AMD 1998 Annual Report Download - page 97

Bank Routing #: 121000358
Account #: 1233404900
To Motorola at:
1st Nat'l Bank of Chicago
One 1st National Bank Plaza
Chicago, IL 60670
Bank Routing #: 071000013
Account #: 52-65673
1.5.3. HIP5L DELIVERY. In addition to the foregoing, AMD will pay
Motorola four equal payments of ***** for HiP5L tool set installation in AMD's
Fab30; on ***** for initial Fab30 wafer starts on the HiP5L process; on *****
for qualification of HiP5L in Fab30; and ***** for support by Motorola of HiP5L
yield improvements in Fab30. Should AMD unilaterally decide to forego or delay
any of the above stated milestones, or be unable to meet the stated milestones,
AMD shall still be responsible for and shall make each payment as stated above.
1.6. COST CATEGORIES AND CLASSIFICATIONS. The parties agree that the
following cost types and classifications will be used in the development of
Project budgets and in the Cost Equalization determination:
1.6.1. PROCESS COSTS. Actual costs incurred in a production facility or
research and development facility owned by one of the parties. These costs
include, but are not limited to, direct labor and fringes, supervisory labor and
fringes, engineering labor and fringes, raw material, chemicals and gases,
utilities, building depreciation, equipment depreciation, maintenance, and all
other costs associated with the normal operation of such facilities. Normal
operation includes equipment utilization at practical capacity. Neither party
will bear the costs of under utilization in the other party's facility.
Capitalization and depreciation schedules used in the Cost Equalization
determination will be consistent with the operating policies and guidelines of
each party.
The units of measure to determine these costs for budgeting and Cost
Equalization are wafers processed for a fabrication facility and die for an
assembly or test facility. Costs assigned to each unit will be determined by the
type of processing and number of process steps incurred by each unit. Costs
assigned to each Project unit will follow the same and consistent procedures of
assigning costs as any non-Project related unit in the same facility.
Unit volumes processed through these facilities are determined via the
Statements of Work and represent volumes necessary to complete the development
requirements as identified therein. Processing of device and product test
structures or test vehicles is included in the scope of Project requirements.
Pre-production, pilot production, risk starts, or other product specific
processing are outside the scope of Project requirements.
Interest expense is excluded for purposes of determining actual process
costs.
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
Source: ADVANCED MICRO DEVIC, 10-K, March 29, 1999