AMD 2001 Annual Report Download - page 16

. interest subsidies totaling $142 million.
Of these amounts, AMD Saxony had received approximately $284 million in
capital investment grants and allowances and $64 million in interest subsidies
through December 30, 2001. The grants and subsidies are subject to conditions,
including meeting specified levels of employment by 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 30, 2001, 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
were released from financial covenants limiting capital expenditures and
requiring AMD Saxony to achieve capacity and production cost targets by the end
of 2001. As of December 30, 2001, $59 million of the revolving loans were
outstanding. The revolving loan amounts are denominated in European Union euros
and are, therefore, subject to change due to foreign exchange rate fluctuation.
We used the exchange rate on December 30, 2001, 1.11 euros to one U.S. dollar,
to translate the amount of the revolving loans.
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
. guarantee up to 35 percent of AMD Saxony's obligations under the Dresden
Loan Agreements, which guarantee must not be less than $100 million or
more than $277 million, until the bank loans are repaid in full.
AMD Saxony would be in default under the Dresden Loan Agreements if we, AMD
Saxony or AMD Saxony Holding GmbH (AMD Holding), the parent company of AMD
Saxony and a wholly owned subsidiary of AMD, fail to comply with certain
obligations thereunder or upon the occurrence of certain events 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 our Loan and Security Agreement (the Loan
Agreement) with a consortium of banks led by a domestic financial
institution, effective on July 13, 1999.
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. As of December 30, 2001, we were in compliance with all
conditions of the Dresden Loan Agreements.
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Source: ADVANCED MICRO DEVIC, 10-K, March 07, 2002