: and/or
(b) earthquake, flood, typhoon, fire or other natural physical disaster.
6.2 A certificate or confirmation issued by the relevant administrative
department or the Suzhou Municipal Government or non-governmental
authoritative organization in the People's Republic of China shall be
accepted by the Parties as final and conclusive proof that the said Event
of Force Majeure has occurred.
6.2 Should any such Event or Force Majeure occur the affected Party shall
notify the other Party in writing within fifteen (15) days and shall use
its
<PAGE>
9
reasonable endeavours to resume prompt performance as soon as such Event of
Force Majeure shall have ceased, and the time for any such Party's
performance shall be extended for a period equal to the time lost by reason
of the delay which shall be remedied with all due despatch in the
circumstances. A Party shall not be considered to be in breach of an
obligation under this Contract if prevented from performing such obligation
due to an Event of Force Majeure.
Chapter 7 NOTICE
7.1 Notices to Party A and Party B shall be issued to their respective
addresses or fax numbers as follows:
Party A
To : China-Singapore Suzhou Industrial Park
Development Co., Ltd.
Recipient : Chief Executive Officer
Correspondent : 128 Zhu Hui Lu, the Municipality of Suzhou,
Address the Province of Jiangsu, The People's Republic
of China, Postal Code 215006
Facsimile Number : 512-529 7941
Party B
To : Advanced Micro Devices (Suzhou) Limited
Recipient : Chairman
Legal Representative: Donald Matthew Brettner
Legal Address : Suzhou Industrial Park Startup Area
Advance Plot No. 21-19, the Municipality of
Suzhou, the Province of Jiangsu, The People's
Republic of China
with copy to : Advanced Micro Devices, Inc.
One AMD Place
P.O. Box 3453, Mail Stop 68
Sunnyvale, CA 94088-3453, U.S.A.
Attention: Thomas Michael McCoy, Secretary
Facsimile Number: (408) 774 7002
<PAGE>
And
Howard Chao
Suite 2501, Shartex Plaza
88 Zun Yi Nan Road, Shanghai 200335
Facsimile Number: (86-21) 275 4949
7.2 If Party A or Party B wishes to change the abovementioned correspondence
address or fax number, it shall inform the other Party of the new
correspondence address or fax number 15 days before such change.
7.3 If the notice is sent out by facsimile, it shall be deemed to be received
on the date of transmission; if the notice is sent out by hand, it shall be
deemed to be received on the date of delivery to the address stipulated; if
the notice is sent out by registered post, it shall be deemed to be
received on the fourteenth (14th) day after the date of posting. In each
case, if the notice is received on a Saturday, Sunday or public holiday,
it shall be deemed to have been received on the next following working
day.
CHAPTER 8 APPLICABLE LAW AND DISPUTE RESOLUTION
8.1 The execution, validity, interpretation and performance of this Contract
and the resolution of any dispute arising from or in relation to this
Contract shall be governed by the law of the People's Republic of China.
8.2 Any questions, dispute or difference between Party A and Party B arising
from the execution, performance or otherwise in connection with the
Contract shall first be resolved through amicable negotiation and friendly
consultation between Party A and Party B. If no resolution is reached
within ninety (90) days of the notice by any Party requesting for
resolution through negotiation and consultation, the question, dispute or
difference shall be submitted to the China International Economic and Trade
Arbitration Commission (hereinafter referred to as "CIETAC") in Shanghai
for final resolution by arbitration in accordance with the rules and
procedures or CIETAC for the time being in force, which rules are deemed to
be incorporated by reference into this Clause. The CIETAC tribunal shall
consist of three (3) arbitrators. Party A and Party B shall at all times
comply with and observe all requirements and rulings of CIETAC made in
relation to any question, dispute or difference submitted to CIETAC for
resolution.
Any award or determination by the CIETAC tribunal is final and binding on
both Party A and Party B. The arbitration proceedings shall be conducted in
the English language. During the course of arbitration, this Contract shall
continue to be performed in all respects except for the relevant provision
affected by the question, dispute or difference submitted to CIETAC for
arbitration.
<PAGE>
CHAPTER 9 REPRESENTATIONS AND WARRANTIES
OF THE PARTIES
9.1 Party A hereby covenants, warrants and undertakes with Party B that:
(i) this Contract does not contravene any laws and regulations of the
People's Republic of China or the provisions of the Assignment
Contract;
(ii) as of the effective date of this Contract and the date of delivery of
vacant possession, there are no mortgages existing on the right to
the use of the Land Parcel; and
(iii) any other provisions of this Contract notwithstanding, Party A shall
continue to perform in accordance with the terms of the Assignment
Contract those obligations thereof which have not been assumed by
Party B or any other party obliged to perform those obligations.
9.2 Party B hereby covenants, warrants and undertakes with Party A that in the
event that the Title Documents are not issued to Party B for any reason
whatsoever on or before 31 December 1996, or such later date as the Parties
may agree in writing, Party A and Party B shall negotiate in good faith as
to Party B's use of the Land Parcel and Party B shall have the option to
vacate the Land Parcel, and if Party B so decides to vacate the Land Parcel
it shall reinstate the Land Parcel to its original state and condition
unless Party A otherwise requires and make good any damage caused to the
Land Parcel to the satisfaction of Party A within such time as Party A may
specify and Party A shall refund to Party B all instalments of the Land
Price without any interest) which Party B had previously paid to it under
this Contract.
CHAPTER 10 ASSIGNMENT AND LETTING
Subject to Party B observing and performing the several covenants and
stipulations herein contained, Party A hereby agrees that it shall not:-
(a) raise any objection to Party B transferring and/or assigning its rights
and obligations under this Contract or letting all, a portion or
portions of the right to use the Land Parcel, subject only to the
provisions of applicable law and of the Assignment Contract; and
(b) require any mortgagee or sublessee of the Land Parcel or any other
third party who replaces Party B under this Contract to acquire or
assume any rights, interests or obligations other than those expressly
assigned to and assumed by Party B under the terms of this Contract or
those as required by law.
<PAGE>
CHAPTER 11 VALIDITY OF CONTRACT AND OTHER MATTERS
11.1 This Contract shall come into effect after signing by Party A and Party B
and notarised.
11.2 This Contract is written in the Chinese and English languages and both
languages shall have equal validity. If there is any conflict or
inconsistency between the Chinese text and the English text, Party A and
Party B shall negotiate in good faith to reconcile the conflict or
inconsistency. In the event that the conflict or inconsistency cannot be
resolved within sixty (60) days of the notice by any Party requesting
resolution through negotiation, the Chinese text shall be the governing and
prevailing version. Party A and Party B shall, as required by SIPAC, submit
the Chinese text for registration. There shall be 5 original sets of the
Chinese texts and 7 original sets of the English texts. Party A and Party B
shall retain 1 set each comprising both the English and Chinese texts of
this Contract, SIPAC shall retain 1 set of the Chinese text, and the Notary
Public before whom this Contract was notarised shall retain 1 set of the
Chinese text.
11.3 The headings in this Contract are for convenient reference only and shall
not be used to construe or interpret this Contract.
11.4 In the event that any provision of this Contract is deemed invalid,
unlawful or unenforceable under any applicable law, the validity, legality
or enforceability of the remaining provisions of this Contract shall not be
affected or impaired but this Contract shall be construed as if such
invalid, unlawful or unenforceable provision had never been contained in
this Contract.
11.5 Party A and Party B hereby represent and warrant that each of them shall
carry out their respective obligations under this Contract from the date on
which this Contract comes into effect until the full performance thereof.
11.6 Save that it is not inconsistent or in conflict with the provisions of
this Contract and the Assignment Contract, and any law and regulation,
Party A and Party B may enter into any supplemental contract in respect of
any matter for which no provision or adequate provision has been made in
this Contract, which shall have equal force and effect in law as this
Contract. The annexures of this Contract shall form part of this Contract
and shall have equal force and effect in law as this Contract.
11.7 Party A and Party B agree that upon the occurrence of any of the following
events which directly or indirectly impedes the due performance of this
Contract, namely :
(a) riot or civil commotion:
(b) strike or lockout or any other industrial action by workers or
employees;
<PAGE>
(c) damage to or destruction of the Land Parcel and/or the Public Basic
Infrastructure or any part thereof, caused by a third party; and/or
(d) refusal or delay or any competent regulatory authority to approve
Party A's right to construct the Public Basic Infrastructure or any
part thereof
the respective obligations of the parties hereto under this Contract shall
be suspended during the continuance or any of the aforesaid events and
neither party shall claim from the other party any damages, compensation or
for loss of any kind whatsoever arising from or attributable whether
directly or indirectly to the occurrence or any of the aforesaid events
provided the parties hereto shall negotiate in good faith as to their
rights and obligations inter se under this Contract, if any of the
aforesaid events shall continue beyond a period of ninety (90) days.
11.8 This Contract constitutes the entire rights and obligations between Party
A and Party B and shall supersede any prior expression of intent,
understanding, discussion, representation, warranty, undertaking or promise
(whether express or implied, oral or written) made by one Party or its
agent to the other Party or its agent with respect to this transaction.
Notwithstanding any provision to the contrary contained in the Memorandum
and for the avoidance of doubt, Party A and Party B hereby declare that the
Memorandum does not and shall not hereafter have any effect.
<PAGE>
14
IN WITNESS WHEREOF the legal/authorised representatives of Party A and Party B
have executed this Contract on the date first above written.
SIGNED by Chan Soo Sen )
the authorised representative ) [LOGO OF CHINA-SINGAPORE
and Chief Executive Officer of ) SUZHOU INDUSTRIAL PARK
CHINA-SINGAPORE SUZHOU ) DEVELOPMENT CO., LTD.
INDUSTRIAL PARK ) APPEARS HERE]
DEVELOPMENT CO., LTD. )
for and on behalf of )
CHINA-SINGAPORE SUZHOU ) /S/ SIGNATURE APPEARS HERE
INDUSTRIAL PARK )
DEVELOPMENT CO., LTD. )
in the presence of:- )
/S/ SIGNATURE APPEARS HERE ) /S/ SIGNATURE APPEARS HERE
SIGNED by Clyde Charles Stiteler: ) /S/ SIGNATURE APPEARS HERE
the authorised representative of )
ADVANCED MICRO DEVICES ) [LOGO OF ADVANCED MICRO DEVICES
(SUZHOU) LIMITED ) (SUZHOU) LIMITED APPEARS HERE]
for and on behalf of )
ADVANCED MICRO DEVICES )
(SUZHOU) LIMITED )
in the presence of:- )
<PAGE>
Annexure 1
LAND SURVEY PLAN FOR THE LAND PARCEL
<PAGE>
Urban Survey Data
Urban Survey Team, Suzhou City
<PAGE>
Table of the Border Point Survey
Lot Name: SuperMicro Semiconductor (Suzhou) Co., Ltd. 07/07/1995
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Border Point
Number X Y S
- ---------------------------------------------------------------------
<S> <C> <C> <C>
- ---------------------------------------------------------------------
1 44050.51 58511.46 ------------------
- --------------------------------------------------- 116. 36
2 44051.41 58531.41 ------------------
- --------------------------------------------------- 28. 32
3 44047.97 55651.44 ------------------
- --------------------------------------------------- 57.68
4 44048.41 58709.12 ------------------
- --------------------------------------------------- 3.99
5 44047.51 58713.86 ------------------
- --------------------------------------------------- 3.99
6 44045.40 58718.74 ------------------
- --------------------------------------------------- 3.98
7 44043.97 58719.39 ------------------
- --------------------------------------------------- 3.99
8 44040.80 58722.29 ------------------
- --------------------------------------------------- 3.99
9 44037.11 58723.77 ------------------
- --------------------------------------------------- 3.98
10 44033.15 58726.23 ------------------
- --------------------------------------------------- 49.38
11 43983.79 58723.41 ------------------
- --------------------------------------------------- 25.24
12 43856.73 55725.45 ------------------
- --------------------------------------------------- 107.32
13 43851.42 58721.71 ------------------
- --------------------------------------------------- 30.20
14 43621.49 58720.71 ------------------
- --------------------------------------------------- 56.42
15 43755.07 58718.55 ------------------
- --------------------------------------------------- 56.42
16 43749.97 58718.55 ------------------
- --------------------------------------------------- 5.16
17 43745.23 58715.83 ------------------
- --------------------------------------------------- 5.16
18 43741.17 58713.59 ------------------
- --------------------------------------------------- 5.16
19 43739.05 58709.96 ------------------
- --------------------------------------------------- 5.16
20 43736.09 55724.79 ------------------
- --------------------------------------------------- 5.16
21 43735.40 59699.59 ------------------
- ---------------------------------------------------------------------
</TABLE>
<PAGE>
Table of the Border Point Survey
Lot Name: SuperMicro Semiconductor (Suzhou) Co., Ltd. 07/07/1995
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Border Point
Number X Y S
- ---------------------------------------------------------------------
<S> <C> <C> <C>
- ---------------------------------------------------------------------
21 43735.41 58699.69 ------------------
- --------------------------------------------------- 40.30
22 43735.27 59659.38 ------------------
- --------------------------------------------------- 15.40
23 43731.72 58644.40 ------------------
- --------------------------------------------------- 85.93
24 43732.44 58558.45 ------------------
- --------------------------------------------------- 322.09
25 44030.51 58314.46 ------------------
- ---------------------------------------------------
- ---------------------------------------------------------------------
</TABLE>
Surface Area: 59090.21 Square Meters
<PAGE>
Map showing parcel of land in Suzhou, China has been omitted.
<PAGE>
ANNEXURE 2
CONTRACT FOR THE ASSIGNMENT OF THE RIGHT TO THE USE
OF THE STATE-OWNED LAND IN THE SUZHOU INDUSTRIAL PARK
<PAGE>
DATED THIS 6th DAY OF DECEMBER 1994
BETWEEN
THE LAND ADMINISTRATION BUREAU
OF THE MUNICIPALITY OF SUZHOU
THE PROVINCE OF JIANGSU,
THE PEOPLE'S REPUBLIC OF CHINA
AND
CHINA-SINGAPORE SUZHOU INDUSTRIAL
PARK DEVELOPMENT CO., LTD.
- --------------------------------------------------------------------------------
CONTRACT FOR THE ASSIGNMENT OF THE RIGHT
TO THE USE OF THE STATE-OWNED LAND
IN THE SUZHOU INDUSTRIAL PARK
- --------------------------------------------------------------------------------
<PAGE>
CONTRACT FOR THE ASSIGNMENT OF THE RIGHT
TO THE USE OF STATE-OWNED LAND
IN THE SUZHOU INDUSTRIAL PARK
Suzhou Industrial Park Assignment No. 001
CHAPTER 1 GENERAL PRINCIPLES
Clause 1 The Parties to this Contract are as follows :
Assignor : The Land Administration Bureau of the
Municipality of Suzhou, the Province of
Jiangsu, The People's Republic of China
(hereinafter referred to as "Party A"); and
Assignee : China-Singapore Suzhou Industrial Park Development
Co., Ltd. (hereinafter referred to as "Party B")
The Parties have, in accordance with the "Interim Regulations of
The People's Republic of China Concerning the Assignment and
Transfer of the Right to the Use of State-Owned Land in Urban
Areas", "Interim Measures for the Administration of Foreign-
Invested Development and Management of Tracts of Land" and the
relevant State and local stipulations, entered into this Contract
after friendly negotiations based on the principles of equality
and voluntariness, and assignment for value.
Clause 2 Party A shall assign the right to the use of the land in accordance
with the law and the provisions of this Contract. The ownership of
the land belongs to The People's Republic of China. The
underground resources, objects buried underground
1
<PAGE>
and public works shall not be within the scope of such assignment
of the right to the use of the land.
Clause 3 Party B may during the tenure of use of the land, transfer, lease
out, mortgage or use in other economic activities, the right to the
use of the land assigned under this Contract. The lawful rights and
interests of Party B shall be protected by the laws of the State.
Party B shall not engage in any activity which is not permitted under
the laws of The People's Republic of China. Party B shall be
responsible for the reasonable development, use and protection of the
land in accordance with the law.
CHAPTER 2 DEFINITIONS
Clause 4 The definitions of the special terms used in this Contract shall be
as follows:
1. "Land Parcel" means the scope of the right to the use of the
land assigned by Party A to Party B under this Contract, the
boundaries of such land are more particularly defined in
Clause 5 of this Contract.
2. "Land Plot" means the land within the Land Parcel which has
been sub-divided in accordance with planning and delineated by
the boundaries demarcating the entitlement to the right to the
use of the land.
3. "Masterplan" means the masterplan on the use of the land, and
the development and construction within the first phase of
development of the Suzhou Industrial Park as approved by the
government of China.
2
<PAGE>
4. "Detailed Plan" means the exact arrangement made for each
development and construction within the scope of the right to
the use of the land, and the proposal for the use of the land
after development, which are formulated in accordance with the
Masterplan and approved by the government of China.
5. "Public Basic Infrastructure" means the basic infrastructure
for the use of the public and which provide inter alia power,
water, drainage, sewerage, heating, road networks, navigation
channels, revetments, postal facilities and telecommunications
which are completed through comprehensive development and
construction of the Land Parcel in accordance with the
Masterplan and the Detailed Plan.
6. "Public and Social Amenities" means the amenities for serving
residential districts including inter alia creches, nurseries,
schools and amenities for health, environmental protection and
landscaping: large scale amenities for servicing the entire
Suzhou Industrial Park for inter alia culture, education,
health, fire prevention and environmental protection; large
areas of greenery: and other relevant amenities for serving the
Suzhou Industrial Park and the residents.
7. "Leasing Out of the Right to the Use of the Land" means the
leasing out of the right to the use of the land together with
the above ground buildings and other attached objects thereon by
the user of the land as a lessor for the use of the lessee upon
the payment of rental by the lessee to the lessor.
3
<PAGE>
8. "State" means The People's Republic of China.
CHAPTER 3 BOUNDARIES, AREA AND TENURE OF USE OF THE ASSIGNED LAND PARCEL
Clause 5 The Land Parcel assigned by Party A to Party B is located at the east
of the city of Suzhou, on the western side of Jin Ji Lake. The
boundaries of the Land Parcel are particularly set out in Plan 2:
"Plan of the Geographical Location of the Land Parcel" annexed
hereto.
Party A and Party B have confirmed inter alia the plan of the
boundaries demarcating the entitlement to the right to the use of the
land, the boundary lines and the boundary points which are more
particularly set out in Plan 1: "Plan of the Boundaries Demarcating
the Entitlement to the Right to the Use of the Land" annexed hereto.
Clause 6 The total area of the Land Parcel which Party A is assigning to Party
B shall be Eight Million (8,000,000) square metres.
Party A shall, in accordance with the development and construction
plan of Party B as approved by the government, deliver the land in
stages to Party B. In the event that Party A is unable, due to
special circumstances, to deliver the land to Party B in accordance
with the stipulated time, Party B hereby agrees to reach a proper
resolution by negotiations with Party A.
4
<PAGE>
Clause 7 The tenure of assignment of the right to the use of the land of the
Land Parcel under this Contract shall be determined in accordance
with the different uses of the land specified in the Masterplan and
the Detailed Plan as follows:
70 years for residential purposes;
50 years for the purposes of industry, education, science and
technology, culture, health and physical education;
40 years for financial, insurance, commercial, tourist,
entertainment and recreational purposes; and
50 years for mixed and other purposes.
The abovementioned tenure of assignment of the right to the use of
the land shall commence on 1 January 1997.
CHAPTER 4 USE OF THE LAND
Clause 8 The assigned Land Parcel under this Contract shall be used for
projects which are specified to be implemented in accordance with the
Masterplan and the Detailed Plan for the construction of inter alia
Public Basic Infrastructure, industrial, commercial, tourist,
financial, entertainment, recreational and residential facilities,
and Public and Social Amenities.
Clause 9 The annexes to this Contract shall form part of this Contract and
have equal force and effect as this Contract. Party B hereby agrees
to use the land in accordance with the "Terms and Conditions of the
Right to the Use of the Land".
Clause 10 In the event that the user of the land desires to change the use of
the land stipulated in Clause 8 of this Contract and the "Terms and
Conditions of the Right to the Use of the Land"
5
<PAGE>
upon the execution and coming into effect of this Contract, the
user of the land shall obtain the agreement of Party A, to complete,
in accordance with the relevant stipulations, the formalities for
examination and approval, to enter into a new contract for the
assignment of the right to the use of the land, to adjust the fee for
the assignment of the right to the use of the land, and to complete
the formalities for registration of the change in the right to the
use of the land.
CHAPTER 5 FEES AND CHARGES IN RELATION TO LAND AND THE PAYMENT THEREOF
Clause 11 Party B hereby agrees to pay to Party A, in accordance with the
stipulations of this Contract, the fee for the assignment of the
right to the use of the land and the fee for the use of the land.
Party B shall, in accordance with the relevant stipulations of the
State, also pay tax for any appreciation in value of the land and
other relevant taxes, fees and charges in relation to the land. In
the event that there is any new stipulation henceforth promulgated by
the State, the payment of the aforesaid taxes, fees and charges shall
be in accordance with such new stipulations.
Clause 12 The fee for the assignment of the right to the use of the land in the
Land Parcel under this Contract shall be United States Dollars Eleven
and Cents Fifty (US$11.50) per square metre and the total amount of
such fee shall be United States Dollars Ninety-Two Million
(US$92,000,000).
