AMD 2006 Annual Report Download - page 144

Table of Contents
Guarantees of Indebtedness not Recorded on the Company’s Consolidated Balance Sheet
The following table summarizes the principal guarantees issued as of December 31, 2006 for which the related underlying liabilities are not recorded on
the Company’s consolidated balance sheets as of December 31, 2006, and their expected expiration dates.
Amounts
Guaranteed(1) 2007 2008 2009 2010 2011
(In millions)
AMTC revolving loan guarantee $ 42 $ 42 $ — $ — $ — $ —
AMTC rental guarantee(2) 101 — — — — 101
Spansion operating and capital lease guarantees(3) 6 5 1 — — —
Total guarantees $ 149 $ 47 $ 1 $ — $ — $ 101
(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, the Company agreed to maintain its 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 AMD, 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. The Company procures advanced photomasks from AMTC and uses them in manufacturing its microprocessors. To finance the project,
BAC and AMTC entered into a $158 million revolving credit facility and a $99 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 31, 2006, the
Company guaranteed up to $42 million plus interest and expenses under the revolving loan, and up to $20 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 the Company’s obligations under the rental agreement guarantee is $101 million.
As of December 31, 2006, $91 million was drawn under the revolving credit facility, and $54 million was drawn under the term loan. The Company has not
recorded any liability in its consolidated financial statements associated with the guarantees because they were issued prior to December 31, 2002, the effective
date of FIN 45.
Spansion Capital and Operating Lease Guarantee
The Company guaranteed certain capital and operating leases entered into by Spansion and its subsidiaries totaling $6 million as of December 31, 2006.
The amounts guaranteed are reduced by the actual amount of lease payments paid by Spansion over the lease terms.
No liability has been recognized for these guarantees related to Spansion under the provisions of FIN 45 because the Company concluded the fair value of
the guarantees is not significant after considering various factors including Spansion’s credit rating, the ability of Spansion to make the payments on these
obligations and the short maturity of the indebtedness.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007