AMD 1995 Annual Report Download - page 248

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:
Operating Purchase
(Thousands) Leases Commitments
- -----------------------------------------------
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
- -----------------------------------------------
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:
Source: ADVANCED MICRO DEVIC, 10-K405, March 21, 1996