AMD 2007 Annual Report Download - page 125

Table of Contents
In November 2007, the FASB announced it is expected to begin its redeliberations of the proposed FSP in January 2008. Therefore, it is highly unlikely
the proposed effective date for fiscal years beginning after December 15, 2007 will be retained.
The Company cannot predict the exact accounting treatment that will be imposed (which may differ from the foregoing description) or when any change
will be finally implemented. However, if the final FSP is issued as exposed, the Company expects to have higher interest expense starting in the period of
adoption due to the interest expense accretion and, if the retrospective application provisions of the proposed FSP are retained in the final FSP, the Company’s
prior period interest expense associated with the 6.00% Notes would be higher than previously reported interest expense due to retrospective application.
The Company may elect to purchase or otherwise retire the 6.00% Notes with cash, stock or other assets from time to time in open market or privately
negotiated transactions, either directly or through intermediaries, or by tender offer, when the Company believes the market conditions are favorable to do so.
Such purchases may have a material effect on the Company’s liquidity, financial condition and results of operations.
October 2006 Term Loan
On October 24, 2006, the Company entered into a credit agreement with Morgan Stanley Senior Funding, Inc., as Syndication Agent and Administrative
Agent, Wells Fargo Bank, N.A., as Collateral Agent, and other lenders that may become party thereto from time to time (October 2006 Term Loan), pursuant to
which the Company borrowed an aggregate amount of $2.5 billion to finance a portion of the acquisition of ATI and related fees and expenses.
In November 2006, the Company repaid $278 million of the amounts outstanding under the October 2006 Term Loan out of the net cash proceeds from the
sale of Spansion common stock. (See Note 4). In addition, in December 2006, the Company repaid the first quarterly installment of $6 million. As of
December 31 2006, $2.2 billion was outstanding under the October 2006 Term Loan.
On April 27, 2007, the Company issued the 6.00% Notes. The Company applied $500 million of the net proceeds to prepay a portion of the amount
outstanding under the October 2006 Term Loan. On August 14, 2007, the Company issued the 5.75% Notes. The net proceeds from the offering, after deducting
discounts, commissions and offering expenses payable by the Company, were approximately $1.5 billion. The Company used all of the net proceeds, together
with available cash, to repay in full the remaining outstanding balance of the October 2006 Term Loan.
Fab 36 Term Loan and Guarantee and Fab 36 Partnership Agreements
The Company’s 300-millimeter wafer fabrication facility, Fab 36, is located in Dresden, Germany at the Company’s wafer fabrication site. Fab 36 is
owned by AMD Fab 36 Limited Liability Company & Co. KG (or AMD Fab 36 KG), a German limited partnership. The Company controls the management of
AMD Fab 36 KG through a wholly owned Delaware subsidiary, AMD Fab 36 LLC, which is a general partner of AMD Fab 36 KG. AMD Fab 36 KG is the
Company’s indirect consolidated subsidiary.
To date, the Company has provided a significant portion of the financing for Fab 36. In addition to the Company’s financing, Leipziger Messe GmbH, a
nominee of the State of Saxony, Fab 36 Beteiligungs GmbH, an investment consortium arranged by M+W Zander Facility Engineering GmbH, the general
contractor for the project, and a consortium of banks have provided financing for the project. Leipziger Messe and Fab 36 Beteiligungs are limited partners in
AMD Fab 36 KG. The Company has also received grants and allowances from federal and state German authorities for the Fab 36 project.
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Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008