Clause 13 Upon the signing of this Contract by the Parties, Party B shall,
within 7 days thereof, pay to Party A 15% of the total fee for the
assignment of the right to the use of the land calculated at
6
<PAGE>
United States Dollars Eleven Million Ninety-Two Thousand Six Hundred
and Five (US$11.092,605) as deposit for the performance of this
Contract.
Within 30 days of the granting of approval of this Contract by the
State, Party B shall pay to Party A 50% of the total fee for the
assignment of the right to the use of the land calculated at United
States Dollars Thirty-Six Million Nine Hundred Seventy-Five Thousand
Three Hundred and Fifty (US$36,975,350). (The sum of US$11,092,605
which has been paid by Party B to Party A as a deposit shall be used
to set off part of the fee for the assignment of the right to the use
of the land.)
Within 60 days of the granting of approval of this Contract by the
State, Party B shall pay to Party A another 30% of the total fee for
the assignment of the right to the use of the land calculated at
United States Dollars Twenty-Two Million One Hundred Eighty-Five
Thousand Two Hundred and Ten (US$22,185,210).
In consideration of the payment prior to the date of this Contract by
Party B to Party A of a sum of United States Dollars Eighteen Million
Forty-Nine Thousand and Three Hundred (US$18,049,300) rebates of
corresponding sums have been deducted from each of the abovementioned
installment payments.
Upon the delivery of any Land Plot within the assigned Land Parcel by
Party A to Party B, Party B shall forthwith pay the balance of the
fee for the assignment of the right to the use of land in such Land
Plot.
7
<PAGE>
Clause 14 Within 15 days of the completion of payment of the fee for the
assignment of the right to the use of the land by Party B to Party A,
Party B shall, in accordance with the stipulations, complete the
formalities for the registration of the land, collect the
"Certificate for the Use of State-Owned Land in The People's Republic
of China" and obtain the right to the use of the land.
Clause 15 Party B shall, commencing in the year of 1997, make a one-time
payment to Party A of the fee for the use of the land. The standard
of such fee for the year of 1994 shall be United States Dollars Seven
and Cents Twenty (US$7.20) per square metre and such standard shall,
commencing in the year of 1995, increase at a yearly progressive
rate of 12%.
In the event that such fee is paid yearly, Party B shall pay to Party
A such fee before the 30th day of June every year. The standard of
such fee for the year of 1994 shall be United States Cents Fifty
(US$0.50) per square metre and such standard shall, commencing in the
year of 1995, increase at a yearly progressive rate of 12%.
Clause 16 Party B hereby agrees to pay to Party A the fee for the assignment of
the right to the use of the land and the fee for the use of the land
in United States Dollars in cash or by way of cash cheque.
Clause 17 Save and except for provisions in this Contract which stipulate
otherwise, Party B shall, on or before the dates of payment provided
in this Contract, remit to the bank account of Party A the amounts
specified in this Contract, the particulars of such bank account
being as follows :
8
<PAGE>
Name of Bank : Suzhou Branch of the Bank of China
Account Number : 14833004000
In the event that there is any change in the name of the bank or the
account number of Party A, Party A shall, within 10 days thereof,
give notice in writing of such change to Party B. In the event that
there is any charge or fee incurred for late payment owing to the
delay in payment caused by the failure of Party A to give timely
notice of such change, Party B shall not be liable for any breach of
contract.
CHAPTER 6 TRANSFER OF THE RIGHT
TO THE USE OF THE LAND
Clause 18 Upon the investment, development and completion of the Public Basic
Infrastructure, such as providing road networks, supplying power and
water, by Party B, in accordance with the Masterplan, Party B may
have the right to transfer the balance of the tenure of the right to
the use of the land in a Land Plot within the Land Parcel under this
Contract (including the sale, exchange or gift thereof). In the event
that the fee for the use of the land is paid by Party B yearly, Party
B may only transfer the balance of the tenure of the right to the use
of the land in each Land Plot within the Land Parcel under this
Contract (including the sale, exchange or gift thereof) upon the
approval of Party A.
Land which, in accordance with the Masterplan approved by the
government, is specified for the use of Public Basic Infrastructure
and Public and Social Amenities shall not be transferable. Land which
is used for Public Basic Infrastructure and Public and Social
Amenities which are
9
<PAGE>
operated for business purposes shall only be transferrable upon
the approval of Party A.
Clause 19 A user of the land which obtains the right to the use of the land by
transfer (hereinafter referred to as "Land User") may, save and
except for stipulations in the law which provide otherwise, be a
company, enterprise, other economic organisation or individual within
or outside The People's Republic of China. In the event that the
price for the transfer of the right to the use of the land is
patently lower than the market price thereof, Party A shall have pre-
emptive right in the purchase of such land. A contract for the
transfer of the right to the use of the land shall be entered into
for such transfer and such contract shall not contravene the laws and
regulations of the State and the provisions of this Contract.
Clause 20 Party B shall, 10 days before the transfer of the right to the use of
the land, give notice to Party A of such transfer. The parties to the
transfer shall, within 15 days of the execution of the contract for
such transfer, forward to Party A the notarised original copies of
the contract for such transfer and the relevant annexes thereto,
complete the formalities in accordance with the stipulations for the
registration of the change in the right to the use of the land and
collect the certificate for the use of the land, and Party B shall,
in accordance with the relevant stipulations of the State, pay tax
for any appreciation in value of such land.
Clause 21 Upon the transfer of the right to the use of the land and the coming
into effect of the contract for such transfer, the rights, interests
and obligations which are set cut in this Contract and
10
<PAGE>
the documents of registration shall also be transferred to the
Land User.
Clause 22 Any sub-division and transfer of the right to the use of the land and
the ownership of the above ground buildings and other attached
objects thereon shall be subject to the approval of Party A and the
formalities for the registration of the transfer of rights shall be
completed in accordance with the stipulations.
CHAPTER 7 LEASING OUT OF THE RIGHT
TO THE USE OF THE LAND
Clause 23 Upon the implementation by Party B of the Masterplan and the Detailed
Plan and the creation by Party B of the conditions for the land to be
used for construction, Party B shall be entitled to lease out for the
use of the lessee the balance of the tenure of the right to the use
of the land in a Land Plot under this Contract together with the
above ground buildings and other attached objects thereon.
Clause 24 The contract for the Leasing Out of the Right to the Use of the Land
entered between Party B and the lessee shall not contravene the laws
and regulations of the State and the provisions of this Contract.
Clause 25 In the event that the right to the use of the land together with the
above ground buildings and other attached objects thereon are leased
out, the parties to the lease shall, within 15 days of the execution
of such contract for lease, jointly complete the formalities for the
relevant registration with Party A. and the lessee receives a
"Certificate for the Leasing Out of the Right
11
<PAGE>
to the Use of the Land". Upon the termination or expiration of the
lease, the parties to the lease shall complete the formalities for
de-registration with the original registration department.
Clause 26 Upon the Leasing Out of the Right to the Use of the Land in a Land
Plot under this Contract, Party B shall continue to perform this
Contract.
CHAPTER 8 MORTGAGE OF THE RIGHT
TO THE USE OF THE LAND
Clause 27 Party B shall be entitled to subject the balance of the tenure of the
right to the use of the land of any Land Plot under this Contract to
one or more mortgages to one or more mortgagees. The contract for
mortgage of the right to the use of the land entered between Party B
and a mortgagee shall not contravene the laws and regulations of the
State and the provisions of this Contract. All loans secured by the
mortgage shall first be used by Party B for the development of the
Land Parcel under this Contract.
Clause 28 Party B shall, 10 days before the mortgage of the right to the use of
the land, give notice to Party A of such mortgage. Party B and the
mortgagee shall, within 15 days of the execution of such contract
for mortgage, forward to Party A the notarised original copies of
such contract for mortgage and the promissory note or loan agreement
in relation to the mortgage, and the relevant annexes, and complete
the formalities for the registration of the mortgage of the right to
the use of the land, and the mortgagee shall collect a "Certificate
for the Mortgage of the Right to the Use of the Land". Upon the
termination of a mortgage, the formalities for
12
<PAGE>
de-registration shall be completed with the original registration
department.
A mortgagee or any third party which, in accordance with the relevant
stipulations, obtains as a result of the disposal of the mortgaged
properties the right to the use of the land which is mortgaged, and
Party B shall, within 15 days of the realisation of the mortgage
rights, jointly complete with Party A the formalities for
registration of the change in the right to the use of the land.
Clause 29 Any mortgagee or third party which replaces Party B in accordance
with Clause 28 of this Contract shall enjoy the rights and interests
and be bound by the obligations provided in this Contract.
CHAPTER 9 EXPIRATION OF THE TENURE
Clause 30 Upon the expiration of the tenure of use of the land provided in this
Contract, Party A shall be entitled to withdraw, without providing
any compensation, the right to the use of the land, and obtain,
without providing any compensation, the ownership of the above ground
buildings and other attached objects thereon. The Land User shall
surrender the certificate for the use of the land and shall in
accordance with the stipulations, complete the formalities for the
de-registration of the right to the use of the land. In the event
that the formalities for such de-registration are not commenced
within 30 days of the expiration of the tenure of use of the land,
Party A shall, in accordance with the stipulations, de-register the
right to the use of the land.
13
<PAGE>
Clause 31 In the event that Party B desires to continue the use of the Land
Parcel upon the expiration of the tenure of use of the land provided
in this Contract, Party B shall, no later than 6 months before the
expiration of such tenure, submit to Party A an application for the
extension of such tenure. Upon the agreement by Party A of the new
tenure of assignment of the right to the use of the land, the new fee
for the assignment of the right to the use of the land and other
terms and conditions, Party B shall also enter into a contract for
the extension of the tenure of assignment of the right to the use of
the land and again complete the formalities for the registration of
the right to the use of the land.
Clause 32 Under special circumstances during the term of this Contract, Party A
may, in the public interests, withdraw, in accordance with legal
procedures, the right to the use of part of the land in a Land Plot
of the Land Parcel and provide compensation which corresponds to the
actual tenure of use of the land by the Land User and the actual
state of development and use of the land.
CHAPTER 10 FORCE MAJEURE
Clause 33 Party A and Party B shall not be liable for any failure to perform
all or any part of this Contract owing to the occurrence of any of
the following events of force majeure: serious fires, floods,
earthquakes, or wars; and where the conditions permit, shall adopt
all necessary remedial measures to reduce any loss caused by the
occurrence of such event of force majeure.
14
<PAGE>
Clause 34 A Party which encounters an event of force majeure shall, within 48
hours of the occurrence of such event, give notice to the other Party
in writing by inter alia post or telegram of the circumstances of
such event and shall, within 15 days of the occurrence of such event,
submit to the other Party a report of the reasons for the failure to
perform all or any part of this Contract and for any extension of
time to perform this Contract.
CHAPTER 11 LIABILITY FOR BREACH
Clause 35 A Party which is unable to perform any of the obligations provided in
this Contract shall be liable for breach of contract.
Clause 36 In the event that Party B is unable to exercise its right of
possession over all or any part of the right to the use of the land
for a period of 60 days owing to any fault of Party A, the tenure of
assignment of the right to the use of the land under this Contract
shall be correspondingly extended. Party B shall also be entitled to
terminate this Contract and Party A shall make timely refund of the
fee for the assignment of the right to the use of the land. Party A
shall also pay to Party B damages for breach of contract calculated
at 8% of the total fee for the assignment of the right to the use of
the land.
Clause 37 Party B shall, in accordance with this Contract, pay the fee for the
assignment of the right to the use of the land. In the event that
Party B fails to pay the fee for the assignment of the right to the
use of the land as provided in this Contract for a period of 60 days,
Party A shall be entitled to terminate this Contract and withdraw all
or any part of the right to the use of the land in the assigned Land
Parcel. Any payment of the fee for the
15
<PAGE>
assignment of the right to the use of the land shall not be refunded
and Party B shall pay to Party A damages for breach of contract
calculated at 8% of the total fee for the assignment of the right to
the use of the land.
Clause 38 In the event that Party B fails to commence construction for a period
of more than half a year commencing on the delivery of the land,
Party B shall pay to Party A a fee for the non-development of the
land. The standard of such fee shall be United States Dollar One and
Cents Fifty (US$1.50) per square metre for the first half a year to
the first year of such non-development and United States Dollars Two
and Cents Thirty (US$2.30) per square metre for the first year to the
second year of such non-development. In the event that Party B fails
to carry out development in accordance with the tract development
plan upon the delivery of land by Party A or for a continuous period
of 2 years tails to commence construction, Party A shall withdraw,
without providing compensation, all or any part of the right to the
use of the land in the Land Parcel.
Clause 39 In the event that Party B fails to carry out and complete
construction on the Land Parcel in accordance with the approved
development and construction plan and the stipulated time limit upon
the formal delivery of the land by Party A to Party B, Party B shall,
1 month before such time limit, submit an application supported by
sufficient reasons to Party A for extension of such time limit. Upon
the agreement of Party A, the time limit for construction stipulated
by this Contract may, in accordance with the circumstances, be
appropriately extended. In the event that Party A disagrees with such
extension or where Party B fails, within the stipulated time. To
submit to Party A the application for such extension and
16
<PAGE>
exceeds the approved time limit for the completion of construction,
Party B shall, commencing on the date on which such time limit is
exceeded, pay to Party A damages for breach of contract to be
calculated on a yearly basis. The damages for the first year in which
such breach occurs shall be calculated at 1% of the total fee for
the assignment of the right to the use at the land. In the event that
such breach continues for a period of more than 1 year but less than
2 years the damages for such breach shall be calculated at 3% of the
total fee for the assignment of the right to the use of the land. In
the event that such breach continues for a period of more than 2
years and the amount of capital invested for construction (excluding
the fee for the assignment of the right to the use of the land) is
less than 20% of the total cost of the project, Party A shall
withdraw, without providing compensation, part of the right to the
use of the land. The quantum of such part of the right to the use of
the land to be withdrawn shall be determined based on the proportion
of the amount of capital invested for construction to the total cost
of the project.
Clause 40 In the event that Party B is unable to pay any sum of money
(excluding the fee for the assignment of the right to the use of the
land) in accordance with the stipulated time, Party A shall issue to
Party B a notice for payment. In the event that Party B fails to pay
such sum within the period stipulated by such notice, Party B shall,
commencing on the date on which such payment should have been made,
pay a penalty for late payment per day which shall be calculated as
follows :
17
<PAGE>
If the failure by Party B to pay such sum continues for a period
of 30 days or less, the penalty shall be calculated at 0.1%.
If the failure by Party B to pay such sum continues for a period
of more than 30 days but less than 60 days, the penalty shall be
calculated at 0.2%.
If the failure by Party B to pay such sum continues for a period
of more than 60 days, the penalty shall be calculated at 0.3%.
Clause 41 In any transfer, leasing out or mortgage of the right to the use of
the land, in the event that the parties concerned fail to register
with Party A such transfer, leasing out or mortgage upon the
execution of the contract for such transfer, leasing out or mortgage
of the right to the use of the land, such contract shall be void and
shall not be protected by the law. In addition to being dealt with as
unlawful occupation of the land, the land may be de-registered and
the certification for the land may be cancelled upon the approval of
the people's government in accordance with the seriousness of each
case.
CHAPTER 12 NOTICE
Clause 42 Any notice or mode of correspondence specified or permitted in this
Contract howsoever transmitted shall come into effect upon the
actual receipt thereof. The correspondence addresses of the
Parties are as follows :
Assignor
Address of Legal Representative: 116 Zhu Hui Road,
the Municipality of Suzhou,
the Province of Jiangsu
Postal Code : 215006
Telephone Number : 529 3875
Telegram Registered Number :
18
<PAGE>
Assignee
Address of Legal Representative: 128 Zhu Hui Road,
the Municipality of Suzhou,
the Province of Jiangsu
Postal Code : 215006
Telephone Number : 520 2030
Telegram Registered Number :
Any Party may amend the abovementioned notice or correspondence
address and shall, within 10 days of such amendment, give notice
of the new address to the other Party.
CHAPTER 13 APPLICABLE LAW AND RESOLUTION OF DISPUTE
Clause 43 The execution, validity, interpretation and performance of this
Contract and the resolution of any dispute arising from or in
relation to this Contract shall be protected and governed by the law
of The People's Republic of China.
Clause 44 In the event that any dispute arises from the performance of this
Contract, the Parties shall attempt to resolve such dispute by
negotiations. In the event that such dispute is not resolved by
negotiations, the Parties in dispute may refer such dispute for
arbitration by the local arbitration agency for economic contracts.
CHAPTER 14 SUPPLEMENTAL PROVISIONS
Clause 45 Upon the execution by the legal representatives (or authorised
representatives) of the Parties and the approval of the State Council
of The People's Republic of China, this Contract shall come into
effect.
19
<PAGE>
Clause 46 This Contract is written in the Chinese and English languages and the
texts written in both languages shall have equal force and effect. In
the event of any inconsistency between the two texts, the text
written in the Chinese language shall prevail. There shall be 4
originals of this Contract in each language and the Parties shall
each retain 2 originals of this Contract in each language.
Clause 47 In respect of any matter for which no provision has been made in this
Contract, such matter shall, upon the agreement of the Parties, be an
annex to this Contract. An annex to this Contract shall have equal
force and effect as this Contract.
Party A: Party B:
The Land Administration Bureau China-Singapore Suzhou Industrial
of the Municipality of Suzhou, Park Development Co., Ltd.
the Province of Jiangsu,
The People's Republic of China
Legal Representative; Legal Representative:
6th December 1994
20
<PAGE>
ANNEX
TERMS AND CONDITIONS OF THE
RIGHT TO THE USE OF THE LAND
<PAGE>
PLAN 1
PLAN OF THE BOUNDARIES DEMARCATING
THE ENTITLEMENT TO THE RIGHT TO THE USE OF THE LAND
<PAGE>
3 SPECIFICATIONS FOR THE USE OF THE LAND
1. The use of the land in the assigned Land Parcel shall comply with the
uses of the land stipulated in this Contract.
2. The Development Company shall formulate the Detailed Plan of the Land
Parcel to be developed and implement the Detailed Plan upon the
approval of the Detailed Plan by the State government.
3. The construction designs in the Land Parcel to be developed and the
use of the Land Parcel for construction shall comply with the
masterplan of the Suzhou Industrial Park, the masterplan of the first
phase of development, the Detailed Plan and the specifications for
the use of the land as defined in this Contract.
4. Public right of way shall be retained in Fengmentang which is located
in the assigned Land Parcel. The original river courses in the Land
Parcel shall be dealt with in accordance with the Masterplan.
5. Ports and harbours shall not, in general, be constructed in
Fengmentang which is located in the assigned Land Parcel and Loujiang
which is located at the northern side of the assigned Land Parcel. In
the event that it is confirmed that the construction of any port or
harbour is required, such construction shall be submitted for the
approval of the local department for the administration of
navigation.
4 PUBLIC BASIC INFRASTRUCTURE AND
PUBLIC AND SOCIAL AMENITIES
1. Public Basic Infrastructure
The Development Company shall be responsible for the construction of
the Public Basic Infrastructure in the assigned Land Parcel in
relation to road networks, pipelines for water, gas, sewage and
heating, navigation
2
<PAGE>
channels, revetments, and cables, wires and lines for inter alia
telecommunications and the supply of power and electricity. The
construction of Public Basic Infrastructure for serving the
industrial land and for overall service shall be completed by the end
of the year of 1996 and such Public Basic Infrastructure shall
comply with the existing designs in China and regulated standards for
construction. The business operations of such Public Basic
Infrastructure shall be conducted in accordance with the
stipulations of the State.
2. Public and Social Amenities
The construction of the relevant Public and Social Amenities in the
Land Parcel shall be carried out in accordance with the approved
masterplan of the Suzhou Industrial Park and the Detailed Plan. The
land used for the construction of such Public and Social Amenities
shall be provided without any payment by the Development Company.
The Development Company shall assist in the construction and
provision of complementary Public and Social Amenities for the
residential districts. The local government shall be responsible for
the management and operation of the Public and Social Amenities
located in the land.
5 INTRODUCTION OF PROJECTS
1. The Development Company shall be responsible for the attraction of
investors to invest in the Land Parcel and the strict implementation
of the approved development and construction plan. In the event that
there are special circumstances which require any change in the
progress of construction, the Development Company and SLAB shall,
after friendly negotiations, make proper arrangements therefor.
3
<PAGE>
2. The construction projects which are introduced into the Land Parcel
shall, in accordance with the relevant stipulations for the
examination, approval and management of such projects, be submitted
for the approval of the relevant departments of the government of
China.
6 SUPERVISION AND INSPECTION
During the tenure of the use of the land, SLAB shall supervise and
inspect the use of the land in the assigned Land Parcel:
2. The Development Company shall not for any reason occupy any land
outside the assigned Land Parcel (including using such land for the
storage and accumulation of inter alia any objects or appliances)
without the prior approval of Party A. Any breach of this provision
shall be dealt with as an unlawful use of the land.
3. The Development Company shall comply with the stipulated uses of the
land and the specifications of the engineering design drawings in
carrying out construction, failing which SLAB shall be entitled to
order the stopping of such construction and to mete out punishment in
accordance with the relevant stipulations.
