AMD 2000 Annual Report Download - page 378

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
. grants, subsidies and loan guarantees from the Federal Republic of
Germany and the State of Saxony.
The Dresden Loan Agreements require that we 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, we have
invested $410 million as of December 31, 2000 in the form of subordinated loans
to and equity in AMD Saxony. In addition to support from AMD, the consortium of
banks referred to above has made available $750 million in loans to AMD Saxony
to help fund Dresden Fab 30 project costs. AMD Saxony had $375 million of such
loans outstanding as of December 31, 2000.
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 of
$750 million in bank debt;
. capital investment grants and allowances totaling $287 million; and
. interest subsidies totaling $141 million.
Of these amounts, AMD Saxony had received $284 million in capital investment
grants and allowances and $38 million in interest subsidies as of December 31,
2000. The grants and subsidies are subject to conditions, including meeting
specified levels of employment in December 2001 and maintaining those levels
until June 2007. Noncompliance with the conditions of the grants and subsidies
could result in the forfeiture of all or a portion of the future amounts to be
received as well as the repayment of all or a portion of amounts received to
date. As of December 31, 2000, we were in compliance with all of the conditions
of the grants and subsidies.
In February 2001, we amended the Dresden Loan Agreements to reflect new capacity
and increased capital expenditure plans for Dresden Fab 30. Under the February
2001 amendments, we agreed to increase and extend our guaranty of AMD Saxony's
obligations and to make available to AMD Saxony revolving loans of up to $500
million. We expanded our obligation to reimburse AMD Saxony for the cost of
producing wafers for us and we also agreed to cancel the cost overrun facility
made available by the banks. Under the February 2001 amendments, we have been
released from financial covenants limiting capital expenditure and requiring AMD
Saxony to achieve capacity and production cost targets by the end of 2001.
The Dresden Loan Agreements, as amended, also require that we:
. provide interim funding to AMD Saxony if either the remaining capital
investment allowances or the remaining interest subsidies are delayed,
such funding to 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;
and
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Source: ADVANCED MICRO DEVIC, 10-K405, March 20, 2001