AMD 2008 Annual Report Download - page 95

and research and development commitments are included in our aggregate unconditional purchase
commitments. Our commitments relating to the parts of the Handheld and Digital Television business units that
were divested no longer apply. We are in substantial compliance with the commitments.
Receivable financing arrangement Classified as Other Short-Term Obligations
On March 26, 2008, we entered into a Sale of Receivables – Supplier Agreement with IBM Credit LLC, or
IBM Credit, and one of our wholly-owned subsidiaries, AMD International Sales & Service, Ltd., or AMDISS,
entered into the same sales agreement with IBM United Kingdom Financial Services Ltd., or IBM UK, pursuant
to which we and AMDISS agreed to sell to each of IBM Credit and IBM UK certain receivables. Pursuant to the
sales agreements, the IBM parties agreed to purchase from the AMD parties invoices of specified AMD
customers up to credit limits set by the IBM parties for any applicable AMD customer. As of December 27,
2008, only selected distributor customers have participated in this program. Because we do not recognize revenue
until our distributors sell our products to their customers, we classified funds received from the IBM parties as
debt according to the requirement of EITF Issue No. 88-18, Sales of Future Revenues. The debt is reduced as the
IBM parties receive payments from the distributors. As of December 27, 2008, $86 million was outstanding
under these agreements. This amount appears as “Other short-term obligations” on our consolidated balance
sheet and is not considered a cash commitment.
Off-Balance Sheet Arrangements
Guarantees of Indebtedness Recorded on our Consolidated Balance Sheet
As of December 27, 2008, the principal guarantee related to indebtedness recorded on our consolidated
balance sheet was for $28 million, which represents the amount of silent partnership contributions that AMD Fab
36 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 in 2009. No incremental liabilities are recorded
on our consolidated balance sheet for this guarantee. Upon the closing of the transactions contemplated by the
Master Transaction Agreement, AMD Fab 36 Holding and AMD Fab 36 Admin will repurchase the limited and
silent partnership interests in AMD Fab 36 KG held by Leipziger Messe. Accordingly, the $28 million guarantee
would expire upon the closing of the transactions.
Guarantees of Indebtedness Not Recorded on our 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 initially formed by AMD, Infineon Technologies AG
(Infineon) and DuPont Photomasks, Inc. (Dupont) for the purpose of constructing and operating an advanced
photomask facility in Dresden, Germany. We procure advanced photomasks from AMTC and use them in
manufacturing our microprocessors. In April 2005, DuPont was acquired by Toppan Printing Co., Ltd. and
became a wholly owned subsidiary of Toppan, named Toppan Photomasks, Inc. (Toppan). In December 2007,
Infineon entered into an assignment agreement to transfer its interest in AMTC and BAC to Qimonda AG
(Qimonda), 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
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