4. The formalities for the submission for approval shall, in accordance
with the stipulations, be completed in inter alia any demolition,
modification or reconstruction of the buildings or structures in the
Land Parcel, failing which the relevant law enforcement departments
shall be entitled to order the restoration of the previous state-of-
affairs or the demolition of such buildings or structures. Any
refusal to execute such order may result in the compulsory
enforcement in accordance with the law and the expenses incurred for
such enforcement shall be paid by the offender concerned.
4
<PAGE>
ANNEX: TERMS AND CONDITIONS OF THE RIGHT
TO THE USE OF THE LAND
1 DEVELOPMENT ENTERPRISE
The Land Parcel which is assigned under this Contract shall undergo
tract development by China-Singapore Suzhou Industrial Park Development Co.,
Ltd. (hereinafter referred to as "Development Company") in accordance with the
Masterplan and the Detailed Plan. The Development Company shall, in accordance
with the law, be autonomous in its business operations and management in the
Land Parcel but shall not have any administrative and judicial powers. The
relationship between the Development Company and other enterprises shall be
commercial.
2 ESTABLISHMENT OF BOUNDARY MARKERS
Upon the formal execution of this Contract, the formalities for the
delivery of the land in stages and in separate lots shall be carried out in
accordance with the development and construction plan as approved by the
government. The Land Administration Bureau of the Municipality of Suzhou
(hereinafter referred to as "SLAB") and the Development Company shall, in
accordance with the plan of a Land Plot, examine the boundary marker located at
each corner of the co-ordinates as indicated on the boundaries, verify the
accuracy of the area of such Land Plot, upon which the Parties shall sign on the
plan of such Land Plot as confirmation of such examination and verification. The
boundary markers shall be properly protected by the Development Company and
shall not be moved without permission. In the event that any boundary marker is
damaged or moved, SLAB shall be notified in time for the re-establishment of
such boundary marker. Any expense incurred in relation to such re-establishment
shall be paid by the Development Company.
<PAGE>
PLAN 2
PLAN OF THE GEOGRAPHICAL
LOCATION OF THE LAND PARCEL
<PAGE>
DATED THIS 6th DAY OF DECEMBER
1994
BETWEEN
THE LAND ADMINISTRATION
BUREAU
OF THE MUNICIPALITY OF
SUZHOU
THE PROVINCE OF JIANGSU,
THE PEOPLE'S REPUBLIC OF
CHINA
AND
CHINA-SINGAPORE SUZHOU
INDUSTRIAL
PARK DEVELOPMENT CO.
LTD.
------------------------------
CONTRACT FOR THE
ASSIGNMENT OF THE RIGHT
TO THE USE OF THE STATE-
OWNED LAND
IN THE SUZHOU INDUSTRIAL
PARK
------------------------------
<PAGE>
17
ANNEXURE 3
LAND USE CERTIFICATE FOR THE RIGHT TO THE USE OF
2,927,777 SQUARE METRES OF LAND ISSUED BY
THE LAND ADMINISTRATION BUREAU OF
THE MUNICIPALITY OF SUZHOU, THE PROVINCE OF JIANGSU
<PAGE>
18
ANNEXURE 4
LAND USE CONDITIONS
-------------------
1. BOUNDARY
1.1 Before the execution of the "Contract for the Transfer of the
Right to Use State-Owned Land" (hereinafter referred to as "the
Contract"), the Land Administration Bureau of the Suzhou
Industrial Park (hereinafter referred to as "Land Bureau")
together with the transferor and the transferee shall verify
each of the boundary markings as marked in the red-line map. All
the parties will signify their verification that the land area
is correct by endorsing on the map of the Land Parcel. The
boundary signs must be protected by the land user and shall not
be privately removed. In the event that the boundary signs are
removed or damaged, the land user shall immediately inform the
Land Bureau to reinstate the boundary signs and the expenses
shall be borne by the land user.
2 CONDITIONS FOR USE OF LAND
2.1 The land user shall comply with the following conditions in its
use of any part of the land within the Land Parcel. A Planning
Permit shall also be obtained:-
(1) The land shall be used for factory purpose and the built-in area
for such use shall not be less than 50% of the total built-in
area;
(2) Annex : Administration office
with a built-in area of not more than 25% of the total
built-in area;
(3) The maximum plot ratio is 2.5,
the minimum plot ratio is 0.3;
(4) Density of the Building is (Not Applicable)
----------------------------------
(5) Height of the Building: Maximum/Average (Not Applicable)
-----------------------
floors;
(6) Green Belt rate of (Not Applicable) %
-------------------------
(7) The construction and design applied within the Land Parcel shall
comply with the existing standards of construction and design
stipulated by the PRC.
<PAGE>
19
3. PUBLIC PROJECT
3.1 Water supply and electricity supply
The land user shall bear the cost of water and electricity
connections and that for road construction.
4. DESIGN, CONSTRUCTION AND COMPLETION
4.1 The building design and purpose within the Land Parcel shall
comply with the requirements of the land use. Matters pertaining
to transportation, laying of pipelines, fire safety, civil
defence, environmental protection, and waterway shall be
submitted to the relevant departments for approval before
construction and such matters shall be managed by an agency
appointed by the government. All expenses thereby incurred shall
be borne by the land user.
4.2 The land user shall complete construction in three (3) phases
and each phase shall be completed in accordance with the
applicable Planning Permit within a period of less than two (2)
years, the first phase of which shall be completed by 31
December 1997. The land user may, six (6) months before the
expiration of the stipulated period, apply to the Land Bureau
for an extension of time in the event of force majeure or other
exceptional circumstances.
4.3 If the land user fails to comply with the completion period as
stipulated in Clause 4.2 and is unable to obtain approval for an
extension in accordance with Clause 4.2, the land department
shall be entitled to exercise governmental rights empowered by
the regulations against the land user or towards the Land
Parcel.
5. CONSTRUCTION AND MAINTENANCE
5.1 The responsibilities to be borne by the land user with regard to
the surrounding environment and facilities when carrying out
construction and maintenance within the Land Parcel includes:
(1) Not to occupy or damage the land and facilities beyond the
Land Parcel with construction materials or discarded
articles (sand, broken stones, construction debris).
Approval from the government shall be obtained for any
temporary use of municipal roads.
<PAGE>
20
The land user shall discuss with the land user concerned
for any temporary use of land beyond the Land Parcel; if
the land concerned is land not yet approved by the
government, the land user shall apply to the land
management department for approval and shall pay the
requisite land use fees.
(2) Not to dump, store or deposit any materials, debris or
carry out any construction activities in the common areas
without the approval of the relevant departments.
(3) To ensure the proper discharge of sewage, waste, foul-
smelling items or any waste which pollutes the environment
and not to cause any damage to the surrounding environment.
(4) To safeguard the municipality facilities within the Land
Parcel during the period of the land use right to prevent
damage thereto. Failing which, the land user shall be
liable for all repair and reinstatement costs and any other
damages arising therefrom.
5.2 The land user shall not develop, destroy or excavate
neighbouring or other land.
5.3 Before construction or maintenance, the land user shall
familiarise itself with the drains, water ways (including hose
reel), cables, wires and the location of other facilities on the
Land Parcel and those of the neighbouring land, and shall submit
the plan relating thereto to the relevant departments. The land
user shall not commence work before obtaining approval. The land
user shall bear all cost of rerouting, re-construction or re-
installation.
6. SUPERVISION AND INSPECTION
6.1 During the period of the land use right, the Land Bureau is
entitled to inspect and supervise the use of Land Parcel by the
land user. The land user shall not object to and cause any
obstruction thereto.
6.2 The land user shall not occupy land not part of the Land Parcel
for whatsoever reasons (including the deposit of articles or
appliances) without any approval, otherwise, the land user
shall be dealt with as an unlawful occupant of the land.
<PAGE>
21
6.3 The land user shall carry out the construction within the Land
Parcel in accordance with the stipulated land purpose and the
approved project design plans.
6.4 The land user shall not wilfully demolish, alter or reconstruct
the buildings within the Land Parcel without approval from the
Planning Department. The relevant department shall have the
right to instruct the land user to reinstate or demolish the
demolished, altered or reconstructed building (as the case may
be). In the event of non-compliance to reinstate or demolish the
building, the relevant department shall have the right to
enforce its order. All expenses shall be borne by the land user.
<PAGE>
22
ANNEXURE 5
PAYMENT OF LAND PRICE
---------------------
(1) The Land Price shall be paid by Party B to Party A by
instalments at the following times and in the manner set out in
paragraph (3) of this Annexure:
(a) within seven (7) days after the signing of this Contract,
a sum equal to 25% of the Land Price;
(b) within fourteen (14) days after receipt by Party B of the
notification issued by the Land Administration Bureau of
SIP to Party B for collection of the Title Documents, a sum
equal to 50% of the Land Price;
(c) within fourteen (14) days after the date of issue of Party
A's notice notifying Party B that the installation of
electrical power supply cable, town gas pipe, sewer pipe
and water pipe in accordance with the terms of this
Contract has been completed, a sum equal to 15% of the Land
Price;
(d) within fourteen (14) days after the date of issue of Party A's
notice notifying Party B that the construction of access road up
to the boundary of the Land Parcel has been completed, a sum
equal to 10% of the Land Price.
(2) The aforesaid notices issued by Party A informing Party B of the
completion of the abovementioned Public Basic Infrastructure may
be given in any order and, for the purpose of payment, shall be
accepted by Party B that the said Public Basic Infrastructure
has been completed on the date stated therein.
(3) The instalments referred to in paragraph (1) shall be paid to
Party A by way of electronic transfer of funds to the Bank of
China Industrial Park Sub-Branch of 88 Donghuan Road, Suzhou,
215001 People's Republic of China for the US$ A/c
No 412-148-250-000-188 and payment shall be deemed to be
received by Party A only upon the payment being received by
Party A's aforesaid Bank and credited into Party A's aforesaid
account.
<PAGE>
23
ANNEXURE 6
GUARANTEE TO BE GIVEN BY
ADVANCED MICRO DEVICES, INC.
----------------------------
THIS GUARANTEE is issued on [ ] 1995
-------------
BY:-
ADVANCED MICRO DEVICES INC., a corporation duly organised under
-----------------------------
the laws of the State of Delaware and having its registered
office at One AMD Place, P.O. Box 3453, Sunnyvale, California
94088-3453, U. S. A. hereinafter referred to as "the Guarantor",
which expression shall include its successors)
IN FAVOUR OF:-
CHINA-SINGAPORE SUZHOU INDUSTRIAL PARK DEVELOPMENT
---------------------------------------------------
CO., LTD. of Jin Ji Lake Holiday Resort, Sanxin Lu, Postal Code
---------
21500, the Municipality of Suzhou, the Province of Jiangsu,
The People's Republic of China (hereinafter referred to as
"CSSD", which expression shall include its successors and
assigns).
WHEREAS:
--------
(A) Pursuant to a Memorandum of Understanding dated 14
September 1994 and four Agreements for the Extension of the
Memorandum of Understanding (hereinafter collectively referred to as
"the Memorandum") entered into between CSSD and Advanced Micro
Devices, Inc. (hereinafter referred to as "the Guarantor"), CSSD had
agreed to reserve for AMD a parcel or land of approximately 5.9
hectares in an industrial township developed or to be developed in
the Municipality or Suzhou known as the Suzhou Industrial Park.
(B) At the request of the Guarantor and Advanced Micro Devices
(Suzhou) Limited (hereinafter referred to as "the Company") and in
reliance upon this Guarantee to be furnished by the Guarantor, CSSD
has agreed to enter into a Contract for Transfer of the right to the
Use of State-owned Land dated [ ] (hereinafter referred to as "the
Contract") for the transfer to the Company of the right to the use of
the land parcel more particularly described in Annexure 1 of the
Contract on the condition that the Guarantor issues this Guarantee to
secure the obligations and liabilities of the Company to pay the Land
Price (as defined in the Contract) and any penalty payable thereon
(hereinafter collectively referred to as "the Secured Sum").
<PAGE>
24
NOW THIS DEED WITNESSETH as follows:--
1. DEFINITIONS
In this Guarantee, except where the context otherwise requires:-
"United States Dollar(s)" and "US $" mean the lawful currency of
the United States of America;
"Business Day" means in relation to United States Dollars, a day
(other than Saturday or Sunday) on which commercial banks are
open for dealings in deposits of United States Dollars in both
Suzhou, The People's Republic of China and New York;
"Guarantee" means this Guarantee as from time to time amended,
modified or supplemented (and any document which amends,
modifies or supplements this Guarantee);
Words (including words defined herein) denoting the singular
number only shall include the plural and vice versa.
The words "written" and "in writing" include any means of
visible reproduction.
References to "Clauses" are to be construed as references to
clauses of this Guarantee. Any reference to a sub-Clause or a
paragraph is to a sub-Clause or paragraph of the Clause in which
such reference appears.
2. GUARANTEE
---------
2.1 In consideration of CSSD agreeing at the request or the Company
and the Guarantor to enter into the Contract with the Company
and to the Company paying the Land Price by way of instalments
in accordance with the terms of the Contract and in
consideration of the sum of US$1O/- paid by CSSD (the receipt
and sufficiency of which is hereby acknowledged by the
Guarantor), the Guarantor hereby irrevocably and unconditionally
guarantees to CSSD as principal obligor and not merely as
surety, that if for any reason the Company does not pay all or
any part of the Secured Sum by the time, on the date and in the
manner specified in the Contract, the Guarantor will pay that
sum, in the currency in which that sum is payable by the Company
under the Contract.
2.2 The Guarantor shall make payment to CSSD immediately upon first
demand given by CSSD to the Guarantor without requiring CSSD to
take any further step in relation to the Company except that
CSSD agrees to give the Guarantor written notice that the
Company has failed to pay any
<PAGE>
25
part of the Secured Sum on the date or in the manner specified
in the Contract and to allow the Guarantor 14 days to make such
payment. The Guarantor hereby waives any right it may have of
first requiring CSSD to proceed against, or enforce any other
rights or security of the Company or any other person before
claiming from the Guarantor hereunder.
2.3 As between the Guarantor and CSSD but without affecting the
Company's obligations, the Guarantor shall be liable under this
Guarantee as if it were the sole principal debtor and not merely
a surety. Accordingly, the Guarantor shall not be discharged,
nor shall its liability be affected, by anything which would not
discharge it or affect its liability if it were the sole
principal debtor (including (1) any time, indulgence, waiver or
consent at any time given to the Company or any other person,
(2) any amendment to any other provision of this Guarantee or
its related security document or any security or other guarantee
or indemnity, (3) the making or absence of any demand on the
Company or any other person for payment, (4) the enforcement or
absence of enforcement of the Contract or of any security or
other guarantee or indemnity, (5) the release of any security or
other guarantee or indemnity, (6) the insolvency, dissolution,
reconstruction or reorganisation of the Company or any other
person, (7) the illegality, invalidity or unenforceability of or
any defect in any provision of this Guarantee or any of the
Company's obligations under the Contract or (8) any other matter
or thing whatsoever).
2.4 This Guarantee shall be a continuing guarantee and shall extend
to the ultimate balance of the Secured Sum payable by the
Company under the Contract notwithstanding any change in the
names, style or constitution of the Company.
2.5 The obligations of the Guarantor under this Guarantee are and
will remain in full force and effect by way of continuing
security until no sum remains payable under this Guarantee and
no part of the Secured Sum remains payable under the Contract.
Furthermore, those obligations of the Guarantor are additional
to, and not instead of; any security or other guarantee or
indemnity at any time existing in favour of any person, whether
from the Guarantor or otherwise.
2.6 So long as any sum remains payable under this Guarantee:-
(a) any right of the Guarantor, by reason of performance of any
of its obligations under this Clause 2, to be indemnified
by the Company or to take the benefit of or enforce any
security or other guarantee or indemnity shall be exercised
and enforced by the Guarantor only in such manner and on
such terms as CSSD may require; and
(b) any amount received or recovered by the Guarantor as a
result of any exercise of any such right in contravention
of the provisions of paragraph (a) above up to the amount
of the Secured Sum shall be held in trust for CSSD and
immediately paid to CSSD.
<PAGE>
26
2.7 Any amount received or recovered by CSSD (otherwise than as a
result of a payment by the Company to CSSD) in respect of any
sum payable by the Guarantor under this Guarantee may be placed
in an interest bearing suspense account and kept there for so
long as any sum then due and payable under this Guarantee
remains payable to CSSD under this Guarantee.
2.8 As a separate and alternative stipulation, the Guarantor
unconditionally and irrevocably agrees that any part of the
Secured Sum expressed to be payable by the Company to CSSD under
the Contract but which is for any reason (whether or not now
existing and whether or not now known or becoming known to any
party to the Contract or this Guarantee) not recoverable from
the Guarantor on the basis of a guarantee shall nevertheless be
recoverable from it as if it were the sole principal debtor and
shall be paid by it to CSSD on first demand.
3. PAYMENTS
--------
3.1 Unless otherwise provided by this Guarantee, all payments of any
amounts due from the Guarantor under this Guarantee to CSSD
shall be made (1) if due in United States Dollars, in United
States Dollars in immediately available and freely transferable
funds, not later than 10 a.m. (Suzhou time) on the due date, by
crediting such account of CSSD as CSSD may from time to time
designate, and (2) if due in any other currency, in that
currency in same day funds by 10 a.m. (of the time of the
country of that currency) on the due date, by crediting such
account of CSSD with such bank as CSSD may from time to time
designate.
3.2 Whenever any payment under this Guarantee would but for sub-
Clause 3.1 fall due on a day which is not a Business Day, then
the due date for payment thereof shall be postponed to the next
succeeding day which is a Business Day.
3.3 If the amount received by CSSD from the Guarantor on any date
is less than the total sum remaining or becoming due under this
Guarantee on that date, then regardless of any appropriation of
all or part of that amount by the Guarantor, CSSD shall apply
that amount in payment of whichever part(s) of that sum it
determines to be most appropriate.
4. CURRENCY INDEMNITY
------------------
4.1 Any amount received or recovered by CSSD in respect of any sum
expressed to be due to it from the Guarantor under or in
connection with this Guarantee in a currency (such currency
being referred to as the "Relevant Currency") other than the
currency in which such sum is expressed to be due under this
Guarantee (such currency being referred to as the "Currency of
Account") whether as a result of, or of the enforcement of, a
judgment or order of a court or tribunal of any jurisdiction, in
the dissolution of the
<PAGE>
27
Guarantor or otherwise, shall only constitute a discharge to the
Guarantor to the extent of the amount in the Currency of Account
which CSSD is able, in accordance with its usual practice, to
purchase with the amount of the Relevant Currency so received
or recovered in such other currency on the date of that receipt
or recovery (or, if it is not practicable to make that purchase
on that date, on the first date on which it is practicable to do
so).
4.2 If that amount in the Currency of Account is less than the
amount of the Currency of Account due to CSSD under or in
connection with this Guarantee, the Guarantor shall indemnify it
against any loss sustained by it as a result. In any event, the
Guarantor shall indemnify CSSD against the cost of making any
such purchase.
4.3 The indemnities contained in this Clause 4 constitute a separate
and independent obligation from the other obligations in this
Guarantee, shall give rise to a separate and independent cause
of action, shall apply irrespective of any indulgence granted by
CSSD and shall continue in full force and effect despite any
judgment, order, claim or proof for a liquidated amount in
respect of any sum due under this Guarantee or any judgment or
order. No proof or evidence of any actual loss may be required.
5. TAXES
-----
5.1 All sums payable by the Guarantor under this Guarantee shall be
paid (1) free of any restriction or condition, (2) free and
clear of and (except to the extent required by law) without any
deduction or withholding on account of any taxes and (3) without
deduction or withholding (except to the extent required by law)
on account of any other amount, whether by way of set-off or
otherwise.
5.2 If the Guarantor (or any person on its behalf) is required by
law to make any deduction or withholding on account of any such
tax or other amount from any sum paid or payable by the
Guarantor to CSSD under this Guarantee:-
(a) the Guarantor shall notify CSSD of any such requirement or
any change in such requirement as soon as it becomes aware
of it;
(b) the Guarantor shall pay any such tax or other amount before
the date on which penalties attach thereto;
(c) the sum payable by the Guarantor in respect of which the
relevant deduction, withholding or payment is required
shall be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment,
CSSD receives on the due date and retains (free from any
liability in respect of any such deduction, withholding or
payment) a net sum equal to what it would have received and
so retained had no such deduction, withholding or
<PAGE>
28
payment been required or made; and
(d) within 14 days after paying any sum from which it is
required by law to make any deduction or withholding, and
within 14 days after the due date of payment of any tax or
other amount which it is required by paragraph (b) to pay,
the Guarantor shall deliver to CSSD evidence satisfactory
to CSSD of such deduction, withholding or payment and of
the remittance thereof to the relevant taxing or other
authority.
