AMD 1999 Annual Report Download - page 170

Of these amounts (which are all denominated in deutsche marks), AMD Saxony has
received $275 million in capital investment grants and $23 million in interest
subsidies as of December 26, 1999.
The Dresden Loan Agreements also require that the Company:
. provide interim funding to AMD Saxony if either the remaining capital
investment allowances or the remaining interest subsidies are delayed, which
will be repaid to AMD as AMD Saxony receives the grants or subsidies from the
State of Saxony;
. fund shortfalls in government subsidies resulting from any default under the
subsidy agreements caused by AMD Saxony or its affiliates;
. guarantee a portion of AMD Saxony's obligations under the Dresden Loan
Agreement up to a maximum of $112 million (denominated in deutsche marks) until
Dresden Fab 30 has been completed;
. fund certain contingent obligations including various obligations to fund
project cost overruns, if any; and
. make funds available to AMD Saxony, after completion of Dresden Fab 30, up
to approximately $75 million (denominated in deutsche marks) if AMD Saxony does
not meet its fixed charge coverage ratio covenant.
Because the amounts under the Dresden Loan Agreements are denominated in
deutsche marks, the dollar amounts set forth herein are subject to change based
on applicable conversion rates. At the end of 1999, the exchange rate was
approximately 1.94 deutsche marks to 1 U.S. dollar (which the Company used to
calculate the amounts denominated in deutsche marks).
In December 1995, the Company signed a five-year, comprehensive 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 nonrefundable royalties through 2000.
Note 13: Investment in Joint Venture
In 1993, the Company formed a joint venture (FASL) with Fujitsu Limited for the
development and manufacture of non-volatile memory devices. FASL operates
advanced IC manufacturing facilities in Aizu-Wakamatsu, Japan, to produce Flash
memory devices. The Company's share of FASL is 49.992 percent and the investment
is being accounted for under the equity method. The Company's share of FASL net
income during 1999 was $5 million, net of income taxes of approximately $3
million. As of December 26, 1999, the cumulative adjustment related to the
translation of the FASL financial statements into U.S. dollars resulted in an
increase of approximately $7 million to the investment in FASL. The following
tables present the significant FASL related party transactions and balances:
Three years ended December 26, 1999 (Thousands) 1999 1998 1997
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Royalty income $ 23,214 $ 21,136 $ 19,322
Purchases 264,344 211,640 242,161
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December 26, 1999 and December 27, 1998 (Thousands) 1999 1998
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Royalty receivable $ 6,601 $ 6,027
Accounts payable 35,701 39,424
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Pursuant to a cross-equity provision between the Company and Fujitsu, the
Company purchased and owned 0.5 million shares of Fujitsu Limited common stock
as of December 26, 1999. Under the same provision, Fujitsu Limited purchased 4.5
million shares of the Company's common stock, of which 0.5 million shares were
purchased in 1999.
In the third quarter of 1997, FASL completed construction of the building for
a second Flash memory device wafer fabrication facility, FASL II, at a site
contiguous to the existing FASL facility in Aizu-Wakamatsu, Japan. Equipment
installation is in progress and the facility is expected to cost approximately
$1 billion (denominated in yen) when fully equipped. Capital expenditures for
FASL II construction to date have been funded by cash generated from FASL
operations and local borrowings by FASL. To the extent that FASL is unable to
secure the necessary funds for FASL II, the Company may be required to
contribute cash or guarantee third-party loans in proportion to our 49.992
percent interest in FASL. As of December 26, 1999, the Company had loan
guarantees of $2 million (denominated in yen) outstanding with respect to such
loans. At the end of 1999, the exchange rate was approximately 103.51 yen to 1
U.S. dollar (which was used to calculated the amounts denominated in yen).
The following is condensed financial data of FASL:
Source: ADVANCED MICRO DEVIC, 10-K405, March 21, 2000