AMD 2006 Annual Report Download - page 143

Table of Contents
IBM for 2007 and 2008 pursuant to our joint development agreement. As IBM’s services are being performed ratably over the life of the agreement, we expense
the payments as incurred. In October 2005, our Board of Directors approved an amendment of this agreement, which, among other things, extended its
termination date through December 2011. However, capital purchases by IBM necessary for the continued development of process development projects past
December 31, 2008 are conditioned upon the approval of IBM’s board of directors. If such approval is not received by September 30, 2007, either party has the
right to terminate the agreement effective December 31, 2008 without liability. Accordingly, the table above only reflects the Company’s obligations through
December 31, 2008. If such approval is received from IBM, the additional obligations from January 2009 through December 2011 would be between $304
million and $334 million. In addition, unconditional purchase commitments also include $206 million for technology license agreements that require periodic
payments through 2009. The remaining purchase commitments also include 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 total amount.
In connection with the acquisition of ATI, the Company made several commitments to the Minister of Industry under the Investment Canada Act including
that it will: increase spending on research and development in Canada to a specified amount over the course of a three-year period when compared to ATI’s
expenditures in this area in prior years; maintain Canadian employee headcount at specified levels by the end of the three-year anniversary of the acquisition;
increase by a specified amount the number of our Canadian employees focusing on research and development; attain specified Canadian capital expenditures
over a three-year period; maintain a presence in Canada via a variety of commercial activities for a period of five years; and nominate a Canadian for election to
the Company’s Board of Directors over the next five years. The Company’s Canadian capital expenditures and research and development commitments are
included in its aggregate unconditional purchase commitments.
Guarantees of Indebtedness Recorded on the Company’s Consolidated Balance Sheet
The following table summarizes the principal guarantees issued as of December 31, 2006 related to underlying liabilities that are already recorded on the
Company’s consolidated balance sheet as of December 31, 2006 and their expected expiration dates by year. No incremental liabilities are recorded on the
Company’s consolidated balance sheet for these guarantees:
Amounts
Guaranteed 2007 2008 2009
(In millions)
Repurchase obligations to Fab 36 partners(1) $ 126 $ 42 $ 42 $ 42
Payment guarantees on behalf of consolidated subsidiaries(2) 142 142 — —
Total guarantees $ 268 $ 184 $ 42 $ 42
(1) This amount represents the amount of silent partnership contributions that the Company is required to repurchase from the unaffiliated limited partners of
AMD Fab 36 KG and is exclusive of the guaranteed rate of return of an aggregate of approximately $58 million.
(2) This amount represents the payment obligation due to a supplier arising out of the purchase of equipment by the Company’s consolidated subsidiary, AMD
Fab 36 KG. The Company has guaranteed these payment obligations on behalf of its subsidiary. At December 31, 2006, approximately $142 million was
outstanding under this guarantee and recorded as a payable on the Company’s consolidated balance sheet. The obligation under the guarantee diminishes
as the amounts are paid to the supplier.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007