6. REPRESENTATIONS AND WARRANTIES
------------------------------
6.1 The Guarantor represents and warrants to and for the benefit
of CSSD that:-
(1) it has the power to enter into and perform this Guarantee
and has taken all necessary action to authorise the
execution, delivery and performance of this Guarantee and
the transactions contemplated hereby in accordance with the
terms hereof;
(2) this Guarantee constitutes the legal, valid and binding
obligations of the Guarantor, enforceable in accordance
with the terms hereof for so long as the Company has any
liability under the Contract to pay the Secured Sum or any
part thereof and its obligations hereunder will constitute
direct, unconditional and general obligations of the
Guarantor;
(3) the execution, delivery and performance by it of this
Guarantee and the transactions contemplated hereby will not
exceed any power granted to it by or violate in any
material respect any provision of (i) any law or regulation
or any order or decree of any governmental authority,
agency or court to which it is subject, or (ii) any
provision of its constitutive documents, or (iii) any
contract or other undertaking, agreement or instrument to
which it is a party or which is binding upon it or any of
its assets, and does not and will not result in the
creation or imposition of any charge, pledge,
hypothecation, preferential right, lien, encumbrance or
security interest on any of its assets pursuant to the
provisions of any such contract or other undertaking or
instrument; and
(4) all action, conditions and things required to be taken,
fulfilled and done (including the obtaining of any
necessary consents) in order (a) to enable it lawfully to
enter into and perform and comply with its obligations
under this Guarantee, and (b) to ensure that those
obligations are legally binding and enforceable, have been
taken, fulfilled and done.
<PAGE>
29
6.2 The Guarantor warrants to and for the benefit of CSSD that each
of the above representations and warranties will be correct and
complied with in all material respects so long as any sum
remains payable under this Guarantee or so long as any part of
the Secured Sum remains payable under the Contract.
7. COSTS AND EXPENSES
------------------
The Guarantor shall pay to CSSD on demand all costs and expenses
(including legal fees) incurred by CSSD in protecting or
enforcing any rights against the Guarantor under this Guarantee.
8. CALCULATIONS AND EVIDENCE
-------------------------
The entries made in the accounts maintained by CSSD in
accordance with its usual practice shall be prima facie evidence
of the existence and amounts of the obligations of the Guarantor
recorded in them.
9. ASSIGNMENT
----------
9.1 This Guarantee shall benefit and be binding on the parties,
their respective successors and any permitted assignee or
transferee of some or all of a party's rights or obligations
under this Guarantee. Any reference in this Guarantee to any
party shall be construed accordingly.
9.2 The Guarantor shall not assign or transfer all or part of its
rights or obligations under this Guarantee.
9.3 CSSD may assign all or part of its rights under this Guarantee
without the consent of the Guarantor. Any such assignee shall be
entitled to the full benefit of this Guarantee to the same
extent as if it were an original party in respect of the rights
assigned to it.
9.4 CSSD may disclose to a potential assignee or any other persons
proposing to enter into contractual arrangements with CSSD in
relation to the Contract or this Guarantee such information
about the Guarantor as it may think fit.
10. REMEDIES AND WAIVERS
--------------------
Save as otherwise provided in this Guarantee, time shall be of
the essence of this Guarantee but no failure on the part of CSSD
to exercise, and no delay on its part in exercising, any right
or remedy under this Guarantee will operate as a waiver thereof,
nor will any single or partial exercise of any right or remedy
preclude any other or further exercise thereof or the
<PAGE>
30
exercise of any other right or remedy. The rights and remedies
provided in this Guarantee are cumulative and not exclusive of
any rights or remedies provided by law.
11. NOTICES
-------
11.1 Any demand, consent, notice or other communication ("notice")
authorized or required to be made hereunder shall be in writing
and may be given by facsimile, telex, cable, post or hand to a
party addressed as follows:-
To the Guarantor: Advanced Micro Devices, Inc.
One AMD Place
P.O. Box 3453, Mail Stop 68
Sunnyvale, CA 94088-3453, U.S. A.
Attention: Thomas Michael McCoy, Secretary
Facsimile: (408) 774 7002
To CSSD: China-Singapore Suzhou Industrial Park
Development Co., Ltd.
128 Zhu Hui Lu, the Municipality of Suzhou,
the Province of Jiangsu,
The People's Republic of China,
Postal Code 215006
Attention : Chief Executive Officer
Facsimile: 512-529 7941
11.2 A notice:
(a) if sent by telex shall be deemed to be received upon
receipt by the sender of the answerback code and the number
of the recipient at the conclusion of the transmission;
(b) if delivered by facsimile transmission shall be deemed to
be received on the date of transmission;
(c) if sent by prepaid registered or certified post (airmail,
if appropriate) shall be deemed to have been given two (2)
business days after the day on which it was posted;
(d) if delivered by hand during normal business hours on a
business day shall be deemed to have been given on that
day, or in any other case of hand delivery shall be deemed
to have been given on the business day following the date
of delivery.
<PAGE>
31
12. PARTIAL INVALIDITY
------------------
The illegality, invalidity or unenforceability of any provision
of this Guarantee under the law of any jurisdiction shall not
affect its legality, validity or enforceability under the law of
any other jurisdiction nor the legality, validity or
enforceability of any other provision.
13. GOVERNING LAW AND JURISDICTION
------------------------------
13.1 This Guarantee shall be governed by, and construed in accordance
with, the laws of Singapore.
13.2 In relation to any legal action or proceedings arising out of or
in connection with this Guarantee ("Proceedings"), the Guarantor
hereby irrevocably submits to the jurisdiction of the courts of
Singapore and waives any objection to Proceedings in any such
courts on the grounds of venue or on the grounds that the
Proceedings have been bought in an inconvenient forum.
13.3 Those submissions shall not affect the right of CSSD to take
Proceedings in any other jurisdiction nor shall the taking of
Proceedings in any jurisdiction preclude CSSD from taking
Proceedings in any other jurisdiction.
13.4 The Guarantor hereby irrevocably appoints AMD Holdings
(Singapore) Pte Ltd whose present address is at 24 Raffles Place
#26-05 Clifford Centre Singapore (or, such other person in
Singapore as the Guarantor may propose to and agreed by CSSD in
writing from time to time) to receive, for the Guarantor and on
its behalf, service of process in any Proceedings in Singapore.
Such service shall be deemed completed on delivery to the
process agent (whether or not it is forwarded to and received by
the Guarantor). However, nothing shall affect CSSD's right to
serve process in any other manner permitted by law.
IN WITNESS WHEREOF this Guarantee has been executed as a Deed the day and
year first above written.
Signed, sealed and delivered by
for and on behalf of
ADVANCED MICRO DEVICES, INC.
in the presence of:-
(Notary Public)
<PAGE>
32
ANNEXURE 7
RESULTS OF SOIL TESTS CONDUCTED BY PARTY B
------------------------------------------
<PAGE>
32-1
Sheet 1
AMD Suznou
Sail Analysis Summary
from Keller & Gannon Final Report dated May 1995
Units = mg/kg Sample Location
<TABLE>
<CAPTION>
------------------------------------------------------------ ---------
Compund K1 K2 K3 G3 G7 G4 G6 DET. Limits (mg/kg)
------------------------------------------------------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Methamidophos ND ND ND 0.05
--------------------------
Dimethoate ND ND ND 0.01
--------------------------
Parathion-meth ND ND ND 0.02
--------------------------
Nitrofen ND ND ND 0.00005
--------------------------
Cypermethrin ND ND ND 0.001
--------------------------
alpha -HCH ND 0.00010 ND 0.00005
--------------------------
gamma -HCH ND ND ND 0.00002
--------------------------
pp'-DDE ND ND ND 0,00008
--------------------------
Org. C(%) 2.00 2.76 2.23
--------------------------
Zn 88.90 85.00 78.90
--------------------------
Ni 40.90 35.9O 39.60
--------------------------
Cu 49.80 51.10 54.30
--------------------------
Pb 29.70 41.40 46.11
--------------------------
Cr 53.00 48.90 50.20
--------------------------
Cd 0.13 0.12 0.10
--------------------------
As 8.00 5.90 4.60
--------------------------
Hg 0.22 0.16 0.29
--------------------------
Co 13.70 14.00 12.70
--------------------------
Ag 0.13 0.12 0.52
--------------------------
Mo 11.90 12.50 9.40
------------------------------------------------------------
TPH 206.00 154.00 101.00 183.00
------------------------------------------------------------
</TABLE>
Page 1
<PAGE>
Map accompanying annexure 7 of the property in Suzhou, China has been omitted.
<PAGE>
33
ANNEXURE 8
DESIGN SPECIFICATIONS OF
PUBLIC BASIC INFRASTRUCTURE
---------------------------
WATER PIPE:
- -----------
The water pipe serving the Land Parcel shall have a capability of delivering 965
cu metres of water per day.
ELECTRICITY SUPPLY CABLE:
- -------------------------
The electrical power supply cable serving the Land Parcel shall have a
capability of delivering 8,000 kilowatts.
SEWERAGE PIPE:
- ---------------
The sewer system serving the Land Parcel shall have a capability of disposing of
965 cu metres of sewage per day.
TOWN GAS PIPE:
- --------------
The town gas pipe serving the Land Parcel shall have a capability of delivering
2,724 cu metres of gas per day.
<PAGE>
Exhibit 11
ADVANCED MICRO DEVICES, INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Three Years Ended December 31, 1995
(Thousands except per share)
<TABLE>
<CAPTION>
PRIMARY 1993 1994 1995
---------- ---------- ----------
<S> <C> <C> <C>
Weighted average number of common shares
outstanding during the year................ 90,660 93,914 102,279
Incremental common shares attributable to
shares issuable under employee stock
plans (assuming proceeds would be used
to purchase treasury stock)................ 4,448 3,596 3,296
---------- ---------- ----------
Total shares................................ 95,108 97,510 105,575
========== ========== ==========
Net Income:
Amount applicable to common shares.......... $218,431 $294,916 $300,511
Per Share................................... $2.30 $3.02 $2.85
<CAPTION>
FULLY DILUTED
<S> <C> <C> <C>
Weighted average number of common shares
outstanding during the year................. 90,660 93,914 102,279
Incremental common shares attributable to
shares issuable under employee stock
plans (assuming proceeds would be used
to purchase treasury stock)............... 4,547 3,802 3,413
Preferred stock............................. 6,856 6,854 1,343
---------- ---------- ----------
Total shares................................ 102,063 104,570 107,035
========== ========== ==========
Net income:
Amount applicable to common shares.......... $218,431 $294,916 $300,511
Preferred stock dividends................... 10,350 10,350 10
---------- ---------- ----------
Net adjusted income......................... $228,781 $305,266 $300,521
Per share................................... $2.24 $2.92 $2.81
</TABLE>
<PAGE>
[LOGO OF AMD APPEARS HERE]
1995
ANNUAL
REPORT
<PAGE>
CORPORATE
profile
As the front cover indicates, Advanced Micro Devices Inc. (AMD) recently changed
its logo. The new "AMD" logo more accurately reflects the way shareholders,
customers and employees refer to the company.
AMD, which focuses on the personal and networked computing and
communications markets, produces microprocessors and related peripherals, flash
memories, programmable logic devices, and circuits for telecommunications and
networking applications. AMD has sales offices worldwide and has manufacturing
facilities in Sunnyvale, California; Austin, Texas; Bangkok, Thailand; Penang,
Malaysia; Singapore; and Aizu-Wakamatsu, Japan.
AMD was founded in 1969. The company is headquartered in Sunnyvale,
California and employs approximately 12,700 people worldwide. AMD became a
publicly held company in 1972 and since 1979 has been listed on the New York
Stock Exchange with the trading sysmbol of AMD for its common shares.
<PAGE>
FINANCIAL
highlights
<TABLE>
<CAPTION>
Five Years Ended December 31, 1995
(Dollars in thousands except per share amounts, ratios, and
employment figures) 91 92 93 94 95
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $1,226,649 $1,514,489 $1,648,280 $2,134,659 $2,429,724
Operating income 109,160 269,945 305,053 513,139 348,277
Net income 145,287 245,011 228,781 305,266 300,521
Net income per common share:
Primary 1.53 2.57 2.30 3.02 2.85
Fully diluted 1.52 2.49 2.24 2.92 2.81
Working capital 170,862 385,114 509,567 394,452 475,032
Stockholders' equity 783,356 1,046,740 1,352,271 1,735,265 2,100,128
Capital additions 137,202 222,064 388,181 582,944 645,237
Depreciation and amortization 155,935 152,313 175,275 215,984 262,501
Research and development 213,765 227,860 262,802 279,984 397,555
Research and development as a
percentage of sales 17.4% 15.0% 15.9% 13.1% 16.4%
Return on equity 20.5 26.8 19.1 19.8 15.7
Debt as a percentage of capital 21.0% 6.0% 9.1% 7.5% 11.5%
Worldwide employment 11,254 11,554 12,065 11,793 12,730
</TABLE>
[BAR CHARTS APPEAR HERE]
<PAGE>
TO OUR FELLOW
shareholders
In 1995 the worldwide semiconductor industry experienced a remarkable 42
percent growth in revenues. Robust unit demand from a strong and
increasingly memory-hungry personal computer market led to shortages and
uncharacteristically stable prices for DRAMs (dynamic random-access
memories). Led by 70 percent growth in the DRAM sector, the semiconductor
industry had a strong wind at its back.
AMD developed a rip in its mainsail, and we didn't catch the wind. Our
revenue growth was an unremarkable 14 percent.
The rip in our mainsail was our tardiness in bringing to market our fifth-
generation, AMD-K5(TM) microprocessor, the first member of our K86 RISC
SUPERSCALAR(TM) family. In the first half of the year, sales of Am486(R)
microprocessors were robust and made substantial contributions to earnings.
In the second half, as demand shifted rapidly to the fifth-generation
Pentium processor, prices for 486 devices declined sharply, and more
importantly, unit demand dropped. Our difficulties in the microprocessor
arena masked the outstanding success we achieved in the remainder of our
businesses, which, in the aggregate, achieved a 36 percent growth rate over
the prior year.
Revenues of $2,429,724,000 resulted in net income of $300,521,000, or $2.81
per share on a fully diluted basis for 1995. For the prior year, AMD
reported revenues of $2,134,659,000 and net income of $305,266,000, or
$2.92 per share fully diluted.
Personal computers, with worldwide sales in excess of 65 million units in
1995 and projected to reach 100 million units in 1998, represent AMD's
greatest opportunity. Microsoft(R) Windows(R)-compatible microprocessors
are our strategic thrust in this market.
AMD has a singular opportunity in the PC market, where intellectual
property requirements impose high barriers to market entry and limit the
number of major
<PAGE>
participants. In January of 1995, AMD and Intel concluded a landmark agreement
settling all outstanding legal disputes. In December, we concluded a second
landmark agreement with Intel when we negotiated a new, five-year cross-license
agreement. This agreement assures that AMD has legal rights to all the enabling
intellectual property necessary to continue providing our customers with
competitive products that are fully software compatible with the Intel
instruction set.
Success in the microprocessor arena, however, requires more than compatibility.
Customers want a high-volume supplier. If customers are to reap the benefits of
competition, an alternate source must be capable of manufacturing its products
in sufficient volume to affect supplies, prices, and the pace of technological
advances. Critical success factors include core competence in advanced
microprocessor design, leading-edge process technology, and manufacturing
capacity to capture a significant market share.
During the past year we took action on all fronts to fortify our position as the
only credible challenger to Intel in Windows-compatible microprocessors. We
achieved a successful startup at our new megafab for microprocessors and
advanced logic products -- Fab 25 in Austin, Texas -- and commenced volume
production. Today, we are producing all of our microprocessors in Fab 25 on
sixth-generation CS34 0.35-micron technology.
We plan to break ground in Dresden, Germany, by the end of 1996 for our next
megafab for future generations of Windows-compatible microprocessors and other
high-volume logic products. This facility, to be known as Fab 30, is scheduled
to commence production by the end of 1998 on 0.25-micron technology, and
subsequently migrate to 0.18-micron technology.
<PAGE>
In January of this year we completed our acquisition of NexGen, Inc.,
significantly enhancing our core competency in advanced microprocessor design
and acquiring a sixth-generation microprocessor design in an advanced stage of
development.
With this design, the AMD-K6(TM) microprocessor, we expect to have--for the
first time in our history--microprocessor products competitive with Intel's
latest mainstream products in a contemporaneous time frame in 1997. The key to
achieving success, of course, is flawless execution.
We believe the future of computation is increasingly being driven by convergence
with communications. Communications networks, including the public and private
infrastructure and wireless technologies, present great opportunities for AMD.
AMD is now the world's number one supplier of integrated circuits for local area
network applications. In 1996 we expect to supply more than 10 million
networking devices to the manufacturers of adapter cards, backbones, routers,
and other devices. AMD is a leading supplier to industry leaders such as Cisco
Systems, whose products supply more than 80 percent of the backbone of the
Internet -- and virtually every Cisco product contains an AMD chip. Indeed, the
path to the Internet is paved with AMD silicon!
AMD's SLIC (subscriber line interface circuit) and SLAC(TM) (subscriber line
audio-processing circuit) products have made AMD the world's leading supplier of
circuits for linecards for the public communications infrastructure. We have a
similar credential in the private infrastructure (i.e., enterprise networks) as
well, where we are the leading supplier of Ethernet hubs and FDDI (Fiber
Distributed Data Interface) circuits.
<PAGE>
Over the longer term, we expect that wireless networks will drive growth in the
communications sector. We are positioning ourselves to capitalize on this
opportunity.
In 1995 even a 70 percent year-to-year growth rate in revenues from our AMD
MACH(R) family of complex programmable logic devices (CPLDs) was insufficient to
keep pace with our principal competitors. We are looking to our new MACH 5 CPLD
products to reverse this trend. With densities as high as 20,000 gates,
architectural superiority and industry-leading speeds as fast as 7.5
nanoseconds, MACH 5 products have won high praise from beta site customers.
Volume production has commenced, and members of the product family will be
introduced throughout the year.
Our progress in flash memories has rewarded our commitment. Flash memory sales
exceeded $500 million--a year-to-year increase of more than 150 percent--as our
5-volt-only architecture continued to win customer acceptance. We successfully
started production at our Fujitsu AMD Semiconductor Limited (FASL) joint-venture
megafab at Aizu-Wakamatsu, Japan, and rapidly ramped production. By year-end AMD
had achieved a 30 percent market share with demand outstripping capacity. We
have just begun volume shipments of our industry-leading 2.7-volt-only flash
products, which we believe are essential to mobile computation and
communications.
Flash memory has proved to be an ideal solution for a broad array of
applications. AMD has achieved leadership in flash process technology and
products. Our near-term challenge is to add capacity to capitalize on the
expanding market opportunities. Consistent with our intention to be the lowest-
cost producer of flash memories, we are moving to 0.35-micron technology and
proceeding with construction of a second FASL megafab for flash memories in
Aizu-Wakamatsu. Early in 1996 we broke
<PAGE>
ground at Suzhou, China, for an assembly and test facility for high-volume,
cost-sensitive products, including flash memories.
While the successes we have achieved across virtually all of our product lines
are gratifying, they are currently overshadowed by the absence of our
competitive response to the Pentium in the PC marketplace. For many, AMD is
defined by its microprocessor business, which in turn drives our participation
in the PC market. Our opportunity is enormous. The stakes are high. Our
commitment is total and irrevocable. The planned introduction of the first of
our K86 SUPERSCALAR microprocessors in the second quarter of this year, with
higher-performance versions expected in the second half of the year in volume
production, should enable us to achieve acceptable overall growth and post
improved operating results.
1996 will be a challenging year for us. We plan to meet the challenge.
Thank you for your continuing support
/s/ W.J.Sanders III /s/ Richard Previte
W.J.Sanders III Richard Previte
Chairman and President and
Chief Executive Officer Chief Operating Officer
February 22, 1996
- --------------------------------------------------------------------------------
The forward looking statements contained in the above letter are subject to
risks and uncertainties, including those discussed in the Company's Form 10-K
for the fiscal year ended December 31, 1995, as filed with the Securities and
Exchange Commission, that could cause actual results to differ materially from
those projected.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL
contents
8 Management's Discussion and Analysis of Results
of Operations and Financial Condition
13 Consolidated Statements of Income
14 Consolidated Balance Sheets
15 Consolidated Statements of Cash Flows
16 Notes to Consolidated Financial Statements
29 Report of Ernst & Young LLP, Independent Auditors
30 Supplementary Financial Data
31 Financial Summary
32 Corporate Directory
<PAGE>
MANAGEMENT'S
discussion and analysis
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
Net sales of $2.4 billion in 1995 rose by approximately 14 percent from 1994.
This increase was primarily attributable to substantial growth in Flash memory
sales and secondarily due to an increase in sales of communication products, the
combination of which more than offset a decline in microprocessor sales. Net
sales in 1994 increased by approximately 30 percent from 1993 due to substantial
growth in microprocessor sales.
Sales of Flash memory devices increased in 1995 from 1994 primarily due to
growth in unit shipments and secondarily due to a change in product mix
resulting in higher average selling prices. Prices may decline in 1996 due to
increased competition. The company plans to continue to meet projected long-term
demand for Flash memory devices primarily through its manufacturing joint
venture, Fujitsu AMD Semiconductor Limited (FASL), in which AMD has a 49.95
percent equity interest. During 1995, Flash memory devices contributed, and are
expected to continue to contribute in 1996, a significant and increased portion
of the company's revenues and profits.
Revenues from communication products rose from 1994 to 1995 primarily due
to growth in the Ethernet family of products. Sales of CMOS programmable logic
devices increased from 1994 to 1995 primarily due to increased unit shipments.
