AMD 2000 Annual Report Download - page 420

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
sale of the facility to a third party and leased it back under a new operating
lease. The Company has deferred the gain on the sale 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 percent of the cumulative increase in the consumer
price index over the prior three-year period up to a maximum of 6.9 percent.
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 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 $410 million as of December 31, 2000 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 $750 million in loans (denominated in deutsche marks) 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 amount
of $750 million in bank debt;
. capital investment grants and allowances totaling $287 million; and
. interest subsidies totaling $141 million.
Of these amounts (which are all denominated in deutsche marks), AMD Saxony has
received $284 million in capital investment grants and $38 million in interest
subsidies as of December 31, 2000.
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
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Source: ADVANCED MICRO DEVIC, 10-K405, March 20, 2001