AMD 2008 Annual Report Download - page 136

discounted carrying value of the 6.00% Notes to their face amount as interest expense over the term of the 6.00%
Notes. The Company expects to have higher interest expense beginning in its first quarter of 2009 due to the
interest accretion, and the interest expense associated with its 6.00% Notes for prior periods will also be higher
than previously reported due to the retrospective application of this FSP. Based on the preliminary analysis
performed by the Company, the interest expense associated with its 6.00% Notes will be approximately $16
million, $25 million and $27 million higher for fiscal years 2007, 2008 and 2009, respectively, as a result of
adopting this FSP.
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.
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 is the remaining
limited partner in AMD Fab 36 KG. The Company has also received grants and allowances from federal and
state German authorities for the Fab 36 project.
The funding to construct and facilitize Fab 36 consists of:
• equity contributions from the Company of $713 million under the partnership agreements, revolving
loans from the Company of up to approximately $1.1 billion, and guarantees from the Company for
amounts owed by AMD Fab 36 KG and its affiliates to the lenders and unaffiliated partners;
• investments of approximately $450 million from Leipziger Messe and Fab 36 Beteiligungs;
• loans of approximately 700 million euro from a consortium of banks, which was fully drawn as of
December 2006;
• up to approximately $764 million of subsidies consisting of grants and allowances from the Federal
Republic of Germany and the State of Saxony, depending on the level of capital investments by AMD
Fab 36 KG, of which $627 million of cash has been received as of December 27, 2008;
• up to approximately $32 million allowances, from the Federal Republic of Germany and the State of
Saxony, depending on the level of capital investments in connection with expansion of production
capacity in Fab 36, of which $9 million has been received as of December 27, 2008; and
• a loan guarantee from the Federal Republic of Germany and the State of Saxony of 80 percent of the
losses sustained by the lenders referenced above after foreclosure on all other security.
The Company has contributed to AMD Fab 36 KG the full amount of equity required under the partnership
agreements and no loans from the Company are outstanding. These equity amounts have been eliminated in the
Company’s consolidated financial statements.
On April 21, 2004, AMD Fab 36 KG entered into a 700 million euro Term Loan Facility Agreement among
AMD Fab 36 KG, as borrower, and a consortium of banks led by Dresdner Bank AG, as lenders, dated April 21,
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