In 1995, EPROM sales decreased as compared to 1994 due to comparable declines in
both unit shipments and average selling prices.
In 1995, Am486(R) microprocessor sales decreased slightly primarily due to
average selling price declines, partially offset by increases in unit sales.
Am486 microprocessor products contributed a significant portion of the company's
revenues and profits in 1994 and 1995. Price declines are anticipated to
continue in 1996 while unit shipments may be flat to down depending on market
demand. The company, therefore, expects Am486 microprocessor revenues and
profits in 1996 to be below those of 1995 as the product life cycle of the
fourth-generation x86 products draws to a close.
On January 17, 1996, NexGen, Inc. (NexGen) merged with and into AMD. The
company plans to bring to production status NexGen's sixth-generation design as
the AMD-K6(TM) microprocessor. The company does not expect any sales of AMD-K6
in 1996.
Gross margin was 47 percent in 1995 as compared to 54 percent in 1994 and
52 percent in 1993. The three main factors contributing to the decrease in gross
margin in 1995, in order of significance, were first, Am486 price declines;
second, purchase prices of FASL products, which are higher than the costs of
similar products manufactured internally; and third, the transition of Fab 25
costs from research and development to cost of sales when production commenced
in September 1995. The impact of gross margin declines caused by purchase of
FASL products during 1995 was mostly offset by the company's share of FASL
income. The increase in gross margin from 1993 to 1994 was primarily
attributable to increased sales from higher margin Am486 products during 1994.
Gross margin is anticipated to decline further in 1996 due to continuing
pricing pressures on Am486 microprocessors, increasing purchases from FASL, and
higher expenses and continuing transition of Fab 25 costs from research and
development to cost of sales as production volume increases.
Research and development expenses for 1995 increased to $398 million from
$280 million in 1994, and $263 million in 1993. These increases were primarily
due to higher Fab 25 expenses and secondarily due to increased microprocessor
development costs.
Marketing, general, and administrative expenses were $385 million for 1995,
$359 million for 1994, and $291 million for 1993. The increase from 1994 to 1995
was primarily attributable to higher advertising expenses. The incremental
change from 1993 to 1994 was mainly due to increased legal and microprocessor
advertising expenses. The company expects to incur transaction fees and other
costs incidental to the NexGen merger in the first quarter of 1996 estimated to
be approximately $10 million.
Interest income and other, net rose from 1994 to 1995 primarily due to
higher interest rates during 1995 and secondarily due to a realized gain of
approximately $3 million from equity securities sold during 1995. In 1994,
interest income and other, net included a net charge of approximately $5 million
resulting from the security class action lawsuit and stockholders' derivative
action settlements, and a gain from the damages award in an arbitration
proceeding with Intel Corporation. Interest expense decreased from 1993 through
1995. These decreases resulted from higher capitalized interest mainly related
to the construction of Fab 25.
The income tax rate was approximately 30, 33, and 28 percent in 1995, 1994,
and 1993, respectively. The lower tax rate in 1995 resulted from lower state
taxes and increased benefits from low taxed foreign income. The lower tax rate
in 1993 was primarily due to available tax credit carryforwards.
- --------------------------------------------------------------------------------
<PAGE>
MANAGEMENT'S
discussion and analysis
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
- --------------------------------------------------------------------------------
International sales were 56, 55, and 54 percent of total sales in 1995,
1994, and 1993, respectively. During 1995, approximately 17 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
inflationary economies. (A highly inflationary economy is defined in accordance
with the Statement of Financial Accounting Standard No. 52 as one in which the
cumulative inflation over a three-year consecutive period approximates 100
percent.) 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 1995, these hedging transactions were denominated in lira, yen, French franc,
deutsche mark, 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 December 31, 1995, the
company had approximately $37 million (notional amount) of foreign exchange
forward contracts (see Notes 2, 3, and 4 to the Consolidated Financial
Statements).
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 the end of 1995, the
net outstanding notional amount of interest rate swaps was $190 million, of
which $150 million will mature in 1996 and $40 million will mature in 1997.
Gains and losses related to these interest rate swaps have been immaterial (see
Notes 2, 3, and 4 to the Consolidated Financial Statements).
The company primarily addresses market risk by participating 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 the credit ratings of such counterparties, and
reduces the financial exposure by limiting the amount of agreements entered into
with any one financial institution.
In 1995, the Financial Accounting Standards Board released the Statement of
Financial Accounting Standard No. 121 (SFAS 121), "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS 121
requires recognition of impairment of long-lived assets in the event the net
book value of such assets exceeds the future undiscounted cash flows
attributable to such assets. SFAS 121 is effective for fiscal years beginning
after December 15, 1995. Adoption of SFAS 121 is not expected to have a material
impact on the company's financial condition or results of operations.
The company accounts for its stock option plans and its employee stock
purchase plan in accordance with provisions of the Accounting Principles Board's
Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees." In 1995,
the Financial Accounting Standards Board released the Statement of Financial
Accounting Standard No. 123 (SFAS 123), "Accounting for Stock Based
Compensation." SFAS 123 provides an alternative to APB 25 and is effective for
fiscal years beginning after December 15, 1995. The company expects to continue
to account for its employee stock plans in accordance with the provisions of APB
25. Accordingly, SFAS 123 is not expected to have any material impact on the
company's financial condition or results of operations.
FINANCIAL CONDITION
Cash, cash equivalents, and short-term investments increased by $113 million
from 1994 to 1995. This increase was primarily attributable to a $150 million
term loan obtained in January of 1995. The $612 million of cash generated from
operating activities in 1995 was used to fund investments in property, plant,
and equipment to expand manufacturing capacity primarily related to Fab 25.
Working capital increased by $81 million from $394 million at the end of
1994 to $475 million at the end of 1995. This increase was primarily due to
higher cash, cash equivalents, and short-term investments.
At the end of 1995, the company's total cash investment in FASL was $160
million as compared to $142 million at the end of 1994. No additional cash
investment is currently planned for 1996. In 1995, FASL approved construction of
a second Flash memory fab, FASL II, at a site contiguous to the existing FASL
facility in Aizu-Wakamatsu, Japan. Groundbreaking on FASL II occurred in the
first quarter of 1996. The planned $1.1 billion in capital expenditures for FASL
II construction is expected to be
- --------------------------------------------------------------------------------
<PAGE>
MANAGEMENT'S
discussion and analysis
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
- --------------------------------------------------------------------------------
funded by the cash anticipated to be generated from FASL operations and, if
necessary, bank borrowings by FASL. However, in the event that FASL is unable to
secure the necessary funds for FASL II, AMD is required to contribute cash or
guarantee third-party loans in proportion to its percentage of interest in FASL.
The planned FASL II costs are denominated in yen and, therefore, are subject to
change due to foreign exchange rate fluctuations.
On January 11, 1995, the company and Intel Corporation reached an agreement
to settle all previously outstanding legal disputes between the two companies.
As part of the settlement, in December 1995, the company signed a five-year,
comprehensive patent cross-license agreement with Intel which expires on
December 31, 2000. The agreement provides that after December 31, 1999, the
parties will negotiate in good faith a patent cross-license agreement to be
effective January 1, 2001. Effective January 1, 1996, the new agreement gives
the company and Intel the rights to use each others' patents and certain
copyrights, exclusive of microprocessor microcode copyrights. The cross-license
is royalty-bearing for the company's products that use certain Intel
technologies. The company is required to pay Intel minimum non-refundable
royalties during the years 1997 through 2000.
As of the end of 1995, the company had the following financing
arrangements: unsecured committed bank lines of credit of $250 million,
unutilized; long-term secured equipment lease lines of $132 million, which were
fully utilized; short-term, unsecured uncommitted bank credit in the amount of
$96 million, of which $27 million was utilized; and an outstanding $150 million
four-year term loan.
The company's current capital plan and requirements are based on the
availability of external financing, various product-mix, selling-price, and
unit-demand assumptions and are, therefore, subject to revision due to future
market conditions.
On May 25, 1994, the Securities and Exchange Commission declared effective
the company's shelf registration statement covering up to $400 million of its
securities, which may be either debt securities, preferred stock, depositary
shares representing fractions of shares of preferred stock, common stock,
warrants to purchase common stock, or any combination of the foregoing which the
company may offer from time to time in the future. To date, the company has not
offered or sold any securities registered under the $400 million registration
statement. The nature and terms of the securities will be established at the
time of their sale. The company may offer the securities through underwriters to
be named in the future, through agents or otherwise. It is presently expected
that the net proceeds of any offering would be used for general corporate
purposes including but not limited to the reduction of outstanding indebtedness,
working capital increases, and capital expenditures.
The company is currently planning to build a submicron wafer fabrication
facility in Dresden, Germany, at an estimated cost of approximately $1.5 billion
over the next 5 years before German government financing. The company plans to
make capital investments estimated at $700 million throughout 1996, including
$350 million for Fab 25 and $75 million for the new facility in Dresden. The
company presently anticipates that it will augment its working capital and fund
a portion of its 1996 capital expenditures through external debt financing.
The company believes that cash flows from operations and current cash
balances, together with current and anticipated external financing, will be
sufficient to fund operations and capital investments currently planned for
1996.
CAUTIONARY STATEMENT
The statements in this Management's Discussion and Analysis that are forward
looking, for example, estimates of 1996 gross margin, microprocessor and Flash
memory business and prospects, capital spending, impact of the NexGen merger,
external financing plans, financial instruments, and FASL II, are based on
current expectations and actual results may differ materially. Forward looking
statements contained in this Management's Discussion and Analysis involve
numerous risks and uncertainties that could cause actual results to differ
materially, including but not limited to the timely development of and market
acceptance of new products, the impact of competitive products and pricing, the
timely development of wafer fabrication process technologies, the effect of
changing economic conditions, business conditions and growth in the personal
computer market, continued demand for the company's microprocessor and Flash
memory products, the company's ability to access external sources of capital,
and such risks and uncertainties detailed from time to time in the company's SEC
reports and filings, including the Form 10-K for the 1995 fiscal year and the
Registration Statement on Form S-4 (Registration Statement No. 33-64911) filed
by the company in connection with its acquisition of NexGen. Certain of these
risks and uncertainties are discussed below.
- --------------------------------------------------------------------------------
<PAGE>
MANAGEMENT'S
discussion and analysis
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
- --------------------------------------------------------------------------------
RISK FACTORS
The semiconductor industry is generally characterized by a highly competitive
and rapidly changing environment in which operating results are subject to the
effects of new product introductions, manufacturing technology innovations,
rapid fluctuations in product demand, the availability of manufacturing
capacity, and the ability to secure and maintain intellectual property rights.
While the company attempts to identify and respond to rapidly changing events
and conditions as soon as possible, the anticipation of and reaction to such
events are an ongoing challenge. The company's future results of operations and
financial condition may be adversely impacted by various factors. Certain of
these risk factors are detailed in the description of the company's business in
the company's Form 10-K for the fiscal year ended December 31, 1995 under the
caption "Business." In addition to those factors, the following risk factors
should be considered by holders of AMD common stock.
The company expects that its operating results will be subject to
potentially substantial quarterly and other fluctuations due to a variety of
factors, including competitive pricing pressures, anticipated decreases in unit
average selling prices of the company's products, fluctuations in manufacturing
yields, availability and cost of products from suppliers, the gain or loss of
significant customers, new product introductions by the company 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
affecting the timing of customer orders and capital spending, a downturn in the
market for PCs, and order cancellations or rescheduling. Customers may change
delivery schedules or cancel orders without significant penalty. Many of the
factors listed above are outside of the control of the company. These factors
are difficult to forecast, and these or other factors could materially adversely
affect quarterly or annual operating results.
A significant portion of the company's revenues and profits in 1995 have
been derived from Am486 products. The company expects Am486 microprocessor
revenues and profits in 1996 to be below those of 1995. As the product life
cycle of fourth-generation x86 products draws to a close, the company
anticipates that its ability to maintain or expand its current levels of
revenues and profits in the future will depend upon its success in developing
and marketing in a timely manner its next generation of microprocessor products,
the K86 RISC SUPERSCALAR(TM) products. The company expects 1996 to be a
transitional year in the development of its next generation of microprocessor
products and believes that the acquisition of NexGen is important to the
development and introduction of K86(TM) products. Future generations of K86
products will face competition not only from x86 products manufactured by Intel
and others, but also from products based upon an increasing number of different
architectures which have been developed or are under development by Hewlett-
Packard Company, IBM, Motorola, Inc., Sun Microsystems, Inc., and other
manufacturers of integrated circuits. No assurance can be given that the K86
products will achieve market acceptance or be introduced before the average
selling prices of comparable products have materially declined from their
initial levels. The company has an agreement with Compaq Computer Corporation
(Compaq) under which it supplies Compaq with microprocessor products, primarily
Am486 products; however, the agreement does not require Compaq to purchase
microprocessor products from the company. The company believes that Compaq will
consider the purchase of K86 microprocessors when they become available. No
assurance can be given that any purchases will be made or, if they are, that
they will not be terminated by Compaq due to the availability of competing
microprocessor products.
Numerous firms compete with the company in the manufacture and sale of
integrated circuits. Some of these firms have resources greater than those of
the company and do not depend upon integrated circuits as their principal source
of revenues. There is also significant captive production by certain large users
of integrated circuits, such as manufacturers of computers, telecommunications
equipment, and consumer electronics. The company competes for integrated circuit
market share with, among others, Intel, Texas Instruments, Motorola, IBM,
National Semiconductor Corporation, Philips, Nippon Electric Co., SGS-Thomson,
Hitachi, Toshiba, Fujitsu Ltd., Matsushita, Mitsubishi, Samsung, Hyundai, and
Siemens, all of whom are actively attempting to increase their respective and
collective worldwide market shares. Intel, in particular, has long held a
dominant position in the market for microprocessors used in PCs. Intel's
dominant market position has to date allowed it to set x86 microprocessor
standards and thus dictate the type of product that the market requires of
Intel's competitors. In addition, Intel's financial
- --------------------------------------------------------------------------------
<PAGE>
MANAGEMENT'S
discussion and analysis
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
- --------------------------------------------------------------------------------
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 who are forced to reduce prices to maintain
competitiveness. The company expects Intel to continue to spend substantial sums
on research and development, on new manufacturing facilities, and to maintain
its dominant position through advertising campaigns designed to engender brand
loyalty to Intel among PC purchasers. As long as Intel remains in this dominant
position, its product introduction schedule and product pricing strategy may
adversely and materially affect AMD's business, operating results, and financial
condition.
The substantial resources which the company has devoted to the development
of the AMD-K5(TM) microprocessor, the first member of the K86 family, in 1995
has impacted the company's efforts to develop successive generation products,
such as those designed to compete with the Pentium Pro and Intel's subsequent
generation products. To the extent that the introduction of each generation of
K86 products is delayed, the company's revenues and profits will be materially
adversely affected.
On January 17, 1996, the company acquired NexGen in a tax-free
reorganization in which NexGen was merged directly into the company. The merger
will be accounted for under the pooling-of-interests method. The shareholders of
NexGen receive eight-tenths (0.8) of a share of the common stock of AMD for each
outstanding share of the common stock of NexGen. The company expects to issue
approximately 33.6 million shares of its common stock to the holders of NexGen
common stock, options, rights to purchase under the employee stock purchase plan
and warrants.
The dilution resulting from the merger could reduce the earnings per share
of common stock unless and until earnings growth or other business benefits
sufficient to offset the effect of the issuance can be achieved. There can be no
assurance that such benefits will be achieved. Achieving the anticipated
benefits of the merger will depend in part upon whether the integration of the
two companies' businesses is accomplished in an efficient and effective manner,
and there can be no assurance that this will occur. The inability of management
to integrate the operations of the two companies successfully could have a
material adverse effect on the business and results of operations of the
company. As commonly occurs with mergers of technology companies, aggressive
competitors may undertake formal initiatives during the integration phase to
attract customers and to recruit key employees through various incentives.
Prior to the merger, NexGen granted limited manufacturing rights regarding
certain of its current and future products, including the Nx586(R) and
Nx686(TM), to IBM and Compaq. The rights of IBM and Compaq to produce NexGen
products for their own use and the rights of IBM to produce limited volumes of
NexGen products for sale to third parties could reduce the potential market for
NexGen products produced by the company, the profit margin achievable with
respect to such products, or both.
The company has entered into a number of licenses and cross-licenses
relating to several of the company's products. As is common in the semiconductor
industry, from time to time the company has been notified that it may be
infringing other parties' patents or copyrights. While patent and copyright
owners in such instances often express a willingness to resolve the dispute or
grant a license, no assurance can be given that all necessary licenses will be
honored or obtained on satisfactory terms, nor that the ultimate resolution of
any material dispute concerning the company's present or future products will
not have an adverse impact on the company's future results of operations or
financial condition.
Due to the factors noted above, the company's future operations, financial
condition, and stock price may be subject to volatility. Based on the trading
history of its stock, the company believes that factors such as quarterly
fluctuations in the company's financial results, announcements of new products
by the company 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 AMD common stock. In addition, an
actual or anticipated shortfall in revenue, gross margin, or earnings from
securities analysts' expectations could have an immediate effect on the trading
price of the company's common stock in any given period.
Am486, MACH, and Nx586 are registered trademarks of AMD.
K86, K86 RISC SUPERSCALAR, AMD-K5, AMD-K6, SLAC and Nx686
are trademarks of AMD.
Microsoft and Windows are registered trademarks of Microsoft Corporation.
- --------------------------------------------------------------------------------
<PAGE>
CONSOLIDATED
statements of income
<TABLE>
<CAPTION>
Three Years Ended December 31, 1995
(Thousands except per share amounts) 95 94 93
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $2,429,724 $2,134,659 $1,648,280
Expenses:
Cost of sales 1,298,876 982,306 789,564
Research and development 397,555 279,984 262,802
Marketing, general, and
administrative 385,016 359,230 290,861
---------- ---------- ----------
2,081,447 1,621,520 1,343,227
---------- ---------- ----------
Operating income 348,277 513,139 305,053
Litigation settlement -- (58,000) --
Interest income and other, net 30,763 16,259 16,490
Interest expense (707) (1,844) (2,910)
---------- ---------- ----------
Income before income taxes and equity
in joint venture 378,333 469,554 318,633
Provision for income taxes 112,738 153,703 89,218
---------- ---------- ----------
Income before equity in joint venture 265,595 315,851 229,415
Equity in net income (loss) of joint
venture 34,926 (10,585) (634)
---------- ---------- ----------
Net income 300,521 305,266 228,781
Preferred stock dividends 10 10,350 10,350
---------- ---------- ----------
Net income applicable to common
stockholders $ 300,511 $ 294,916 $ 218,431
========== ========== ==========
Net income per common share:
Primary $2.85 $3.02 $2.30
========== ========== ==========
Fully diluted $2.81 $2.92 $2.24
========== ========== ==========
Shares used in per share calculation:
Primary 105,575 97,510 95,108
Fully diluted 107,035 104,570 102,063
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes
<PAGE>
CONSOLIDATED
balance sheets
<TABLE>
<CAPTION>
December 31, 1995, and December 25, 1994
(Thousands except share and per share amounts) 95 94
- --------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 113,354 $ 84,643
Short-term investments 377,293 293,211
---------- -----------
Total cash, cash equivalents, and
short-term investments 490,647 377,854
Accounts receivable, net of allowance for
doubtful accounts of $10,159 in 1995
and $10,319 in 1994 275,733 337,107
Inventories:
Raw materials 29,272 21,604
Work-in-process 68,827 72,632
Finished goods 56,571 34,454
---------- -----------
Total inventories 154,670 128,690
Deferred income taxes 108,989 98,675
Prepaid expenses and other current assets 66,729 44,293
---------- -----------
Total current assets 1,096,768 986,619
Property, plant, and equipment:
Land 28,851 28,820
Buildings and leasehold improvements 893,321 500,530
Equipment 1,828,059 1,442,787
Construction in progress 180,742 492,792
---------- -----------
Total property, plant, and equipment 2,930,973 2,464,929
Accumulated depreciation and
amortization (1,294,881) (1,200,718)
---------- -----------
Property, plant, and equipment, net 1,636,092 1,264,211
Investment in joint venture 176,821 124,588
Other assets 121,587 70,284
---------- -----------
$3,031,268 $ 2,445,702
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 27,070 $ 32,459
Accounts payable 223,708 149,122
Accrued compensation and benefits 105,651 104,526
Accrued liabilities 79,092 82,570
Litigation settlement -- 58,000
Income tax payable 56,297 53,795
Deferred income on shipments to distributors 100,057 83,800
Current portion of long-term debt and capital
lease obligations 29,861 27,895
---------- -----------
Total current liabilities 621,736 592,167
Deferred income taxes 94,439 42,518
Long-term debt and capital lease obligations, less
current portion 214,965 75,752
Commitments and contingencies -- --
Stockholders' equity:
Capital stock:
Serial preferred stock (redeemed March 13,
1995), par value $.10; 1,000,000 shares
authorized; 345,000 shares issued and
344,862 shares outstanding in 1994 -- 34
Common stock, par value $.01; 250,000,000
shares authorized; 104,519,457 shares
issued and outstanding in 1995 and
95,417,383 in 1994 1,047 956
Capital in excess of par value 735,825 698,673
Retained earnings 1,363,256 1,035,602
---------- -----------
Total stockholders' equity 2,100,128 1,735,265
---------- -----------
$3,031,268 $ 2,445,702
========== ===========
</TABLE>
See accompanying notes
- --------------------------------------------------------------------------------
<PAGE>
CONSOLIDATED
statements of cash flows
<TABLE>
<CAPTION>
Three Years Ended December 31, 1995
(Thousands) 95 94 93
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 300,521 $ 305,266 $ 228,781
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 262,501 215,984 175,275
Accrual for litigation settlement -- 58,000 --
Net (gain) loss on sale of property, plant, and equipment 2,152 276 (2,943)
Write-down of property, plant, and equipment 611 2,230 366
Gain realized on sale of available-for-sale securities (2,707) -- --
Compensation recognized under employee stock plans 2,483 1,971 1,313
Undistributed (income) loss of joint venture (34,926) 10,585 634
Changes in operating assets and liabilities:
Net increase in receivables, inventories, prepaid expenses,
and other assets (2,606) (114,566) (57,269)
Payment of litigation settlement (58,000) -- --
Net (increase) decrease in deferred income taxes 41,607 (21,072) (27,021)
Increase in income tax payable 11,772 61,910 70,502
Net increase in payables and accrued liabilities 88,490 52,589 69,750
--------- ----------- ---------
Net cash provided by operating activities 611,898 573,173 459,388
--------- ----------- ---------
Cash flows from investing activities:
Purchase of property, plant, and equipment (620,815) (548,742) (323,669)
Proceeds from sale of property, plant, and equipment 4,834 2,058 4,648
Purchase of available-for-sale securities (678,071) (36,700) --
Proceeds from sale of available-for-sale securities 603,772 -- --
Purchase of held-to-maturity debt securities (648,012) (1,245,167) (715,487)
Proceeds from maturities of held-to-maturity debt securities 642,229 1,416,431 566,773
Investment in joint venture (18,019) (139,175) (3,160)
--------- ----------- ---------
Net cash used in investing activities (714,082) (551,295) (470,895)
--------- ----------- ---------
Cash flows from financing activities:
Proceeds from borrowings 236,982 42,025 10,238
Payments on capital lease obligations and other debt (125,614) (68,898) (22,386)
Proceeds from issuance of stock 23,073 39,565 42,401
Redemption of preferred stock and stockholder rights (3,536) -- --
Payments of preferred stock dividends (10) (10,350) (10,350)
--------- ----------- ---------
Net cash provided by financing activities 130,895 2,342 19,903
--------- ----------- ---------
Net increase in cash and cash equivalents 28,711 24,220 8,396
Cash and cash equivalents at beginning of year 84,643 60,423 52,027
--------- ----------- ---------
Cash and cash equivalents at end of year $ 113,354 $ 84,643 $ 60,423
========= =========== =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amounts capitalized) $ -- $ 977 $ 2,123
========= =========== =========
Income taxes $ 60,329 $ 111,704 $ 44,433
========= =========== =========
Non-cash financing activities:
Equipment capital leases $ 24,422 $ 34,202 $ 64,512
========= =========== =========
Conversion of preferred stock to common stock $ 164,127 $ -- $ --
========= =========== =========
- ----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes
<PAGE>
notes
TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1995, December 25, 1994, and December 26, 1993
NOTE 1 NATURE OF OPERATIONS
AMD is a semiconductor manufacturer with manufacturing facilities in the U.S.
