AMD 2003 Annual Report Download - page 86

Table of Contents
The July 2003 FASL Term Loan Agreement restricts FASL LLC’s ability to pay cash dividends in respect of membership interests if its net domestic cash
balance (as defined in the July 2003 FASL Term Loan) drops below $130 million through the first quarter of 2004, $120 million from the second quarter of 2004
to the end of 2005 and $100 million during 2006. FASL LLC must also comply with additional financial covenants if its net domestic cash balance declines
below $130 million through the first quarter of 2004, $120 million from the second quarter of 2004 to the end of 2005, and $100 million during 2006. At any
time that net domestic cash falls below these thresholds, FASL LLC must comply with, among other things, the following financial covenants:
• maintain an adjusted tangible net worth (as defined in the July 2003 FASL Term Loan) of not less than $850 million;
• achieve EBITDA according to the following schedule:
Period Amount
For the six months ending December 2003 $75 million
For the nine months ending March 2004 $170 million
For the four quarters ending June 2004 $285 million
For the four quarters ending September 2004 $475 million
For the four quarters ending December 2004 $550 million
For the four quarters ending in 2005 $640 million
For the four quarters ending in 2006 $800 million
• 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
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 its facility. The Company has agreed to reimburse Fujitsu 60 percent of any amount paid
by Fujitsu under its guarantee of this loan (see Note 12). 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;
80
Source: ADVANCED MICRO DEVIC, 10-K, March 09, 2004