AMD 2000 Annual Report Download - page 379

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
. guarantee up to 35 percent of AMD Saxony's obligations under the
Dresden Loan Agreements, which guarantee must not be less than $99
million or more than $273 million, until the bank loans are repaid in
full.
The definition of defaults under the Dresden Loan Agreements includes the
failure of AMD, AMD Saxony or AMD Holding, the parent company of AMD Saxony and
a wholly owned subsidiary of AMD, to comply with obligations in connection with
the Dresden Loan Agreements, including:
. material variances from the approved plans and specifications;
. our failure to fund equity contributions or shareholder loans or
otherwise comply with our obligations relating to the Dresden Loan
Agreements;
. the sale of shares in AMD Saxony or AMD Holding;
. the failure to pay material obligations;
. the occurrence of a material adverse change or filings or proceedings
in bankruptcy or insolvency with respect to us, AMD Saxony or AMD
Holding; and
. the occurrence of default under the indenture dated August 1, 1996
between AMD and the United States Trust Company of New York (the
Indenture) pursuant to which our Senior Secured Notes were issued or
the Loan Agreement.
Generally, any default with respect to borrowings made or guaranteed by AMD that
results in recourse to us of more than $2.5 million and is not cured by us,
would result in a cross-default under the Dresden Loan Agreements and the Loan
Agreement. Under certain circumstances, cross-defaults result under our
Convertible Subordinated Notes and the Dresden Loan Agreements. As of December
31, 2000, we were in compliance with all conditions of the Dresden Loan
Agreements.
In the event we are unable to meet our obligations to AMD Saxony as required
under the Dresden Loan Agreements, we will be in default under the Dresden Loan
Agreements and the Loan Agreement, which would permit acceleration of certain
indebtedness, which would have a material adverse effect on us. We cannot assure
that we will be able to obtain the funds necessary to fulfill these obligations.
Any such failure would have a material adverse effect on us.
FASL, a joint venture formed by AMD and Fujitsu Limited in 1993, operates
advanced integrated circuit manufacturing facilities in Aizu-Wakamatsu, Japan,
to produce Flash memory devices. FASL is continuing the facilitization of its
second Flash memory device wafer fabrication facility, FASL JV2. The facility,
including equipment, is expected to cost approximately $1.1 billion when fully
equipped. As of December 31, 2000, approximately $752 million (denominated in
yen) of this cost had been funded. In July 2000, FASL broke ground for a third
fabrication facility for the manufacture of Flash memory devices in
Aizu-Wakamatsu, Japan. As of December 31, 2000, the building was complete and
the clean room was under construction. The facility, designated as FASL JV3, is
expected to cost approximately $1.5 billion when fully equipped. Capital
expenditures for FASL JV2 and FASL JV3 construction to date have been funded by
cash generated from FASL operations and borrowings by FASL.
FASL capital expenditures in 2001 will continue to be funded by cash generated
from FASL
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Source: ADVANCED MICRO DEVIC, 10-K405, March 20, 2001