and Asia, and sales offices throughout the world. Focusing on the personal and
networked computing and communications markets, AMD is a global company that
derives more than half of its revenues from international sales, mainly in
Europe and Asia. The company provides programmable products in concert with
applications solutions to the manufacturers of equipment for personal and
networked computation and communications.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal year. The company uses a 52- to 53-week fiscal year ending on the last
Sunday in December, which resulted in a 53-week year ended December 31, 1995.
This compares with a 52-week fiscal year for 1994 and 1993, which ended on
December 25 and 26, respectively.
Principles of consolidation. The consolidated financial statements include the
accounts of the company and its subsidiaries. Upon consolidation, all
significant intercompany accounts and transactions are eliminated. Also included
in the financial statements of the company, under the equity method of
accounting, is the company's 49.95 percent investment in Fujitsu AMD
Semiconductor Limited (FASL).
Foreign currency translation. The U.S. dollar is the functional currency for the
company's wholly-owned foreign subsidiaries. Translation adjustments, resulting
from the process of translating foreign currency financial statements into U.S.
dollars, are included in operations. The functional currency of the company's
unconsolidated joint venture is the Japanese yen. Translation adjustments
relating to the translation of these statements have not been material, and
therefore, are not disclosed as a separate component of stockholders' equity.
Cash equivalents. Cash equivalents consist of financial instruments which are
readily convertible to cash and have original maturities of three months or less
at the time of acquisition.
Investments. The company classifies its marketable debt and equity securities
into held-to-maturity and available-for-sale categories in accordance with the
provisions of the Statement of Financial Accounting Standard No. 115 (SFAS No.
115), "Accounting for Certain Instruments in Debt and Equity Securities." In
accordance with the FASB staff Special Report, "A Guide to Implementation of
Statement 115 on Accounting for Certain Investments in Debt and Equity
Securities," the company chose to reclassify, as of December 31, 1995, cash
equivalents and short-term investments from held-to-maturity to available-for-
sale. Securities classified as available-for-sale are reported at fair market
value with the related unrealized gains and losses included in retained
earnings. Realized gains and losses and declines in value of securities judged
to be other than temporary are included in interest income and other, net.
Interest and dividends on all securities are included in interest income and
other, net.
Investments with maturities between three and twelve months are considered
short-term investments. Short-term investments consist of money market auction
preferred stocks and debt securities such as commercial paper, time deposits,
certificates of deposit, bankers' acceptances, and marketable direct obligations
of the United States Treasury.
Foreign exchange forward contracts. Foreign exchange forward contracts are used
to hedge the company's net monetary asset positions in its foreign subsidiaries
and the company's liabilities for products purchased from FASL. Realized gains
and losses from these hedges are included in operations. Premiums and discounts,
if any, are amortized over the life of the contract and included in operations.
Foreign currency options. Foreign currency options are used to hedge firm
commitments with respect to the company's joint venture (FASL) investment.
Realized gains and losses from these hedges are deferred and included in other
assets or accrued liabilities, respectively. They are recognized in operations
in the same period as the hedged transactions. Premiums and discounts, if any,
are amortized over the life of the contract and included in operations.
Interest rate swaps. The company enters into interest rate swaps primarily to
reduce its interest rate exposure by changing a portion of the company's
interest rate exposure from a floating rate to a fixed rate basis. The
differential between fixed and floating rates to be paid or received is accrued
and recognized as an adjustment to interest expense. Accordingly, the related
amount payable to or receivable from counterparties is included in other current
assets or accrued liabilities.
- --------------------------------------------------------------------------------
<PAGE>
notes
TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Inventories. Inventories are stated principally at standard cost adjusted to
approximate the lower of cost (first-in, first-out method) or market (net
realizable value).
Property, plant, and equipment. Property, plant, and equipment is stated at
cost. Depreciation and amortization are provided principally on the straight-
line basis over the estimated useful lives of the assets for financial reporting
purposes and on accelerated methods for tax purposes. Estimated useful lives for
financial reporting purposes are as follows: machinery and equipment 3 to 5
years; buildings up to 26 years; and leasehold improvements are the shorter of
the remaining terms of the leases or the estimated economic useful lives of the
improvements.
In 1995, the Financial Accounting Standards Board released the Statement of
Financial Accounting Standard No. 121 (SFAS 121), "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS 121
requires recognition of impairment of long-lived assets in the event the net
book value of such assets exceeds the future undiscounted cash flows
attributable to such assets. SFAS 121 is effective for fiscal years beginning
after December 15, 1995. Adoption of SFAS 121 is not expected to have a material
impact on the company's financial position or results of operations.
Deferred income on shipments to distributors. A portion of sales is made to
distributors under terms allowing certain rights of return and price protection
on unsold merchandise held by the distributors. These agreements can be canceled
by either party upon written notice, at which time the company generally
repurchases unsold inventory. Accordingly, recognition of sales to distributors
and related gross profits are deferred until the merchandise is resold by the
distributors.
Advertising expenses. The company accounts for advertising costs as expense in
the period in which they are incurred. Advertising expense for 1995, 1994, and
1993 was approximately $40 million, $31 million, and $22 million, respectively.
Net income per common share. Primary net income per common share is based upon
weighted average common and dilutive common equivalent shares outstanding using
the treasury stock method. Dilutive common equivalent shares include stock
options and restricted stock. Fully diluted net income per common share is
computed using the weighted average common and dilutive common equivalent shares
outstanding, plus other dilutive shares outstanding which are not common
equivalent shares. Other dilutive shares which are not common equivalent shares
include convertible preferred stock.
Employee stock plans. The company accounts for its stock option plans and its
employee stock purchase plan in accordance with provisions of the Accounting
Principles Board's Opinion No. 25 (APB 25), "Accounting for Stock Issued to
Employees." In 1995, the Financial Accounting Standards Board released the
Statement of Financial Accounting Standard No. 123 (SFAS 123), "Accounting for
Stock Based Compensation." SFAS 123 provides an alternative to APB 25 and is
effective for fiscal years beginning after December 15, 1995. The company
expects to continue to account for its employee stock plans in accordance with
the provisions of APB 25. Accordingly, SFAS 123 is not expected to have any
material impact on the company's financial position or results of operations.
Use of estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results inevitably will differ from those estimates,
and such differences may be material to the financial statements.
Financial presentation. Certain prior year amounts on the Consolidated Financial
Statements have been reclassified to conform to the 1995 presentation.
NOTE 3 FINANCIAL INSTRUMENTS
Financial instruments with off-balance-sheet risk.
As part of the company's asset and liability management, the company enters into
various types of transactions that involve financial instruments with off-
balance-sheet risk. These instruments are entered into in order to manage
financial market risk, including interest rate and foreign exchange risk. The
notional values, carrying amounts, and fair values are tabled below.
Foreign exchange forward contracts. The company enters into foreign exchange
forward contracts to buy and sell currencies as economic hedges of its net
monetary asset positions in its foreign subsidiaries and liabilities for
products purchased from FASL. The hedging transactions in 1995 were denominated
in lira, yen, French franc, deutsche mark, and pound sterling. The maturities of
these contracts are generally less than six months.
- --------------------------------------------------------------------------------
<PAGE>
notes
TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Foreign currency options. The joint venture (FASL) investments are denominated
in yen, and therefore, are subject to exposure due to fluctuations in yen
exchange rates. Thus, the company hedges its exposures on certain firm
commitments relating to the FASL investment with foreign currency options
denominated in yen. The maturities of these options are generally less than six
months. No foreign currency options were outstanding as of December 31, 1995.
Interest rate swaps. The company engaged in interest rate swaps primarily to
reduce its interest rate exposure on its term loan and on a building lease
obligation by changing a portion of the company's interest rate obligation from
a floating rate to a fixed rate basis without exchanges of the underlying
notional amounts. The fixed interest rates are based on one to five year swap
rates, and the floating interest rates are based on three or six month LIBOR.
These interest rate swaps will mature in 1996 and 1997.
Fair value of financial instruments with off-balance-sheet risk. The estimates
of fair value were obtained using prevailing financial market information as of
December 31, 1995. In certain instances where judgment is required in estimating
fair value, price quotes were obtained from certain of the company's
counterparty financial institutions.
<TABLE>
<CAPTION>
95 94
-----------------------------------------------------------
Notional Carrying Fair Notional Carrying Fair
(Thousands) Amount Amount Value Amount Amount Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest rate
instruments:
Swaps $190,000 $(518) $(1,694) $40,000 $(518) $ 228
Foreign
exchange
instruments:
Foreign
exchange
forward
contracts 36,670 (102) (102) 32,651 536 536
Foreign
currency
options - - - 12,662 - (200)
</TABLE>
Fair value of other financial instruments.
The carrying value of short-term debt approximates fair value due to its short-
term maturity. The fair value for long-term debt was estimated using discounted
cash flow analysis based on estimated interest rates for similar types of
borrowing arrangements.
The carrying amounts and estimated fair values of the company's other
financial instruments are as follows:
<TABLE>
<CAPTION>
95 94
------------------------------------
Carrying Fair Carrying Fair
(Thousands) Amount Value Amount Value
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Short-term debt:
Notes payable $ 27,070 $ 27,070 $32,459 $32,459
Long-term debt
(excluding capital leases) 167,527 169,146 20,933 20,255
- -----------------------------------------------------------------------
</TABLE>
Securities held-to-maturity and available-for-sale.
The following is a summary of held-to-maturity and
available-for-sale securities included in cash and cash equivalents and short-
term investments as of December 31, 1995 and December 25, 1994.
<TABLE>
<CAPTION>
95 94
-------------------------------------
(Thousands) Available-for-sale Held-to-maturity
- ------------------------------------------------------------------------------
<S> <C> <C>
Certificates of deposit $ 15,002 $ 4,997
Treasury notes 10,437 -
Federal agency notes 9,202 -
Security repurchase agreements 53,370 50,800
Commercial paper 14,914 24,760
Other debt securities 434 1,672
---------- ----------
Total cash equivalents $103,359 $ 82,229
========== ==========
Certificates of deposit $ 70,551 $ 95,342
Municipal notes and bonds 52,256 -
Corporate notes 37,898 101,850
Treasury notes 54,933 44,877
Commercial paper 46,656 14,442
Money market auction preferred stocks 114,999 36,700
---------- ----------
Total short-term investments $377,293 $293,211
========== ==========
- ------------------------------------------------------------------------------
</TABLE>
<PAGE>
notes
TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
On November 15, 1995, the FASB staff issued the Special Report, "A Guide to
Implementation of Statement 115 on Accounting for Certain Investments in Debt
and Equity Securities." In accordance with provisions in that Special Report,
the company chose to reclassify cash equivalents and short-term investments from
held-to-maturity to available-for-sale. At the date of the transfer, the
amortized cost of those securities was approximately $480.7 million. Since the
securities transferred on December 31, 1995 are short-term in nature, changes in
market interest rates did not have a significant impact on the fair value of
these securities. The net unrealized gain on these securities was immaterial.
The available-for-sale equity securities that the company held, included in
other assets, had a cost and fair value of $14.5 million and $75.1 million,
respectively, as of December 31, 1995, and a cost and fair value of $9.4 million
and $18.5 million, respectively as of December 25, 1994. At December 31, 1995,
the total net unrealized holding gain on these equity securities, net of tax,
was approximately $42.5 million, of which $33.4 million was recorded in 1995.
The entire, net of tax, unrealized holding gain is included in retained
earnings.
As of December 31, 1995, the company did not own any securities classified
as trading.
NOTE 4 CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the company to concentrations of
credit risk consist primarily of cash equivalents, short-term investments, trade
receivables, and financial instruments used in hedging activities.
The company places its cash equivalents and short-term investments with
high credit quality financial institutions and, by policy, limits the amount of
credit exposure with any one financial institution. Investments in time deposits
and certificates of deposit are acquired from banks having combined capital,
surplus and undistributed profits of not less than $200 million. Investments in
commercial paper and money market auction preferred stocks of industrial firms
and financial institutions are rated A1, P1 or better, investments in tax-exempt
securities including municipal notes and bonds are rated AA, Aa or better, and
investments in repurchase agreements must have securities of the type and
quality listed above as collateral.
Concentrations of credit risk with respect to trade receivables are limited
because a large number of geographically diverse customers make up the company's
customer base, thus spreading the trade credit risk. The company controls credit
risk through credit approvals, credit limits, and monitoring procedures. The
company performs in-depth credit evaluations of all new customers and requires
letters of credit, bank guarantees and advance payments, if deemed necessary.
Bad debt expenses have not been material.
The counterparties to the agreements relating to the company's foreign
exchange and interest rate instruments 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 the credit ratings of such counterparties, and limits the
financial exposure and the amount of agreements entered into with any one
financial institution. While the notional amounts of financial instruments are
often used to express the volume of these transactions, the potential accounting
loss on these transactions if all counterparties failed to perform is limited to
the amounts, if any, by which the counterparties' obligations under the
contracts exceed the obligations of the company to the counterparties.
NOTE 5 CONCENTRATIONS OF OTHER RISKS
Products. Microprocessor products and Flash memory devices contributed a
significant portion of the company's revenues and profits in 1995. The company
expects that its ability to maintain or expand its current levels of revenues
and profits in the future will depend upon, among other things, its success in
developing and marketing, in a timely manner, its next generation of
microprocessor products, the K86 RISC SUPERSCALAR products, and future
generations of Flash memory devices.
- --------------------------------------------------------------------------------
<PAGE>
notes
TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Markets. The markets for the company's products are characterized by rapid
technological developments, evolving industry standards, changes in customer
requirements, frequent new product introductions and enhancements, and short
product life cycles. The market for microprocessors and Flash memory devices is
primarily dependent upon the market for personal computers. From time to time,
the PC industry has experienced significant downturns, often in connection with,
or in anticipation of, declines in general economic conditions. These downturns
have been characterized by diminished product demand, production overcapacity,
and resultant accelerated erosion of average selling prices. The company's
business could be materially and adversely affected by industry-wide
fluctuations in the PC marketplace in the future.
Inventories. Given the volatility of the market, the company makes inventory
provisions for potentially excess and obsolete inventory based on backlog and
forecasted demand. However, such backlog demand is subject to revisions,
cancellations, and rescheduling. Actual demand will inevitably differ from such
anticipated demand, and such differences may have a material effect on the
financial statements.
Customers. The company markets and sells its products primarily to a broad base
of customers comprised of Distributors and Original Equipment Manufacturers
(OEMs) of computation and communication equipment. One of the company's
distributors, Arrow Electronics, Inc., accounted for approximately 12 percent of
1995 net sales. No other Distributor or OEM customer constituted 10 percent or
more of net sales in 1995.
International operations. The company derives more than half of its revenues
from international sales. However, only a portion of the company's international
sales were denominated in foreign currencies. Further, the company does not have
any sales denominated in the local currencies of those countries which have
highly inflationary economies.
Nearly all product assembly and final testing of the company's products are
performed at its manufacturing facilities in Penang, Malaysia; Singapore; and
Bangkok, Thailand; or by subcontractors in Asia. Wafer fabrication of certain
products is performed at foundries in Asia. FASL wafer fabrication facilities
are located in Aizu-Wakamatsu, Japan. Foreign manufacturing entails political
and economic risks, including political instability, expropriation, currency
controls and fluctuations, changes in freight and interest rates, and exemptions
for taxes and tariffs. For example, if the company were unable to assemble and
test its products abroad, or if air transportation between the United States,
the company's overseas facilities and customers worldwide were disrupted, there
could be a material adverse effect on the company's operations.
Materials. Certain of the 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 integrated circuit packages purchased by the company, 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 the company were unable to procure certain of such materials, it
would be required to reduce its manufacturing operations, which could have a
material adverse effect upon its results of operations.
- --------------------------------------------------------------------------------
<PAGE>
notes
TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 6 STOCKHOLDERS' EQUITY
The following is a summary of the changes in the components of consolidated
stockholders' equity for the three years ended December 31, 1995.
<TABLE>
<CAPTION>
Preferred Stock Common Stock
------------------- ------------------
Number Number Capital in Total
of of Excess of Retained Stockholders'
(Thousands) Shares Amount Shares Amount Par Value Earnings Equity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
December 27, 1992 345 $ 35 88,226 $ 885 $532,674 $ 513,146 $1,046,740
Issuance of shares:
Employee stock plans - - 3,218 31 19,408 - 19,439
Fujitsu Limited - - 1,000 10 22,952 - 22,962
Compensation recognized under
employee stock plans - - - - 1,313 - 1,313
Income tax benefits realized from
employee stock option exercises - - - - 43,386 - 43,386
Preferred stock dividends - - - - - (10,350) (10,350)
Net income - - - - - 228,781 228,781
------- ----- ------- ------ ---------- ---------- ----------
December 26, 1993 345 35 92,444 926 619,733 731,577 1,352,271
Issuance of shares:
Employee stock plans - - 1,970 19 16,911 - 16,930
Fujitsu Limited - - 1,000 10 22,625 - 22,635
Compensation recognized under
employee stock plans - - - - 1,971 - 1,971
Conversion of preferred stock to
common stock - (1) 3 1 - - -
Income tax benefits realized from
employee stock option
exercises - - - - 37,433 - 37,433
Preferred stock dividends - - - - - (10,350) (10,350)
Net income - - - - - 305,266 305,266
Unrealized gain from
available-for-sale investments - - - - - 9,109 9,109
------- ----- ------- ------ ---------- ---------- ----------
December 25, 1994 345 34 95,417 956 698,673 1,035,602 1,735,265
Issuance of shares:
Employee stock plans - - 2,249 22 23,051 - 23,073
Compensation recognized under
employee stock plans - - - - 2,483 - 2,483
Conversion of preferred stock to
common stock (345) (34) 6,853 69 (2,536) - (2,501)
Income tax benefits realized from
employee stock option
exercises - - - - 15,189 - 15,189
Preferred stock dividends - - - - - (10) (10)
Redemption of stockholder rights
plan - - - - (1,035) - (1,035)
Net income - - - - - 300,521 300,521
Unrealized gain from
available-for-sale investments
and translation adjustment
for joint venture - - - - - 27,143 27,143
------- ----- ------- ------ ---------- ---------- ----------
December 31, 1995 - $ - 104,519 $1,047 $735,825 $1,363,256 $2,100,128
======= ===== ======= ====== ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
NOTE 7 SERIAL PREFERRED STOCK
In March 1987, the company sold 345,000 shares of Convertible Exchangeable
Preferred Stock, $.10 par value. Dividends were payable quarterly in arrears at
an annual rate of $30 per share (6 percent) cumulative from the date of original
issue. The preferred stock was redeemable for cash at any time at the option of
the company, in whole or in part, at prices declining to $500 per share at March
15, 1997, plus unpaid dividends. The preferred stock was convertible at any time
at the option of the holder into common stock at the initial conversion rate of
19.873 common shares for each preferred share.
