AMD 2005 Annual Report Download - page 52

Table of Contents
Guarantees of Indebtedness not Recorded on Our Consolidated Balance Sheet
The following table summarizes the principal guarantees issued as of December 25, 2005 for which the related underlying liabilities are not recorded on
our consolidated balance sheet as of December 25, 2005 and their expected expiration dates:
Amounts
Guaranteed (1)
Fiscal
2006
Fiscal
2007
Fiscal
2008
Fiscal
2009
Fiscal
2010
Fiscal
2011 and
Beyond
(In thousands)
AMTC revolving loan guarantee $ 37,981 $ — $ 37,981 $ — $ — $ — $ —
AMTC rental guarantee (2) 118,837 — — — — — 118,837
Spansion Japan term loan guarantee (3) 43,363 24,779 18,584 — — — —
Spansion capital lease guarantees (3) 35,851 32,598 3,253 — — — —
Spansion operating lease guarantees (3) 7,072 3,997 2,050 1,025 — — —
Other 3,448 3,448 — — — — —
Total guarantees $ 246,552 $ 64,822 $ 61,868 $ 1,025 $ — $ — $ 118,837
(1) Amounts represent the principal amount of the underlying obligations guaranteed and are exclusive of obligations for interest, fees and expenses.
(2) Amount of the guarantee diminishes as the rent is paid.
(3) Notwithstanding the Spansion IPO, we agreed to maintain our guarantees of these Spansion obligations.
AMTC and BAC Guarantees
The Advanced Mask Technology Center GmbH & Co. KG (AMTC) and Maskhouse Building Administration GmbH & Co., KG (BAC) are joint ventures
formed by us, Infineon Technologies AG and DuPont Photomasks, Inc. for the purpose of constructing and operating an advanced photomask facility in Dresden,
Germany. In April 2005 DuPont Photomasks, Inc. was acquired by Toppan Printing Co., Ltd. and became a wholly owned subsidiary of Toppan, named Toppan
Photomasks, Inc. We procure advanced photomasks from AMTC and use them in manufacturing our microprocessors. To finance the project, BAC and AMTC
entered into a $142 million revolving credit facility and a $89 million term loan in December 2002. Also in December 2002, in order to occupy the photomask
facility, AMTC entered into a rental agreement with BAC. With regard to these commitments by BAC and AMTC, as of December 25, 2005, we guaranteed up
to $38 million plus interest and expenses under the revolving loan, and up to $19 million, initially, under the rental agreement. The obligations under the rental
agreement guarantee diminish over time through 2011 as the term loan is repaid. However, under certain circumstances of default by the other tenant of the
photomask facility under its rental agreement with BAC and certain circumstances of default by more than one joint venture partner under its rental agreement
guarantee obligations, the maximum potential amount of our obligations under the rental agreement guarantee is $119 million. As of December 25, 2005, $83
million was drawn under the revolving credit facility, and $57 million was drawn under the term loan. We have not recorded any liability in our consolidated
financial statements associated with the guarantees because they were issued prior to December 31, 2002, the effective date of FIN 45.
Spansion Japan Term Loan Guarantee
As a result of the formation of Spansion LLC on June 30, 2003, the third-party loans of FASL were refinanced from the proceeds of a term loan entered
into between Spansion Japan, which owns the assets of FASL, and a Japanese financial institution. Under the agreement, the amounts borrowed bear an interest
rate of TIBOR plus a spread that is determined by Fujitsu’s current debt rating and Spansion Japan’s non-consolidated net asset value as of the last day of its
fiscal year. Repayment occurs in equal, consecutive, quarterly principal installments ending in June 2007. As a result of Spansion’s IPO, the amount outstanding
under this loan facility is no longer consolidated on our consolidated balance sheet.
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Source: ADVANCED MICRO DEVIC, 10-K, February 27, 2006