AMD 2003 Annual Report Download - page 39

Table of Contents
Holders have the right to require us to repurchase all or a portion of our 4.50% Notes in the event that we undergo specified fundamental changes,
including a change of control. In each such case, the redemption or repurchase price would be 100 percent of the principal amount of the 4.50% Notes plus
accrued and unpaid interest.
Dresden Term Loan and Dresden Term Loan Guarantee
AMD Saxony, our indirect, wholly owned German subsidiary, continues to facilitize Fab 30, which began production in the second quarter of 2000. AMD,
the Federal Republic of Germany, the State of Saxony and a consortium of banks are providing financing for the project. We currently estimate that the
construction and facilitization costs of Fab 30 will be $2.5 billion when it is fully equipped by the end of 2005. As of December 28, 2003, we had invested $2.3
billion in AMD Saxony and we currently estimate that during 2004 we will invest approximately $160 million.
In March 1997, AMD Saxony entered into a loan agreement and other related agreements (the Dresden Loan Agreements) with a consortium of banks led
by Dresdner Bank AG, a German financial institution, in order to finance the project. AMD Saxony has pledged substantially all of its property as security under
the Dresden Loan Agreements. The Dresden Loan Agreements were amended in February 2004 to accommodate the construction, facilitization, and operation of
Fab 36.
Because most of the amounts under the Dresden Loan Agreements are denominated in deutsche marks (converted to euros), the dollar amounts are subject
to change based on applicable exchange rates. We used the exchange rate that was permanently fixed on January 1, 1999, of 1.95583 deutsche marks to one euro
for the conversion of deutsche marks to euros, and then used exchange rate as of December 28, 2003, of 0.804 euro to one U.S. dollar to translate the amounts
denominated in deutsche marks into U.S. dollars.
The Dresden Loan Agreements, as amended, provide for the funding of the construction and facilitization of Fab 30. The funding consists of:
• equity contributions, subordinated and revolving loans and loan guarantees from, and full cost reimbursement through, AMD;
• loans from a consortium of banks; and
• investment grants, investment allowances, interest subsidies, and loan guarantees from the Federal Republic of Germany and the State of Saxony.
The Dresden Loan Agreements require that we partially fund Fab 30 project costs in the form of subordinated and revolving loans to, or equity investments
in, AMD Saxony. In accordance with the terms of the Dresden Loan Agreements, as of December 28, 2003 we had provided $179 million of subordinated loans
and $286 million of equity investments in AMD Saxony. These amounts have been eliminated in our consolidated financial statements.
In addition to support from us, the consortium of banks referred to above made available $954 million in loans to AMD Saxony to help fund Fab 30
project costs. The loans have been fully drawn and a portion has been repaid. AMD Saxony had $664 million of such loans outstanding as of December 28, 2003,
which are included in our consolidated balance sheet.
Finally, pursuant to a Subsidy Agreement, the Federal Republic of Germany and the State of Saxony are supporting the Fab 30 project, in accordance with
the Dresden Loan Agreements, in the form of:
• guarantees equal to 65 percent of AMD Saxony bank debt, or $432 million;
• capital investment grants and allowances totaling up to approximately $453 million; and
• interest subsidies totaling $191 million.
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Source: ADVANCED MICRO DEVIC, 10-K, March 09, 2004