On February 10, 1995, the company called all outstanding shares of its
preferred stock for redemption on March 13, 1995, at a redemption price of
$509.00 per share, plus $7.30 of accrued and unpaid dividends. Prior to the
redemption date, 343,427 shares of preferred stock
- --------------------------------------------------------------------------------
<PAGE>
notes
TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
were surrendered for conversion which resulted in the issuance of 6,824,694
shares of the company's common stock. Pursuant to previous arrangements, on
March 14, 1995, the company sold 28,518 shares of its common stock to certain
institutions and used the proceeds to fund the redemption of 1,435 shares of
preferred stock which were not converted.
NOTE 8 STOCKHOLDER RIGHTS PLAN
In February 1990, the company adopted a stockholder rights plan and declared a
dividend distribution of preferred stock purchase rights at the rate of one
right for each share of common stock held as of the close of business on
February 20, 1990. The rights were not exercisable, or transferable apart from
the common stock, until certain events occurred. The rights were redeemable at
any time at the option of the company.
On May 3, 1995, the company redeemed all its preferred stock purchase
rights for a redemption price of $.01 per right (approximately $1 million) paid
on May 24, 1995, to the holders of the company's common stock as of the
redemption date.
NOTE 9 INCOME TAXES
Provision for income taxes consists of:
<TABLE>
<CAPTION>
(Thousands) 95 94 93
- -----------------------------------------------------------------
<S> <C> <C> <C>
Current:
U.S. Federal $ 58,683 $154,425 $83,598
U.S. State and Local 1,855 13,001 3,640
Foreign National and
Local 10,594 7,350 2,332
Deferred:
U.S. Federal 43,827 (18,239) (1,947)
U.S. State and Local (3,167) (2,820) 1,798
Foreign National and
Local 946 (14) (203)
-------- -------- -------
Provision for income taxes $112,738 $153,703 $89,218
======== ======== =======
</TABLE>
Tax benefits resulting from the exercise of nonqualified stock options and the
disqualifying disposition of shares acquired under the company's incentive stock
option and stock purchase plans reduced taxes currently payable as shown above
by $15.2 million, $37.4 million, and $43.4 million in 1995, 1994, and 1993,
respectively. Such benefits were credited to capital in excess of par value when
realized.
Under SFAS No. 109, deferred income taxes reflect the net tax effects of
tax carryforwards and temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes. Significant components of the company's deferred tax assets
and liabilities as of December 31, 1995, December 25, 1994, and December 26,
1993 are as follows:
<TABLE>
<CAPTION>
(Thousands) 95 94 93
- ------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Deferred distributor
income $ 40,583 $ 31,396 $ 31,349
Inventory reserves 29,665 18,809 14,935
Accrued expenses not
currently deductible 16,717 39,467 21,799
Federal and state tax
credit carryovers 6,249 2,873 30,888
Other 49,850 39,081 27,569
--------- -------- --------
Total deferred tax assets 143,064 131,626 126,540
Less: valuation allowance -- -- (26,415)
--------- -------- --------
Net deferred tax assets 143,064 131,626 100,125
--------- -------- --------
Deferred tax liabilities:
Depreciation (109,141) (59,614) (44,886)
Other (19,373) (15,855) (20,154)
--------- -------- --------
Total deferred tax
liabilities (128,514) (75,469) (65,040)
--------- -------- --------
Net deferred tax assets $ 14,550 $ 56,157 $ 35,085
========= ======== ========
</TABLE>
The 1993 valuation allowance for deferred tax assets, attributable to stock
option deductions, were credited to equity upon realization in 1994.
Pretax income from foreign operations was $60.6 million in 1995, $45.7
million in 1994, and $40.0 million in 1993.
- --------------------------------------------------------------------------------
<PAGE>
notes
TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following is a reconciliation between statutory federal income taxes and the
total provision for income taxes:
<TABLE>
<CAPTION>
95 94 93
-----------------------------------------------------
(Thousands except percent) Tax Rate Tax Rate Tax Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Statutory federal income tax provision $132,417 35.0% $164,344 35.0% $111,522 35.0%
State taxes net of federal benefit 216 0.1 6,601 1.4 3,535 1.1
Tax exempt Foreign Sales Corporation income (6,848) (1.8) (8,955) (1.9) (7,236) (2.3)
Tax credits utilized -- -- -- -- (5,004) (1.5)
Foreign income at other than U.S. rates (11,503) (3.1) (9,633) (2.1) (10,398) (3.3)
Other (1,544) (0.4) 1,346 0.3 (3,201) (1.0)
------- ---- ------- ---- ------- ----
$112,738 29.8% $153,703 32.7% $ 89,218 28.0%
======= ==== ======= ==== ======= ====
- ---------------------------------------------------------------------------------------------------
</TABLE>
No provision has been made for income taxes on approximately $264.6 million of
cumulative undistributed earnings of certain foreign subsidiaries because it is
the company's intention to permanently invest such earnings. If such earnings
were distributed, additional taxes of $92.6 million would accrue.
The company's Far East assembly and test plants in Singapore and Thailand
are operated under various tax holidays which expire in whole or in part during
1996 and 1998. Possible extensions of the holiday period, as well as other tax
incentives, are anticipated to result in minimal tax liabilities in these
countries through 1998. The net impact of these tax holidays was an increase in
net income of approximately $6.2 million ($0.06 per share) in 1995.
NOTE 10 DEBT
The company has certain debt agreements that contain provisions regarding
restrictions on cash dividends, maintenance of specified working capital and net
worth levels, and specific financial ratio requirements. At December 31, 1995,
the company was in compliance with all restrictive covenants of such debt
agreements and all retained earnings were restricted as to payments of cash
dividends on common stock.
Significant elements of uncommitted, unsecured revolving lines of credit
are:
<TABLE>
<CAPTION>
(Thousands except percent) 95 94
- --------------------------------------------------------------------------------
<S> <C> <C>
Total lines of credit $345,801 $378,182
Portion of lines of credit available to
foreign subsidiaries 95,801 128,182
Amounts outstanding at year-end:
Short-term 27,070 32,459
Short-term borrowings:
Average daily borrowings 29,666 33,449
Maximum amount outstanding at
any month-end 36,105 35,384
Weighted monthly average interest rate 4.19% 4.32%
Average interest rate on amounts
outstanding at year-end 4.41% 4.42%
- --------------------------------------------------------------------------------
</TABLE>
Interest on foreign and short-term domestic borrowings is negotiated at the time
of the borrowing.
Information with respect to the company's long-term debt and capital lease
obligations at year-end is:
<TABLE>
<CAPTION>
(Thousands) 95 94
- --------------------------------------------------------------------------------
<S> <C> <C>
Term loan with variable interest at 7.06%
at December 31, 1995 payable quarterly
through 1998 $150,000 $ --
Promissory notes with principal and
6.88% interest payable annually
through January 2000, secured by a
partnership interest 10,276 11,946
Mortgage with principal and 9.88%
interest payable in monthly installments
through April 2007 2,167 2,382
Obligations under capital leases 77,299 82,714
Obligations secured by equipment 4,990 6,482
Other 94 123
------- -------
244,826 103,647
Less: current portion (29,861) (27,895)
------- -------
Long-term debt and capital lease
obligations, less current portion $214,965 $ 75,752
======= =======
- --------------------------------------------------------------------------------
</TABLE>
On January 5, 1995, the company obtained a $150 million four-year term loan with
a consortium of eight commercial banks. The loan has a floating interest rate
that resets on the one, two, three, or six month LIBOR and requires quarterly
interest payments with the principal to be paid at the end of the term in 1998.
The interest rate on the loan at December 31, 1995 was 7.06 percent.
- --------------------------------------------------------------------------------
<PAGE>
notes
TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
For each of the next five years and beyond, long-term debt and capital lease
obligations are:
<TABLE>
<CAPTION>
Long-term
Debt Capital
(Thousands) (Principal only) Leases
- ---------------------------------------------------------------
<S> <C> <C>
1996 $ 3,646 $27,297
1997 3,802 26,255
1998 154,033 21,532
1999 2,326 6,949
2000 2,493 1,182
Beyond 2000 1,227 -
-------- -------
Total 167,527 83,215
Less: Amount representing interest - 5,916
-------- -------
Total at present value $167,527 $77,299
======== =======
</TABLE>
Obligations under the lease agreements are collateralized by the assets leased.
Total assets leased were approximately $141.5 million and $131.3 million at
December 31, 1995 and December 25, 1994, respectively. Accumulated amortization
of these leased assets was approximately $95.3 million and $60.2 million at
December 31, 1995 and December 25, 1994, respectively.
<TABLE>
<CAPTION>
NOTE 11 INTEREST EXPENSE & INTEREST INCOME AND OTHER, NET
Interest expense
(Thousands) 95 94 93
- --------------------------------------------------------------------
<S> <C> <C> <C>
Interest expense $ 18,750 $10,138 $ 9,994
Interest capitalized (18,043) (8,294) (7,084)
-------- ------- -------
$ 707 $ 1,844 $ 2,910
======== ======= =======
</TABLE>
- --------------------------------------------------------------------
In 1995, interest expense primarily consisted of interest payments on the $150
million four-year term loan the company entered into on January 5, 1995; and
interest capitalized primarily related to the construction of Fab 25.
Interest income and other, net
<TABLE>
<CAPTION>
(Thousands) 95 94 93
- --------------------------------------------------
<S> <C> <C> <C>
Interest income $27,816 $22,456 $15,990
Other income (loss) 2,947 (6,197) 500
------- ------- -------
$30,763 $16,259 $16,490
======= ======= =======
- --------------------------------------------------
</TABLE>
In 1995, other income (loss) primarily consisted of the $2.7 million realized
gain on an equity investment in Seeq Corporation. In 1994, other income (loss)
primarily consisted of the $33 million settlement cost related to the class
action lawsuits and stockholders' derivative action offset by an $18 million
gain resulting from an award of damages in the arbitration proceedings with
Intel. Also included in other income (loss) for all years presented is the net
gain (loss) on the sale of assets.
NOTE 12 FOREIGN AND DOMESTIC OPERATIONS
The company is currently engaged in a single line of business: The design,
development, manufacture, and sale of programmable products in concert with
applications solutions to the manufacturers of equipment for personal and
networked computation and communications.
Operations outside the United States include both manufacturing and sales.
Manufacturing subsidiaries are located in Malaysia, Singapore, and Thailand.
Sales subsidiaries are in Europe and Asia.
The following is a summary of operations by entities within geographic
areas for the three years ended December 31, 1995:
<TABLE>
<CAPTION>
(Thousands) 95 94 93
- ----------------------------------------------------------------
<S> <C> <C> <C>
Sales to unaffiliated
customers:
North America $1,741,585 $1,524,050 $1,174,410
Europe 491,293 483,632 343,600
Asia 196,846 126,977 130,270
---------- ---------- ----------
$2,429,724 $2,134,659 $1,648,280
========== ========== ==========
Transfers between
geographic areas
(eliminated in
consolidation):
North America $ 743,117 $ 563,303 $ 444,378
Asia 396,158 323,050 277,496
---------- ---------- ----------
$1,139,275 $ 886,353 $ 721,874
========== ========== ==========
Operating income:
North America $ 290,626 $ 467,131 $ 265,676
Europe 18,922 15,860 8,376
Asia 38,729 30,148 31,001
---------- ---------- ----------
$ 348,277 $ 513,139 $ 305,053
========== ========== ==========
Identifiable assets:
North America $2,589,476 $2,090,080 $1,647,477
Europe 85,664 120,070 88,003
Asia 463,530 361,144 312,529
Eliminations (107,402) (125,592) (118,778)
---------- ---------- ----------
$3,031,268 $2,445,702 $1,929,231
========== ========== ==========
U.S. export sales:
Asia $ 485,625 $ 436,120 $ 314,268
Europe 190,866 117,811 109,226
---------- ---------- ----------
$ 676,491 $ 553,931 $ 423,494
========== ========== ==========
- ----------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
notes
TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Sales to unaffiliated customers are based on the location of the company's
subsidiary. Transfers between geographic areas consist of products and services
that are sold at amounts generally above cost and are consistent with governing
tax regulations. Operating income is total sales less operating expenses.
Identifiable assets are those assets used in each geographic area. Export sales
are United States foreign direct sales to unaffiliated customers primarily in
Europe and Asia.
NOTE 13 EMPLOYEE BENEFIT PLANS
Stock option plans. The company has several stock option plans under which key
employees have been granted incentive (ISOs) and nonqualified (NSOs) stock
options to purchase the company's common stock. Generally, options are
exercisable within four years from the date of grant and expire five to ten
years after the date of grant. ISOs granted under the plans have exercise prices
of not less than 100 percent of the fair market value of the common stock at the
date of grant. Exercise prices of NSOs may not be less than 50 percent of the
fair market value of the common stock at the date of grant. At December 31,
1995, 2,940 employees were eligible and participating in the plans.
The following is a summary of stock option exercises:
<TABLE>
<CAPTION>
(Thousands) 95 94 93
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate exercise price $ 14,770 $ 10,149 $14,029
Options exercised 1,635 1,589 2,749
- --------------------------------------------------------------------------------
</TABLE>
A summary of the stock option plans at December 31, 1995 and December 25, 1994
are shown below.
<TABLE>
<CAPTION>
(Thousands except per share amounts) 95 94
- --------------------------------------------------------------------------------
<S> <C> <C>
Options:
Outstanding at beginning of year 11,919 10,961
Granted 2,627 2,789
Canceled (386) (242)
Exercised (1,635) (1,589)
-------- -------
Outstanding at end of year 12,525 11,919
======== =======
Exercisable at beginning of year 5,878 4,852
Exercisable at end of year 6,570 5,878
Available for grant at beginning of year 2,960 963
Available for grant at end of year 701 2,960
Aggregate exercise price of options
outstanding at end of year $247,913 $193,000
Average exercise price of options
outstanding at end of year $19.79 $16.19
- --------------------------------------------------------------------------------
</TABLE>
Stock appreciation rights plans. The company maintains three stock appreciation
rights plans under which stock appreciation rights (SARs) either have been or
may be granted to key employees. The number of SARs exercised plus common stock
issued under the stock option plans may not exceed the number of shares
authorized under the stock option plans. SARs may be granted in tandem with
outstanding stock options, in tandem with future stock option grants, or
independently of any stock options. Generally, the terms of SARs granted under
the plans are similar to those of options granted under the stock option plans,
including exercise prices, exercise dates, and expiration dates. To date, the
company has granted only limited SARs, which become exercisable only in the
event of certain changes in control of the company.
Stock purchase plan. The company has a stock purchase plan that allows
participating employees to purchase, through payroll deductions, shares of the
company's common stock at 85 percent of the fair market value at specified
dates. At December 31, 1995, 6,723 employees were eligible to participate in the
plan and 482,182 common shares remained available for issuance under the plan. A
summary of stock purchased under the plan is shown below.
<TABLE>
<CAPTION>
(Thousands except
employee participants) 95 94 93
- -----------------------------------------------------
<S> <C> <C> <C>
Aggregate purchase price $10,873 $8,115 $6,413
Shares purchased 467 412 387
Employee participants 2,720 1,941 1,684
- -----------------------------------------------------
</TABLE>
Profit sharing program. The company has a profit sharing program to which the
Board of Directors has authorized semiannual contributions. Profit sharing
contributions were $44.7 million in 1995, $57.0 million in 1994, and $33.9
million in 1993.
Retirement savings plan. The company has a retirement savings plan, commonly
known as a 401(k) plan, that allows participating United States employees to
contribute from 1 percent to 15 percent of their pre-tax salary subject to IRS
limits. The company makes a matching contribution calculated at 50 cents on each
dollar of the first 3 percent of participant contributions, to a maximum of 1.5
percent of eligible compensation. The company's contributions to the 401(k) plan
were $4.3 million, $3.7 million, and $3.2 million for 1995, 1994, and 1993,
respectively. There are four investment funds in which each employee may invest
contributions in whole percentage increments.
<PAGE>
notes
TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Restricted stock award plan. The company established the 1987 restricted stock
award plan under which up to two million shares of common stock may be issued to
employees, subject to terms and conditions determined at the discretion of the
Board of Directors. The company entered into agreements to issue 226,427,
180,000, and 19,000 shares in 1995, 1994, and 1992, respectively. To date,
agreements covering 212,212 shares have been canceled without issuance and
1,252,964 shares have been issued pursuant to prior agreements. At December 31,
1995, agreements covering 436,427 shares were outstanding under the plan and
310,609 shares remained available for future awards. Outstanding awards vest
under varying terms within five years.
NOTE 14 COMMITMENTS
The company leases certain of its facilities under agreements which expire at
various dates through 2011. The company also leases certain of its manufacturing
and office equipment for terms ranging from one to six years. Rent expense was
$36.1 million, $31.9 million, and $31.9 million in 1995, 1994, and 1993,
respectively.
For each of the next five years and beyond, noncancelable long-term
operating leases obligations and commitments to purchase manufacturing supplies
and services are as follows:
<TABLE>
<CAPTION>
Operating Purchase
(Thousands) Leases Commitments
- -----------------------------------------------
<S> <C> <C>
1996 $28,996 $ 5,074
1997 22,298 4,868
1998 17,123 4,868
1999 11,426 4,868
2000 11,144 3,797
Beyond 2000 11,503 27,900
- -----------------------------------------------
</TABLE>
The operating lease of the company's corporate sales and marketing facility
expires in December 1998. The company has the option of extending the lease
agreement or purchasing the building for $40 million. The company may also
consider alternative financing arrangements.
At December 31, 1995, the company had commitments of approximately $93
million for the construction or acquisition of additional property, plant, and
equipment.
The company is currently planning to build a submicron wafer fabrication
and design facility in Dresden, Germany at an estimated cost of approximately
$1.5 billion over 5 years. The German federal and state governments will provide
financing assistance to the facility through grants and allowances, loan
guarantees, and loan interest subsidies. As of December 31, 1995, the company
had commitments to make cash investments and loans, in aggregate, in this
facility amounting to approximately $350 million over the next 4 years.
In December 1995, the company signed a five-year, comprehensive patent
cross-license agreement with Intel. The cross-license is royalty-bearing for the
company's products that use certain Intel technologies. The company is required
to pay Intel minimum non-refundable royalties during the years 1997 through
2000.
NOTE 15 INVESTMENT IN JOINT VENTURE
In 1993, the company and Fujitsu Limited established a joint venture, Fujitsu
AMD Semiconductor Limited (FASL), to manufacture Flash memory devices. The
company's share of FASL is 49.95 percent and the investment is being accounted
for under the equity method. In 1995, the company invested an additional $18.0
million in FASL, and the company's share of FASL net income during 1995 was
$34.9 million, net of income taxes of approximately $18.8 million. At December
31, 1995, the adjustment related to the translation of the FASL financial
statements into U.S. dollars resulted in a decrease of approximately $6.2
million to the investment in FASL.
Pursuant to a cross-equity provision between AMD and Fujitsu Limited, the
company purchased $12.7 million of Fujitsu Limited shares, with certain resale
restrictions. Under the same provision, Fujitsu Limited has purchased 2 million
shares of AMD common stock, and is required to purchase an additional 2.5
million shares over the next several years, for a total investment not to exceed
$100 million. No purchases were made in 1995.
The following are condensed unaudited financial data of FASL:
<TABLE>
<CAPTION>
Three Years Ended December 31, 1995
(Unaudited) (Thousands) 95 94 93
- -----------------------------------------------------------------
<S> <C> <C> <C>
Net sales $252,069 $ - $ -
Operating income (loss) 117,411 (32,203) (1,772)
Net income (loss) 107,563 (32,293) (1,772)
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Dec. 31, 1995 and Dec. 25, 1994
(Unaudited) (Thousands) 95 94
- -------------------------------------------------------
<S> <C> <C>
Current assets $161,810 $ 10,907
Non-current assets 326,252 263,380
Current liabilities 107,524 29,362
Non-current liabilities 284 60
- -------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
notes
TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 16 CONTINGENCIES
I. Litigations
A. Class action lawsuits. On November 3 and 15, 1995, two class action lawsuits
were filed, purportedly on behalf of purchasers of the company's stock from
April 11, 1995, to September 25, 1995, alleging that the company and various of
its officers and directors violated sections of the Securities Exchange Act of
1934 Rule 10b-5 promulgated thereunder by issuing allegedly false and misleading
statements concerning the development and production of the AMD-K5
microprocessor. The complaints seek damages in an unspecified amount. Based upon
information presently known to management, the company does not believe that the
ultimate resolution of these lawsuits will have a material adverse effect upon
the financial condition or results of operations of the company.
