AMD 2004 Annual Report Download - page 50

Table of Contents
Capital Lease Obligations
As of December 26, 2004, we had aggregate outstanding capital lease obligations of approximately $185 million. Obligations under these lease agreements
are collateralized by the assets leased and are payable through 2008. Leased assets consist principally of machinery and equipment. We guaranteed
approximately $87 million of Spansion’s and its subsidiaries’ aggregate outstanding capital lease obligations as of December 26, 2004.
Operating Leases
We lease certain of our facilities, including our executive offices in Sunnyvale, California, and in some jurisdictions we lease the land on which these
facilities are built, under lease agreements that expire at various dates through 2032. We lease certain of our manufacturing and office equipment for terms
ranging from one to five years. Total future lease obligations as of December 26, 2004, were approximately $431 million, of which $106 million was recorded as
a liability for certain facilities that were included in our 2002 Restructuring Plan.
Unconditional Purchase Commitments
Total non-cancelable purchase commitments as of December 26, 2004, were approximately $1.3 billion for periods through 2020. These purchase
commitments include approximately $546 million related to contractual obligations to purchase energy and gas for Fab 30 and Fab 36 and $250 million
representing future payments to IBM pursuant to the joint development agreement. As IBM’s services are being performed ratably over the life of the agreement,
we expense the payments as incurred. Our non-cancelable purchase commitments also include approximately $141 million to M+W Zander for the design and
construction of Fab 36 and other related services. These payments will be made to M+W Zander as services are performed. In addition, unconditional purchase
commitments also include approximately $68 million for software maintenance agreements that require periodic payments through 2009. As a result, we have not
recorded any liabilities relating to these agreements. The remaining commitments primarily consist of non-cancelable contractual obligations to purchase raw
materials, natural resources and office supplies. Purchase orders for goods and services that are cancelable without significant penalties are not included in the
amount set forth in the table above.
Other Long-Term Liabilities
The only component of Other Long-Term Liabilities that requires us to make cash payments is a net restructuring accrual of approximately $87 million
relating to the net future operating lease payments on certain facilities that were included in our 2002 Restructuring Plan. We will make these payments through
2011. We included these amounts in the operating lease total in the table above. The other components of Other Long-Term Liabilities do not require us to make
cash payments and primarily consist of approximately $274 million of deferred grants and subsidies related to the Fab 30 and Fab 36 projects and a $22 million
deferred gain as a result of the sale and leaseback of our corporate marketing, general and administrative facility in Sunnyvale, California in 1998.
Repayment of Dresden Term Loan
AMD Saxony, our indirect, wholly owned German subsidiary, continues to facilitize Fab 30, which began production in the second quarter of 2000. AMD,
the Federal Republic of Germany, the State of Saxony and a consortium of banks provided financing for the Fab 30 project. We currently estimate that the
construction and facilitization costs of Fab 30 will be $2.5 billion when it is fully equipped by the end of 2005. As of December 26, 2004, we had invested
approximately $2.4 billion in the Fab 30 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. On November 2, 2004, AMD Saxony prepaid the full amount outstanding
under the Dresden Term Loan plus accrued and unpaid interest and a prepayment premium, and the Dresden Term Loan
45
Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005