AMD 2008 Annual Report Download - page 153

Off-Balance Sheet Arrangements
Guarantees of Indebtedness Recorded on the Company’s Consolidated Balance Sheet
As of December 27, 2008, the principal guarantee related to indebtedness recorded on the Company’s
consolidated balance sheet was for $28 million, which represents the amount of silent partnership contributions
that AMD Fab 36 KG Holding and AMD Fab 36 Admin are required to repurchase from Leipziger Messe and
does not include the guaranteed rate of return. This $28 million is expected to expire by the end of 2009. No
incremental liability is recorded on the Company’s consolidated balance sheet for this guarantee.
Guarantees of Indebtedness not Recorded on the Company’s Consolidated Balance Sheet
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 the Company, Infineon Technologies AG
(Infineon) and DuPont Photomasks, Inc. (Dupont) for the purpose of constructing and operating an advanced
photomask facility in Dresden, Germany. The Company procures advanced photomasks from AMTC and uses
them in manufacturing its microprocessors. In April 2005, DuPont was acquired by Toppan Printing Co., Ltd.
and became a wholly owned subsidiary of Toppan, named Toppan Photomasks, Inc. In December 2007, Infineon
entered into an assignment agreement to transfer its interest in AMTC and BAC to Qimonda AG, with the
exception of certain AMTC/BAC related payment guarantees. The assignment became effective in January 2008.
In December 2002, BAC obtained a euro denominated term loan to finance the construction of the
photomask facility pursuant to which the equivalent of $39 million was outstanding as of December 27, 2008.
Also in December 2002, each of Toppan Photomasks Germany GmbH, and AMTC, as lessees, entered into a
lease agreement with BAC, as lessor. The term of the lease agreement is ten years. Each joint venture partner
guaranteed a specific percentage of AMTC’s portion of the rental payments. Currently, Infineon, AMD and
Toppan are the guarantors under the rental guarantee. The rental payments to BAC are in turn used by BAC to
repay amounts outstanding under the BAC term loan. There is no separate guarantee outstanding for the BAC
term loan. With respect to the lease agreement, AMTC may exercise a “step-in” right in which it would take over
Toppan Germany’s remaining rental payments in connection with the lease agreement between Toppan
Photomask Germany and BAC. As of December 27, 2008, the Company’s guarantee of AMTC’s portion of the
rental obligation was approximately $8 million. The Company’s maximum liability in the event AMTC exercises
its “step-in” right and the other joint venture partners default under the guarantee would be approximately $73
million. These estimates are based upon forecasted rents to be charged by BAC in the future and are subject to
change based upon the actual usage of the facility by the tenants and foreign currency exchange rates.
In December 2007, AMTC entered into a euro denominated revolving credit facility, pursuant to which the
equivalent of $66 million was outstanding as of December 27, 2008. With the lenders’ consent, AMTC may
request that the loan amount be increased by an additional amount of euro (equivalent to approximately $56
million as of December 27, 2008.) The term of the revolving credit facility is three years. Upon request by
AMTC and subject to certain conditions, the term of the revolving credit facility may be extended by two
additional one-year periods. Pursuant to a guarantee agreement, each joint venture partner guaranteed one third
of AMTC’s outstanding loan balance under the revolving credit facility. In September 2008, Qimonda provided
cash security equal to one third of AMTC’s outstanding loan balance pursuant to a cash pledge agreement and
was released from the guarantee agreement. The obligations of the remaining joint venture partners under the
guarantee agreement remain the same. As of December 27, 2008, the Company’s potential obligation under this
guarantee was the equivalent of $22 million plus its portion of accrued interest and expenses. The Company’s
maximum potential liability under this guarantee in the event the AMTC revolving credit facility is increased as
set for above would be approximately $32 million plus its portion of accrued interest and expenses. Under the
terms of the guarantee, if the Company’s group consolidated cash (which is defined as cash, cash equivalents and
marketable securities less the aggregate amount outstanding under any revolving credit facility) is less than or
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