The Company's gross profit margin increased from 38.7% in 1993 to 41.0% in 1995. Benefitting from a favorable industry environment in 1993, 1994 and 1995, such increases in gross profit margins combined with significant reductions in selling, general and administrative expenses as a percentage of net revenues and lower interest expenses to significantly increase profitability. In 1996, the gross profit margin improved to 41.4%, due primarily to a more favorable product mix and improved manufacturing productivity despite an unfavorable industry environment which increased pricing pressures. However, the Company's gross profit margin declined to 38.9% in 1997 primarily as a result of declining prices, strong competition and other factors previously discussed.
There can be no assurance that the Company will experience revenue growth at or above the growth rate for the TAM or the SAM, or that increased competition in the Company's core product markets will not lead to further price erosion, lower revenue growth rates and lower margins for the Company.
Results of Operations
The tables below set forth information on the Company's net revenues by product group and by geographic region:
Year ended December 31,
| (in millions, except percentages) | 1993 | 1994 | 1995 | 1996 | 1997 |
| Net Revenues by Product Group: | |||||
| Dedicated Products(1)(2) | $ 755.6 | $ 997.1 | $1,344.4 | $1,788.7 | $1,696.3 |
| Discrete and Standard ICs(3) | 514.6 | 636.3 | 838.0 | 784.1 | 846.8 |
| Memory Products(2) | 440.0 | 560.7 | 653.3 | 736.8 | 708.6 |
| Programmable Products(1) | 288.9 | 372.0 | 550.6 | 689.5 | 642.1 |
| New Ventures Group and Others(4) | 38.4 | 78.8 | 168.1 | 123.3 | 125.4 |
| Total | $2,037.5 | $2,644.9 | $3,554.4 | $4,122.4 | $4,019.2 |
| Net Revenues by Geographic Region:(5) | |||||
| Europe | $ 976.0 | $1,219.1 | $1,627.5 | $1,824.4 | $1,786.4 |
| Americas(6) | 495.5 | 673.5 | 846.4 | 934.1 | 940.0 |
| Asia Pacific | 463.2 | 617.6 | 925.1 | 1,135.7 | 1,078.3 |
| Japan | 102.8 | 134.7 | 155.4 | 228.2 | 214.5 |
| Total | $2,037.5 | $2,644.9 | $3,554.4 | $4,122.4 | $4,019.2 |
| As a percentage of net revenues | |||||
| Net Revenues by Product Group: | |||||
| Dedicated Products(1)(2) | 37.0% | 37.7% | 37.8% | 43.4% | 42.2% |
| Discrete and Standard ICs(3) | 25.3 | 24.1 | 23.6 | 19.0 | 21.1 |
| Memory Products(2) | 21.6 | 21.2 | 18.4 | 17.9 | 17.6 |
| Programmable Products(1) | 14.2 | 14.0 | 15.5 | 16.7 | 16.0 |
| New Ventures Group and Others(4) | 1.9 | 3.0 | 4.7 | 3.0 | 3.1 |
| Total | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| Net Revenues by Geographic Region:(5) | |||||
| Europe | 48.0% | 46.1% | 45.8% | 44.3% | 44.5% |
| Americas(6) | 24.3 | 25.5 | 23.8 | 22.7 | 23.4 |
| Asia Pacific | 22.7 | 23.4 | 26.0 | 27.5 | 26.8 |
| Japan | 5.0 | 5.0 | 4.4 | 5.5 | 5.3 |
| Total | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
(1) In January 1997, analog array products were moved from the Programmable Products Group to the Dedicated
Products Group and image processing products from the Dedicated Products Group to the Programmable Products Group. Revenues for the Dedicated Products Group and the Programmable
Products Group have been restated in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" for prior periods to reflect this
change.
(2) 1996 revenues for the Dedicated Products Group include $5.6 million of revenues from certain foundry activities which were moved from the Memory Products
Group in January 1996. Revenues for the Dedicated Products Group and the Memory Products Group have been restated for prior periods to reflect this change.
(3) Includes revenues from sales of RF products, which were moved to the Discrete and Standard ICs product group in May 1994. Revenues for the Discrete and
Standard ICs group have been restated for prior years to include RF product revenues.
(4) Includes revenues from sales of subsystems and other products and from the New Ventures Group, which was created in May 1994 to act as a focal point for
the Company's new business opportunities.
(5) Revenues are classified by location of customer invoiced. For example, products ordered by U.S.-based companies to be invoiced to Asia Pacific affiliates
are classified as Asia Pacific revenues.
(6) Substantially all of the revenues derived from the Americas are derived from the United States.
