AMD 2003 Annual Report Download - page 42

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• maintain a fixed charge coverage ratio (as defined in the July 2003 FASL Term Loan) according to the following schedule:
Period Ratio
Fourth fiscal quarter of 2003 0.2 to 1.00
First fiscal quarter of 2004 0.25 to 1.00
Period ending June 2004 0.4 to 1.00
Period ending September 2004 0.8 to 1.00
Period ending December 2004 1.0 to 1.00
Full fiscal year 2005 1.0 to 1.00
Full fiscal year 2006 0.9 to 1.00
At December 28, 2003, FASL LLC’s net domestic cash totaled $208 million, and the preceding financial covenants were not applicable.
FASL JAPAN Term Loan and Guarantee
Because most amounts under the FASL JAPAN Term Loan are denominated in yen, the dollar amounts are subject to change based on applicable
exchange rates. We used the exchange rate as of December 28, 2003 of 107.19 yen to one U.S. dollar to translate the amounts denominated in yen into U.S.
dollars.
As a result of the FASL LLC transaction, the Manufacturing Joint Venture’s third-party loans were refinanced from the proceeds of a term loan in the
aggregate principal amount of 18 billion yen (approximately $168 million on December 28, 2003) entered into between FASL JAPAN and a Japanese financial
institution. Under the agreement, the amounts borrowed bear an interest rate of TIBOR plus a spread that is determined by Fujitsu’s current debt rating and FASL
JAPAN’s non-consolidated net asset value as of the last day of its fiscal year. The interest rate was 0.98 percent as of December 28, 2003. Repayment occurs in
equal, consecutive, quarterly principal installments ending in June 2007. FASL JAPAN’s assets are pledged as security for its borrowings under this agreement.
Also, Fujitsu guaranteed 100 percent of the amounts outstanding under this facility. We agreed to reimburse Fujitsu 60 percent of any amount paid by Fujitsu
under its guarantee of this loan. Under this loan agreement, FASL JAPAN is required to comply with the following financial covenants:
• Ensure that assets exceed liabilities as of the end of each fiscal year and each six-month period during such fiscal year;
• Maintain an adjusted tangible net worth (as defined in the loan agreement), as of the last day of each fiscal quarter, of not less than 60 billion yen;
• Maintain total net income plus depreciation, as of the last day of each fiscal period, as follows:
Period Amount
Fiscal year 2003 $78 million
First fiscal quarter of 2004 $23 million
First and second fiscal quarters of 2004 $68 million
Fiscal year 2004 $214 million
Fiscal year 2005 $197 million
Fiscal year 2006 $182 million
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Source: ADVANCED MICRO DEVIC, 10-K, March 09, 2004