AMD 2000 Annual Report Download - page 377

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
proceeds from foreign grants and subsidies. Net cash used in financing
activities was $174 million in 1999 primarily due to $244 million in payments on
debt and capital lease obligations offset by $12 million in proceeds from
borrowings, $44 million in proceeds from issuance of stock and $14 million in
proceeds from foreign grants and subsidies. Net cash provided by financing
activities was $950 million in 1998 primarily due to $816 million in proceeds
from borrowings, an increase in proceeds of $197 million from foreign grants and
subsidies and a decrease of $93 million in payments on debt and capital lease
obligations.
Under our Loan and Security Agreement (the Loan Agreement) effective on July 13,
1999, which provides for a four-year secured revolving line of credit of up to
$200 million, we can borrow, subject to amounts which may be set aside by the
lenders, up to 85 percent of our eligible accounts receivable from Original
Equipment Manufacturers (OEMs) and 50 percent of our eligible accounts
receivable from distributors. We must comply with certain financial covenants if
the level of domestic cash we hold declines to certain levels, or the amount of
borrowings under the Loan Agreement rises to certain levels. Our obligations
under the Loan Agreement are secured by a pledge of most of our accounts
receivable, inventory, general intangibles and the related proceeds. As of
December 31, 2000, no funds were drawn under the Loan Agreement. In addition, we
had available unsecured, uncommitted bank lines of credit in the amount of $24
million, none of which were outstanding.
We plan to make capital investments of approximately $1 billion during 2001.
These investments include those relating to the continued facilitization of
Dresden Fab 30 and Fab 25.
On January 29, 2001, we announced that the Board of Directors had authorized a
program to repurchase up to $300 million worth of our common shares over a
period of time to be determined by management. These repurchases will be made in
the open market or in privately negotiated transactions from time to time in
compliance with the SEC's Rule 1b-18, subject to market conditions, applicable
legal requirements and other factors. This plan does not obligate us to acquire
any particular amount of our common stock and the plan may be suspended at any
time at our discretion.
AMD Saxony, an indirect wholly owned German subsidiary of AMD, operates Dresden
Fab 30 which began production in the second quarter of 2000. AMD, the Federal
Republic of Germany, the State of Saxony and a consortium of banks are
supporting the project. We currently estimate construction and facilitization
costs of Dresden Fab 30 will be $2.3 billion when fully equipped by the end of
2003. We have invested $1.4 billion to date. In March 1997, AMD Saxony entered
into a loan agreement and other related agreements (the Dresden Loan Agreements)
with a consortium of banks led by Dresdner Bank AG. Because most of the amounts
under the Dresden Loan Agreements are denominated in deutsche marks, the dollar
amounts set forth below are subject to change based on applicable conversion
rates. We used the exchange rate at the end of 2000, which was approximately
2.20 deutsche marks to one U.S. dollar, to value the amounts denominated in
deutsche marks. The Dresden Loan Agreements 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
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Source: ADVANCED MICRO DEVIC, 10-K405, March 20, 2001