AMD 2003 Annual Report Download - page 94

Table of Contents
design and construction of the manufacturing facility. As of December 28, 2003, AMD Fab 36 is required to make payments to M+W Zander through May 2005
in an aggregate amount of approximately $440 million. As of December 28, 2003, the Company’s purchase commitments also included $80 million representing
future payments to IBM under the Company’s joint development agreement, which calls for a quarterly payment of $10 million. As the services are being
performed ratably over the life of the agreement, the Company expenses the payments as incurred. Purchase commitments also included approximately $71
million for various software maintenance agreements the Company enters into that require periodic payments through 2007. As a result, the Company has not
recorded any liabilities relating to these agreements. The remaining $39 million primarily consists of purchase agreements for raw materials and office supplies.
The Company accounts for guarantees in accordance with FIN 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others.”
Guarantees of indebtedness recorded on the Company’s consolidated balance sheets
The following table summarizes the principal guarantees issued as of December 28, 2003 related to underlying liabilities that are already recorded on the
Company’s consolidated balance sheets as of December 28, 2003 and their expected expiration dates by year:
Amounts of guarantee expiration per period
Amounts
Guaranteed* 2004 2005 2006 2007 2008
2009 and
Beyond
(Thousands)
Dresden intercompany guarantee $ 332,028 $ 18,653 $ 167,880 $ 145,495 $ — $ — $ —
July 2003 FASL term loan guarantee (see Note 7) 43,500 16,500 16,500 10,500 — — —
FASL JAPAN term loan guarantee (see Note 7) 100,756 26,868 26,868 26,868 20,152 — —
FASL capital lease guarantees (see Note 7) 147,303 53,655 49,494 40,422 3,732 — —
Total guarantees $ 623,587 $ 115,676 $ 260,742 $ 223,285 $ 23,884 $ — $ —
* Represent the principal amount of the underlying obligations guaranteed and are exclusive of obligations for interest, fees and expenses.
Dresden Term Loan and Dresden Term Loan Guarantee
AMD Saxony Limited Liability Company & Co. KG, (AMD Saxony, formerly known as AMD Saxony Manufacturing GmbH), an indirect wholly owned
German subsidiary of AMD, continues to facilitize Fab 30, which began production in the third quarter of 2000. AMD, the Federal Republic of Germany, the
State of Saxony, and a consortium of banks are providing financing for the project.
In March 1997, AMD Saxony entered into a loan agreement and other related agreements (the Dresden Loan Agreements) with a consortium of banks led
by Dresdner Bank AG, a German financial institution, in order to finance the project. AMD Saxony has pledged substantially all of its property as security under
the Dresden Loan Agreements. The Dresden Loan Agreements were amended in February 2004 to accommodate the construction, facilitization, and operation of
Fab 36.
Because most of the amounts under the Dresden Loan Agreements are denominated in deutsche marks (converted to euros), the dollar amounts are subject
to change based on applicable exchange rates. The Company used the exchange rate that was permanently fixed on January 1, 1999, of 1.95583 deutsche marks
to one euro for the conversion of deutsche marks to euros, and then used exchange rate as of December 28, 2003, of 0.804 euro to one U.S. dollar to translate the
amounts denominated in deutsche marks into U.S. dollars.
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Source: ADVANCED MICRO DEVIC, 10-K, March 09, 2004