B. AMD v. Altera Corporation. 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. 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 upon the
financial condition or results of operations of the company.
C. Thorn EMI North America, Inc. v. AMD. This litigation was filed in 1995 and
alleges that AMD is infringing a patent owned by Thorn EMI North America, Inc.
relating to the processes used by AMD to manufacture microprocessors. 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 upon the
financial condition or results of operations of the company.
II. SEC Investigation
The Securities and Exchange Commission (SEC) began an informal investigation of
the company in 1993 concerning the company's disclosures relating to the
development of microcode for one of its Am486 products. The company has been
cooperating fully with the SEC.
III. Environmental Matters
Clean-Up Orders. Since 1981, the company has discovered, investigated, and begun
remediation of three sites where releases from underground chemical tanks at its
facilities in Santa Clara County, California adversely affected the groundwater.
The chemicals released into the groundwater were commonly in use in the
semiconductor industry in the wafer fabrication process prior to 1979. At least
one of the released chemicals (which is no longer used by the company) has been
identified as a probable carcinogen.
In 1991, the company received four Final Site Clean-up Requirements Orders
from the California Regional Water Quality Control Board, San Francisco Bay
Region (RWQCB) relating to the three sites. One of the orders named the company
as well as TRW Microwave, Inc. and Philips Semiconductors Corporation. Another
of the orders named the company as well as National Semiconductor Corporation.
The three sites in Santa Clara County are on the National Priorities List
(Superfund). If the company fails to satisfy federal compliance requirements or
inadequately performs the compliance measures, the government (a) can bring an
action to enforce compliance, or (b) can undertake the desired response actions
itself and later bring an action to recover its costs, and penalties, which is
up to three times the costs of clean-up activities, if appropriate. With regard
to certain claims related to this matter the statute of limitations has been
tolled.
The company has computed and recorded the estimated environmental liability
in accordance with applicable accounting rules and has not recorded any
potential insurance recoveries in determining the estimated costs of the clean-
up. The amount of environmental charges to earnings has not been material during
the last three fiscal years. The company believes that the potential liability,
if any, in excess of amounts already accrued with respect to the foregoing
environmental matters will not have a material adverse effect on the financial
condition or results of operations of the company.
- --------------------------------------------------------------------------------
<PAGE>
notes
TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
IV. Other matters
The company is a defendant or plaintiff in various other actions which arose in
the normal course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
financial condition or results of operations of the company.
NOTE 17 SHELF REGISTRATION STATEMENT
On May 25, 1994, the Securities and Exchange Commission declared effective the
company's shelf registration statement covering up to $400 million of its
securities, which may be either debt securities, preferred stock, depositary
shares representing fractions of shares of preferred stock, common stock,
warrants to purchase common stock, or any combination of the foregoing which the
company may offer from time to time in the future. The nature and terms of the
securities will be established at the time of their sale. The company may offer
the securities through underwriters to be named in the future, through agents or
otherwise. The net proceeds of any offering will be used for general corporate
purposes, which may include the reduction of outstanding indebtedness, working
capital increases, and capital expenditures. To date, the company has not
offered or sold any securities registered under the $400 million registration
statement.
NOTE 18 SUBSEQUENT EVENT
On January 17, 1996, the company acquired NexGen, Inc. (NexGen) in a tax-free
reorganization in which NexGen was merged directly into the company. The
shareholders of NexGen receive eight-tenths (0.8) of a share of the common stock
of AMD for each outstanding share of the common stock of NexGen. The company
expects to issue approximately 33.6 million shares of common stock to the
holders of NexGen common stock, options, rights to purchase under the employee
stock purchase plan, and warrants.
Pursuant to the merger, AMD extended NexGen a $60 million revolving line of
credit, of which $30 million has been used as of December 31, 1995.
The merger will be accounted for under the pooling-of-interests method and,
accordingly, historical financial data in future reports will be restated to
include NexGen data. The following unaudited pro forma data summarizes the
combined results of operations of the company and NexGen as though the merger
had occurred at the beginning of fiscal 1993.
<TABLE>
<CAPTION>
Three Years Ended December 31, 1995
(Unaudited, pro forma)
(Thousands, except per share amounts) 95 94 93
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $2,468,379 $2,135,515 $1,648,280
Net income 216,326 281,247 216,589
Net income per
common share:
Primary $ 1.59 $ 2.18 $ 1.79
Fully diluted $ 1.57 $ 2.14 $ 1.77
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
REPORT OF
Ernst & Young LLP
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders
Advanced Micro Devices, Inc.
We have audited the accompanying consolidated balance sheets of Advanced Micro
Devices, Inc. at December 31, 1995 and December 25, 1994 and the related
consolidated statements of income and cash flows for each of the three years in
the period ended December 31, 1995. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Advanced Micro
Devices, Inc. at December 31, 1995 and December 25, 1994, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
San Jose, California
January 9, 1996, except for note 18, as to which the date is January 17, 1996
- --------------------------------------------------------------------------------
<PAGE>
SUPPLEMENTARY
financial data
<TABLE>
<CAPTION>
1995 and 1994 by Quarter (Unaudited) Dec. 31, Oct. 1, July 2, Apr. 2, Dec. 25, Sept. 25, June 26, Mar. 27,
(Thousands except per share amounts) 95 95 95 95 94 94 94 94
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $593,029 $590,385 $626,214 $620,096 $545,168 $543,114 $533,297 $513,080
Expenses:
Cost of sales 362,801 344,344 300,959 290,772 263,837 252,409 235,623 230,437
Research and development 104,009 100,014 101,032 92,500 76,115 67,759 67,889 68,221
Marketing, general, and
administrative 95,181 95,525 97,364 96,946 87,236 87,369 91,731 92,894
-------- -------- -------- -------- -------- -------- -------- --------
561,991 539,883 499,355 480,218 427,188 407,537 395,243 391,552
-------- -------- -------- -------- -------- -------- -------- --------
Operating income 31,038 50,502 126,859 139,878 117,980 135,577 138,054 121,528
Litigation settlement -- -- -- -- (58,000) -- -- --
Interest income and other, net 7,526 9,867 6,657 6,713 5,317 394 6,366 4,182
Interest expense (706) -- -- (1) (1) (205) (899) (739)
-------- -------- -------- -------- -------- -------- -------- --------
Income before income taxes
and equity in joint venture 37,858 60,369 133,516 146,590 65,296 135,766 143,521 124,971
Provision for income taxes 3,786 16,517 44,060 48,375 21,548 44,803 47,362 39,990
-------- -------- -------- -------- -------- -------- -------- --------
Income before equity in
joint venture 34,072 43,852 89,456 98,215 43,748 90,963 96,159 84,981
Equity in net income (loss)
of joint venture 21,500 12,311 2,529 (1,414) (2,989) (4,277) (2,925) (394)
-------- -------- -------- -------- -------- -------- -------- --------
Net income 55,572 56,163 91,985 96,801 40,759 86,686 93,234 84,587
Preferred stock dividends -- -- -- 10 2,588 2,587 2,587 2,588
-------- -------- -------- -------- -------- -------- -------- --------
Net income applicable to
common stockholders $ 55,572 $ 56,163 $ 91,985 $ 96,791 $ 38,171 $ 84,099 $ 90,647 $ 81,999
======== ======== ======== ======== ======== ======== ======== ========
Net income per common share
Primary $ .52 $ .52 $ .86 $ .96 $ .39 $ .86 $ .93 $ .85
======== ======== ======== ======== ======== ======== ======== ========
Fully diluted $ .52 $ .52 $ .86 $ .91 $ .39 $ .83 $ .89 $ .82
======== ======== ======== ======== ======== ======== ======== ========
Shares used in per share
calculation
Primary 106,799 107,318 107,170 101,012 98,636 97,778 97,394 96,233
======== ======== ======== ======== ======== ======== ======== ========
Fully diluted 106,799 107,319 107,306 106,717 105,490 104,872 104,249 103,670
======== ======== ======== ======== ======== ======== ======== ========
Common stock market price range
High $ 29.25 $ 36.50 $ 39.25 $ 35.88 $ 30.50 $ 31.00 $ 31.75 $ 31.75
Low $ 16.13 $ 28.00 $ 32.13 $ 23.50 $ 22.25 $ 24.00 $ 22.63 $ 16.75
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FINANCIAL
summary
<TABLE>
<CAPTION>
Five Years Ended December 31, 1995
(Thousands except per share amounts) 95 94 93 92 91
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $2,429,724 $2,134,659 $1,648,280 $1,514,489 $1,226,649
Expenses:
Cost of sales 1,298,876 982,306 789,564 746,486 658,824
Research and development 397,555 279,984 262,802 227,860 213,765
Marketing, general, and administrative 385,016 359,230 290,861 270,198 244,900
---------- ---------- ---------- ----------- ----------
2,081,447 1,621,520 1,343,227 1,244,544 1,117,489
---------- ---------- ---------- ----------- ----------
Operating income 348,277 513,139 305,053 269,945 109,160
Litigation settlement -- (58,000) -- -- --
Interest income and other, net 30,763 16,259 16,490 18,913 57,007
Interest expense (707) (1,844) (2,910) (17,227) (20,880)
---------- ---------- ---------- ----------- ----------
Income before income taxes and equity
in joint venture 378,333 469,554 318,633 271,631 145,287
Provision for income taxes 112,738 153,703 89,218 26,620 --
---------- ---------- ---------- ----------- ----------
Income before equity in joint venture 265,595 315,851 229,415 245,011 145,287
Equity in net income (loss) of joint venture 34,926 (10,585) (634) -- --
---------- ---------- ---------- ----------- ----------
Net income 300,521 305,266 228,781 245,011 145,287
Preferred stock dividends 10 10,350 10,350 10,350 10,350
---------- ---------- ---------- ----------- ----------
Net income applicable to common stockholders $ 300,511 $ 294,916 $ 218,431 $ 234,661 $ 134,937
========== ========== ========== =========== ==========
Net income per common share
Primary $2.85 $3.02 $2.30 $2.57 $1.53
========== ========== ========== =========== ==========
Fully diluted $2.81 $2.92 $2.24 $2.49 $1.52
========== ========== ========== =========== ==========
Shares used in per share calculation
Primary 105,575 97,510 95,108 91,383 88,196
========== ========== ========== =========== ==========
Fully diluted 107,035 104,570 102,063 98,475 95,540
========== ========== ========== =========== ==========
Long-term debt and capital lease obligations,
less current portion $ 214,965 $ 75,752 $ 79,504 $ 19,676 $ 42,039
Total assets $3,031,268 $2,445,702 $1,929,231 $1,448,095 $1,291,758
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
AMD's common stock (symbol AMD) is listed on the New York Stock Exchange. The
company has never paid cash dividends on common stock and has no present plans
to do so.
The number of stockholders of record at January 28, 1996 was 10,008.
<PAGE>
CORPORATE
directory
- --------------------------------------------------------------------------------
DIRECTORS
W. J. Sanders III
Chairman of the Board and
Chief Executive Officer, AMD, and
a Director of Donaldson, Lufkin & Jenrette, Inc.
Dr. Friedrich Baur
President and Managing Partner, MST Beteiligungs und Unternehmensberatungs GmbH
Charles M. Blalack
Chairman of the Board and
Chief Executive Officer of Blalack and Company, Investment Advisors
Dr. R. Gene Brown
Private Investor and a Managing Director
of Putnam, Hayes and Bartlett, Inc.,
an Economic Consulting Firm
Anthony B. Holbrook
Vice Chairman of the Board, AMD
Richard Previte
President and Chief Operating Officer, AMD
S. Atiq Raza
Corporate Vice President and
Chief Technical Officer, AMD
Joe L. Roby
Chief Operating Officer, Donaldson,
Lufkin & Jenrette, Inc., a Securities
Brokerage and Investment Banking Firm
Dr. Leonard M. Silverman
Dean, School of Engineering,
University of Southern California
CORPORATE OFFICERS
W. J. Sanders III
Chief Executive Officer and
Chairman of the Board
Richard Previte
President and Chief Operating Officer
Marvin Burkett
Senior Vice President, Chief Financial
and Administrative Officer and Treasurer
Gene Conner
Senior Vice President, Operations
S. Atiq Raza
Corporate Vice President and
Chief Technical Officer, AMD
Stanley Winvick
Senior Vice President, Human Resources
Stephen Zelencik
Senior Vice President and
Chief Marketing Executive
Thomas M. McCoy
Vice President, General Counsel and Secretary
GROUP VICE PRESIDENTS
John Bourgoin
Group Vice President,
Computation Products Group
Vinod Dham
Group Vice President,
Computation Products Group
Richard Forte
Group Vice President,
Communications and Components Group
Terryll R. Smith
Group Vice President, Sales
VICE PRESIDENTS
Benjamin M. Anixter
Vice President, External Affairs
Gary Ashcraft
Vice President and General Manager,
Communication Products Division
Frank Barone
Vice President and General Manager,
Programmable Logic Division and
Bipolar Operations
Kathryn Brandt
Vice President, Business Systems
Donald M. Brettner
Vice President, Manufacturing Services Division
David Chavoustie
Vice President and General Manager,
Embedded Processor Division
Susan T. Daniel
Vice President, Human Resource Operations
James Doran
Vice President, Technical Operations
Curt Francis
Vice President, Corporate Planning
and Development
Al F. Frugaletti
Vice President,
Worldwide Distribution and Headquarters Sales
Clive Ghest
Vice President, Business Development
Gary O. Heerssen
Vice President and Group Executive,
Austin Wafer Fabrication Operations
Robert R. Herb
Vice President, Group Strategic Marketing,
Computation Products Group
Larry Hollatz
Vice President and General Manager,
Texas Microprocessor Division
Robert M. Krueger
Vice President and General Manager,
I/O and Network Products Division
Gerald A. Lynch
Vice President, Asia Pacific Sales and Marketing
Walid Maghribi
Vice President and General Manager,
Non-Volatile Memory Division
Robert McConnell
Vice President
Giuliano Meroni
Vice President, Europe Sales and Marketing
K.C. Murphy
Vice President,
Systems and Platform Development
Daryl Ostrander
Vice President, Austin Wafer Fabrication
Joseph Proctor
Vice President, Information Systems
Geoff Ribar
Vice President, Corporate Controller
Douglas Ritchie
Vice President,
Information Integration and Access
Jack Saltich
Vice President, Fab 25
William Siegle
Vice President, Integrated Technology Division
and Submicron Development Center,
and Chief Scientist
Danne Smith
Vice President, Corporate Quality
Tom Stites
Vice President, Communications
TRANSFER AGENT AND REGISTRAR
The First National Bank of Boston
P.O. Box 644
Boston, Massachusetts 02102
LEGAL COUNSEL
Bronson, Bronson & McKinnon
505 Montgomery Street
San Francisco, California 94111-2514
INDEPENDENT AUDITORS
Ernst & Young LLP
55 Almaden Boulevard
San Jose, California 95113
- --------------------------------------------------------------------------------
<PAGE>
Corporate Address
AMD
One AMD Place
P.O. Box 3453
Sunnyvale, California 94088-3453
Financial Information
Copies of the annual report, 10-K and quarterly financial news releases are
available without charge from the
company's literature department at
(800) 222-9323. A faxed copy of the financial news release can also be requested
using this phone number.
For other investor-related information, interested parties should contact the
Investor Relations Department at
(408) 749-3127.
Manufacturing Facilities
Aizu-Wakamatsu, Japan
Austin, Texas
Bangkok, Thailand
Penang, Malaysia
Singapore
Sunnyvale, California
<PAGE>
AMD
One AMD Place
P.O. Box 3453
Sunnyvale, California 94088-3453
(C) Advanced Micro Devices, Inc., 1996 Printed in U.S.A.
AMD-90264
RKD-AL- 130K-3/96-0
<PAGE>
EXHIBIT 21
ADVANCED MICRO DEVICES, INC.
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
State or Jurisdiction in Which
Name of Subsidiary Incorporated or Organized
- ------------------ ------------------------------
<C>
Foreign Subsidiaries
- --------------------
<S>
Advanced Micro Devices Belgium, S.A.N.V. Belgium
Advanced Micro Devices (Canada) Limited Canada
Advanced Micro Devices (Suzhou) Limited/(1)/ China
Advanced Micro Devices S.A. France
Advanced Micro Devices GmbH Germany
AMD Saxonia Manufacturing GmbH Germany
AMD Foreign Sales Corporation Guam
Advanced Micro Devices S.p.A. Italy
AMD Japan Ltd. Japan
Advanced Micro Devices Sdn. Bhd. Malaysia
Advanced Micro Devices Export Sdn. Bhd./(2)/ Malaysia
Advanced Micro Devices Product Sdn. Bhd./(2)/ Malaysia
Advanced Micro Devices Technology Sdn. Bhd/(2)/ Malaysia
AMD (Netherlands) B.V./(3)/ Netherlands
Advanced Micro Devices (Singapore) Pte. Ltd. Singapore
AMD Holdings (Singapore) Pte. Ltd./(4)/ Singapore
Advanced Micro Devices AB Sweden
Advanced Micro Devices S.A./(5)/ Switzerland
AMD (Thailand) Limited/(4)/ Thailand
Advanced Micro Devices (U.K.) Limited United Kingdom
NexGen International Ltd. British Virgin Islands
<CAPTION>
Domestic Subsidiaries
- ---------------------
<S> <C>
Advanced Micro Ltd. California
AMD Corporation California
AMD Far East Ltd. Delaware
AMD International Sales and Service, Ltd. Delaware
NSI California
</TABLE>
_______________
(1) Subsidiary of AMD Holdings (Singapore) Pte. Ltd.
(2) Subsidiary of Advanced Micro Devices Sdn. Bhd.
(3) Subsidiary of Advanced Micro Devices Export Snd. Bhd.
(4) Subsidiary of Advanced Micro Devices (Singapore) Pte. Ltd.
(5) Subsidiary of AMD International Sales and Service, Ltd.
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of Advanced Micro Devices, Inc. of our report dated January 9, 1996,
except for Note 18, as to which the date is January 17, 1996, included in the
1995 Annual Report to Stockholders of Advanced Micro Devices, Inc.
Our audits also included the financial statement schedule of Advanced Micro
Devices, Inc. listed in Item 14(a). This schedule is the responsibility of the
Corporation's management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-16095) pertaining to the Advanced Micro Devices,
Inc. 1987 Restricted Stock Award Plan, in the Registration Statement on Form S-8
(No. 33-39747) pertaining to the Advanced Micro Devices, Inc. 1991 Employee
Stock Purchase Plan, in the Registration Statements on Form S-8 (Nos. 33-10319,
33-36596 and 33-46578) pertaining to the Advanced Micro Devices, Inc. 1982 and
1986 Stock Option Plans and the 1980 and 1986 Stock Appreciation Rights Plans,
in the Registration Statements on Form S-8 (Nos. 33-46577 and 33-55107)
pertaining to the Advanced Micro Devices, Inc. 1992 Stock Incentive Plan, in the
Registration Statement on Form S-8 (No. 33-00969) pertaining to the Advanced
Micro Devices, Inc. 1991 Employee Stock Purchase Plan and to the 1995 Stock Plan
of NexGen, Inc., in the Registration Statement on Form S-3 (No. 33-52943)
pertaining to up to $400,000,000 in the aggregate of debt securities, preferred
stock, depositary shares evidencing fractions of preferred shares, common stock
and warrants to purchase common stock, and in the Registration Statement on Form
S-4 (No. 33-64911) pertaining to shares issued in connection with the
acquisition of
1
<PAGE>
NexGen, Inc. and Post-Effective Amendment No. 1 thereto on Form S-8 of our
report dated January 9, 1996, except for Note 18, as to which the date is
January 17, 1996, with respect to the consolidated financial statements
incorporated herein by reference, and our report included in the preceding
paragraph with respect to the financial statement schedule included in this
Annual Report (Form 10-K) of Advanced Micro Devices, Inc.
ERNST & YOUNG LLP
March 18, 1996
San Jose, California
2
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
Know All Men By These Presents, that each person whose signature appears below
constitutes and appoints W. J. Sanders III and Marvin D. Burkett, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign Advanced Micro Devices, Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, and any and all
amendments thereto and to file the same, with all exhibits thereto and documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitutes, may lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ W. J. Sanders III Chairman of the Board February 7, 1996
- ------------------------ and Chief Executive Officer
W. J. Sanders III (Principal Executive Officer)
/s/ Anthony B. Holbrook Vice Chairman of the Board February 7, 1996
- ------------------------
Anthony B. Holbrook
/s/ Richard Previte Director, President and February 7, 1996
- ------------------------ Chief Operating Officer
Richard Previte
/s/ Friedrich Baur Director February 7, 1996
- ------------------------
Friedrich Baur
/s/ Charles M. Blalack Director February 7, 1996
- ------------------------
Charles M. Blalack
/s/ R. Gene Brown Director February 7, 1996
- ------------------------
R. Gene Brown
/s/ Joe L. Roby Director February 7, 1996
- ------------------------
Joe L. Roby
/s/ Leonard Silverman Director February 7, 1996
- ------------------------
Leonard Silverman
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 113,354
<SECURITIES> 377,293
<RECEIVABLES> 285,892
<ALLOWANCES> (10,159)
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0
0
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</TABLE>
