AMD 1999 Annual Report Download - page 168

Retirement Savings Plan. The Company has a retirement savings plan, commonly
known as a 401(k) plan, that allows participating United States employees to
contribute from one percent to 15 percent of their pretax salary subject to
I.R.S. limits. Before December 26, 1999, the Company made a matching
contribution calculated at 50 cents on each dollar of the first three percent of
participant contributions, to a maximum of 1.5 percent of eligible compensation.
After December 26, 1999, the Company revised the contribution rate and
contributes 50 cents on each dollar of the first six percent of participants'
contributions, to a maximum of three percent of eligible compensation. The
contributions to the 401(k) plan were approximately $5 million in 1999 and $5
million in both 1998 and 1997.
Note 12: Commitments
The Company leases certain of its facilities under agreements which expire at
various dates through 2018. The Company also leases certain of its manufacturing
and office equipment for terms ranging from one to five years. Rent expense was
approximately $52 million, $54 million and $48 million in 1999, 1998 and 1997,
respectively.
For each of the next five years and beyond, noncancelable long-term operating
lease obligations and commitments to purchase manufacturing supplies and
services are as follows:
Operating Purchase
(Thousands) leases commitments
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2000 $ 43,462 $ 50,579
2001 34,267 38,938
2002 32,395 11,226
2003 26,821 5,245
2004 25,075 5,091
Beyond 2004 198,467 14,843
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$360,487 $125,922
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The operating lease of the Company's corporate marketing, general and
administrative facility expired in December 1998. At the end of the lease term,
the Company was obligated to either purchase the facility or to arrange for its
sale to a third party with a guarantee of residual value to the seller equal to
the option purchase price. In December 1998, the Company arranged for the sale
of the facility to a third party and leased it back under a new operating lease.
The Company has deferred the gain and is amortizing it over a period of 20
years, the life of the lease. The lease expires in December 2018. At the
beginning of the fourth lease year and every three years thereafter, the rent
will be adjusted by 200% of the cumulative increase in the consumer price index
over the prior three-year period.
In addition to the purchase commitments above, the Company had commitments of
approximately $2.6 million for the construction or acquisition of additional
property, plant and equipment as of December 26, 1999.
AMD Saxony has constructed and is installing equipment in Dresden Fab 30. AMD,
the Federal Republic of Germany, the State of Saxony and a consortium of banks
are supporting the project. In March 1997, AMD Saxony entered into the Dresden
Loan Agreements which provide for the funding of the construction and
facilitization of Dresden Fab 30. The funding consists of:
. equity, subordinated loans and loan guarantees from AMD;
. loans from a consortium of banks; and
. grants, subsidies and loan guarantees from the Federal Republic of Germany
and the State of Saxony.
The Dresden Loan Agreements, which were amended in February 1998 to reflect
upgrades in wafer production technology as well as the decline in the deutsche
mark relative to the U.S. dollar, require that the Company partially fund
Dresden Fab 30 project costs in the form of subordinated loans to, or equity
investments in, AMD Saxony. In accordance with the terms of the Dresden Loan
Agreements, the Company has invested $421 million as of December 26, 1999 in the
form of subordinated loans and equity in AMD Saxony (denominated in both
deutsche marks and U.S. dollars).
In addition to AMD's support, the consortium of banks referred to above has
made available $850 million in loans (denominated in deutsche marks) to AMD
Saxony to help fund Dresden Fab 30 project costs. AMD Saxony had $270 million of
such loans outstanding as of December 26, 1999.
Finally, the Federal Republic of Germany and the State of Saxony are
supporting the Dresden Fab 30 project, in accordance with the Dresden Loan
Agreements, in the form of:
. guarantees of 65 percent of AMD Saxony bank debt up to a maximum amount of
$850 million;
Source: ADVANCED MICRO DEVIC, 10-K405, March 21, 2000