AMD 2003 Annual Report Download - page 51

Table of Contents
financing opportunities, including debt and equity. Additional debt or equity financing may not be available when needed or, if available, may not be available on
satisfactory terms. Our inability to obtain needed debt and/or equity financing or to generate sufficient cash from operations may require us to abandon planned
projects or curtail capital expenditures. If we abandon projects such as the Fab 36 project, we may have to write off related costs that we capitalized and we may
be required to continue to make payments or otherwise be liable pursuant to then-existing contracts that we cannot terminate at will or without significant
penalties, which would have a material adverse effect on us.
We have a substantial amount of debt and debt service obligations, and may incur additional debt, which could adversely affect our financial position and
prevent us from fulfilling our obligations under the agreements governing our indebtedness. We have a substantial amount of debt and we may incur additional
debt in the future. At December 28, 2003, our total debt was $2.1 billion and stockholders’ equity was $2.4 billion. In addition, at December 28, 2003, we had up
to $125 million of availability under our July 2003 Loan Agreement (subject to our borrowing base). We had also guaranteed approximately $243 million of
debt, which is not reflected as debt on our balance sheet.
Our high degree of leverage may:
• limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general
corporate purposes;
• require a substantial portion of our cash flow from operations to make debt service payments;
• limit our flexibility to plan for, or react to, changes in our business and industry;
• place us at a competitive disadvantage compared to our less leveraged competitors; and
• increase our vulnerability to the impact of adverse economic and industry conditions.
Our ability to make payments on and to refinance our debt or our guarantees of other parties’ debts will depend on our financial and operating
performance, which may fluctuate significantly from quarter to quarter and is subject to prevailing economic conditions and to financial, business and other
factors many of which are beyond our control.
We cannot assure you that we will continue to generate sufficient cash flow or that we will be able to borrow funds under our credit facilities in amounts
sufficient to enable us to service our debt, or meet our working capital and capital expenditure requirements. If we are not able to generate sufficient cash flow
from operations or to borrow sufficient funds to service our debt, due to borrowing base restrictions or otherwise, we may be required to sell assets or equity,
reduce capital expenditures, refinance all or a portion of our existing debt or obtain additional financing. We cannot assure you that we will be able to refinance
our debt, sell assets or equity, or borrow more funds on terms acceptable to us, if at all.
If we are not successful in integrating the operations of FASL LLC, we could be materially adversely affected. Effective June 30, 2003, we and Fujitsu
Limited executed several agreements that resulted in the integration of our and Fujitsu’s Flash memory operations. We contributed Flash memory inventory, Fab
25 in Austin, Texas, the SDC, and our Flash memory assembly and test operations in Thailand, Malaysia and China. Fujitsu contributed its Flash memory
division, including related inventory, cash, and its Flash memory assembly and test operations in Malaysia. In addition, both we and Fujitsu contributed our
respective investments in our previous Manufacturing Joint Venture, Fujitsu AMD Semiconductor Limited, located in Aizu-Wakamatsu, Japan, which became a
wholly owned subsidiary of FASL LLC.
Our anticipated benefits from this transaction are subject to, among other things, the following risks:
• the possibility that FASL LLC will not be successful because of problems integrating the operations and employees of the two companies or achieving
the efficiencies and other advantages intended by the transaction; and
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Source: ADVANCED MICRO DEVIC, 10-K, March 09, 2004