AMD 2003 Annual Report Download - page 97

Table of Contents
outstanding loans of approximately $664 million. The occurrence of a default under these agreements would likely result in a cross-default under the Indentures
governing the Company’s 4.75% Debentures and 4.50% Notes. The Company cannot assure that it would be able to obtain the funds necessary to fulfill these
obligations. Any such failure would have a material adverse effect on the Company.
Guarantees of indebtedness not recorded on the Company’s consolidated balance sheets
The following table summarizes the principal guarantees issued as of December 28, 2003 for which underlying liabilities are not recorded on the
Company’s consolidated balance sheets as of December 28, 2003. These guarantees are described below the following table:
Amounts of guarantee expiration per period
Amounts
Guaranteed* 2004 2005 2006 2007 2008
2009 and
Beyond
(Thousands)
FASL LLC operating lease guarantees $ 26,604 $ 12,279 $ 8,367 $ 5,958 $ — $ — $ —
AMTC payment guarantee 39,793 — — — 39,793 — —
AMTC term loan guarantee 31,088 31,088 — — — — —
AMTC rental guarantee 145,811 — — — — — 145,811**
Total guarantees $243,296 $43,367 $8,367 $5,958 $39,793 $ — $145,811
* Represent the principal amount of the underlying obligations guaranteed and are exclusive of obligations for interest, fees and expenses.
** Amounts outstanding will diminish until the expiration of the guarantee.
FASL LLC Operating Lease Guarantees
The Company has guaranteed certain operating leases entered into by FASL LLC and its subsidiaries totaling approximately $27 million as of December
28, 2003. The amount of the guarantees will be reduced by the actual amount of lease payments paid by FASL LLC over the lease term. No liability has been
recognized for this guarantee under the provisions of FIN 45 because the guarantee is for a subsidiary’s performance obligations.
AMTC and BAC Guarantees
The Advanced Mask Technology Center GmbH & Co. KG (AMTC), and Maskhouse Building Administration GmbH & Co., KG (BAC), are joint
ventures formed by AMD, Infineon Technologies AG and DuPont Photomasks, Inc. for the purpose of constructing and operating a new advanced photomask
facility in Dresden, Germany. To finance the project, BAC and AMTC entered into a $149 million revolving credit facility and a $93 million term loan in
December 2002. Also in December 2002, in order to occupy the photomask facility, AMTC entered into a rental agreement with BAC. With regard to these
commitments by BAC and AMTC, the Company guaranteed up to approximately $31 million plus interest and expenses under the term loan, up to
approximately $40 million plus interest and expenses under the revolving loan, and up to approximately $17 million, initially, under the rental agreement. The
obligations under the rental agreement guarantee diminish over time through 2011 as the term loan is repaid. However, under certain circumstances of default by
the other tenant of the photomask facility under its rental agreement with BAC and certain circumstances of default by more than one joint venture partner under
its rental agreement guarantee obligations, the maximum potential amount of the Company’s obligations under the rental agreement guarantee is approximately
$146 million. As of December 28, 2003, $73 million was drawn under the revolving credit facility, and $81 million was drawn under the term loan. These
borrowings are subject to the aforementioned guarantees except that the Company’s guarantee obligations with respect to the term loan terminated in February
2004 because the AMTC occupied the photomask facility under the rental agreement in 2003 and the rental guarantee replaced the term loan guarantee.
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Source: ADVANCED MICRO DEVIC, 10-K, March 09, 2004