AMD 2001 Annual Report Download - page 255

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Dresden Loan Agreements also require that the Company:
o 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;
o fund shortfalls in government subsidies resulting from any default
under the subsidy agreements caused by AMD Saxony or its affiliates;
and
o 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:
o material variances from the approved plans and specifications;
o our failure to fund equity contributions or shareholder loans or
otherwise comply with our obligations relating to the Dresden Loan
Agreements;
o the sale of shares in AMD Saxony or AMD Holding;
o the failure to pay material obligations;
o 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
o the occurrence of default under 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. As of December 30, 2001, 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.
Because the amounts under the Dresden Loan Agreements are denominated in
deutsche marks, the dollar amounts set forth herein are subject to change based
on applicable conversion rates. At December 30, 2001, the exchange rate was
approximately 2.17 deutsche marks to one U.S. dollar (which the Company used to
translate the amounts denominated in deutsche marks).
NOTE 13: INVESTMENT IN JOINT VENTURE
In 1993, the Company formed a joint venture (FASL) with Fujitsu Limited for the
development and manufacture of non-volatile memory devices. FASL operates
advanced IC manufacturing facilities in Aizu-Wakamatsu, Japan, to produce Flash
memory devices, which are sold to the Company and Fujitsu. The Company's share
of FASL is 49.992 percent and the investment is being accounted for under the
equity method. The Company's share of FASL net income during 2001 was $18.9
million, net of income taxes of approximately $13.5 million. As of December 30,
2001, the cumulative adjustment related to the translation of the FASL financial
statements into U.S. dollars resulted in a decrease of approximately $53.4
million to the investment in FASL. The following tables present the significant
FASL related party transactions and balances:
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Source: ADVANCED MICRO DEVIC, 10-K, March 07, 2002