AMD 2009 Annual Report Download - page 80

Off-Balance Sheet Arrangements
Guarantees of Indebtedness Not Recorded on our Consolidated Balance Sheet
AMTC and BAC Guarantees
The Advanced Mask Technology Center GmbH & Co. KG (AMTC) and Maskhouse Building
Administration GmbH & Co. KG (BAC) are joint ventures initially formed for the purpose of constructing and
operating an advanced photomask facility in Dresden, Germany. AMTC provides advanced photomasks for use
in manufacturing our microprocessors. As of December 26, 2009, the joint venture limited partners were AMD
and Toppan Printing Co., Ltd. Qimonda AG, who had been one of the limited partners in these joint ventures,
was expelled in March 2009 because of its commencement of insolvency proceeding in January 2009.
In December 2002, BAC obtained a euro denominated term loan to finance the construction of the
photomask facility pursuant to which the equivalent of $29 million was outstanding as of December 26, 2009.
Also in December 2002, each of Toppan Photomasks Germany GmbH, and AMTC, as lessees, entered into a
lease agreement with BAC, as lessor. The term of the lease agreement is 10 years from initial occupancy. Each
joint venture partner guaranteed a specific percentage of AMTC’s portion of the rental payments. The rental
payments to BAC are in turn used by BAC to repay amounts outstanding under the BAC term loan. There is no
separate guarantee outstanding for the BAC term loan. With respect to the lease agreement, AMTC may exercise
a “step-in” right in which it would take over Toppan Germany’s remaining rental payments in connection with
the lease agreement between Toppan Photomask Germany and BAC. As of December 26, 2009, our guarantee of
AMTC’s portion of the rental obligation was approximately $10 million. Our maximum liability in the event
AMTC exercises its “step-in” right and Toppan defaults under the guarantee would be approximately $47
million. These estimates are based upon forecasted rents to be charged by BAC in the future and are subject to
change based upon the actual usage of the facility by the tenants and foreign currency exchange rates.
In December 2007, AMTC entered into a euro denominated revolving credit facility, pursuant to which the
equivalent of $50 million was outstanding as of December 26, 2009. The term of the revolving credit facility is 3
years. Upon request by AMTC and subject to certain conditions, the term of the revolving credit facility may be
extended for up to 2 additional years. In June 2009, the AMTC revolving credit facility and related documents
were amended to reflect Qimonda’s expulsion from the joint ventures. Pursuant to the amended guarantee
agreement, each of AMD and Toppan guarantee 50% of AMTC’s outstanding loan balance under the revolving
credit facility. As of December 26, 2009, our potential obligation under this guarantee was the equivalent of $25
million plus our portion of accrued interest and expenses. Under the terms of the guarantee, if our group
consolidated cash (which is defined as cash, cash equivalents and marketable securities less the aggregate amount
outstanding under any revolving credit facility and not including GF cash, cash equivalents and marketable
securities) is less than or expected to be less than $500 million, we will be required to provide cash collateral
equal to 50% of the balance outstanding under the revolving credit facility.
As of March 28, 2009, Qimonda owed AMTC approximately $20 million in connection with its committed
capacity allocations. However, as a result of the commencement of insolvency proceedings, these amounts are
considered insolvency claims and will be handled along with the claims of Qimonda’s other creditors. Because
we believe that AMTC is unlikely to recover amounts due from Qimonda during the insolvency proceedings, we
recorded a charge of $10 million, or 50 percent of the total receivable, in the first quarter of 2009. As of
December 26, 2009, this receivable was still outstanding.
In January 2010, we signed binding agreements to transfer our limited partnership interests in AMTC and
BAC to GF. The transfer of our limited partnership interests in the AMTC and BAC must be approved by the
lenders under the AMTC revolving credit facility and the BAC term loan and also by German regulatory
authorities. The transfer of our limited partnership interests will become effective upon these approvals and
registration with the German courts.
Pursuant to the January 2010 agreements, our guarantee exposure remains as described above except that
GF is a joint guarantor. However, if we are called upon to make any payments under these guarantees, GF has
agreed to indemnify us for the full amount of such payments under certain conditions. In addition,
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