AMD 2001 Annual Report Download - page 254

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
o equity, subordinated loans and loan guarantees from AMD;
o loans from a consortium of banks; and
o 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 $334 million as of December 30, 2001 in the form of
subordinated loans and equity investments in AMD Saxony (denominated in both
deutsche marks and U.S. dollars) which are eliminated in our consolidated
financial statements.
In addition to AMD's support, the consortium of banks referred to above has made
available $692 million in loans to AMD Saxony to help fund Dresden Fab 30
project costs. AMD Saxony had $602 million of such loans outstanding through
December 30, 2001, which are included in the Company's consolidated balance
sheets.
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:
o guarantees equal to the lesser of 65 percent of AMD Saxony bank debt
or $692 million;
o capital investment grants and allowances totaling $286 million; and
o interest subsidies totaling $142 million.
Of these amounts, AMD Saxony has received $284 million in capital investment
grants and allowances and $64 million in interest subsidies through December 30,
2001, which are included in the Company's consolidated financial statements. 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, the Dresden Loan Agreements were amended to reflect new
capacity and increased capital spending plans for Dresden Fab 30. Under the
February 2001 amendments, the Company agreed to extend its guaranty of AMD
Saxony's obligations and to make available to AMD Saxony revolving loans of up
to $500 million. The Company also expanded its obligation to reimburse AMD
Saxony for the cost of producing wafers for the Company and agreed to cancel the
cost overrun facility made available by the banks. Under these amendments, the
Company was released from financial covenants limiting capital expenditures and
requiring AMD Saxony to achieve capacity and production cost targets by the end
of 2001.
Source: ADVANCED MICRO DEVIC, 10-K, March 07, 2002