AMD 2003 Annual Report Download - page 41

Table of Contents
• the occurrence of a material adverse change or filings or proceedings in bankruptcy or insolvency with respect to us, AMD Saxony or AMD Holding;
• the occurrence of a default under the July 2003 Loan Agreement; and
• AMD Saxony’s noncompliance with certain financial covenants, including minimum tangible net worth, minimum interest cover ratio, asset cover ratio
and a minimum liquidity covenant.
Generally, any default with respect to borrowings made or guaranteed by AMD that results in recourse to us of more than $2.5 million, and that is not
cured by us, would result in a cross-default under the Dresden Loan Agreements. As of December 28, 2003, we were in compliance with all conditions of the
Dresden Loan Agreements.
In the event we are unable to meet our obligations to AMD Saxony as required under the Dresden Loan Agreements and the lenders determine that their
legal or risk position is materially adversely affected, we will be in default under the Dresden Loan Agreements, which would permit acceleration of the
outstanding loans of approximately $664 million. The occurrence of a default under these agreements would likely result in a cross-default under the Indentures
governing our 4.75% Debentures and 4.50% Notes. We cannot assure that we would be able to obtain the funds necessary to fulfill these obligations. Any such
failure would have a material adverse effect on us.
July 2003 FASL Term Loan and Guarantee
On July 11, 2003, we amended our September 2002 Loan Agreement and assigned it to FASL LLC. Under the Amended and Restated Term Loan
Agreement (the July 2003 FASL Term Loan), amounts borrowed bear interest at a variable rate of LIBOR plus four percent, which was 5.14 percent at
December 28, 2003. Repayment occurs in equal, consecutive, quarterly principal and interest installments ending in September 2006. As of December 28, 2003,
$72.5 million was outstanding under the July 2003 FASL Term Loan, of which 60 percent is guaranteed by us and 40 percent is guaranteed by Fujitsu. FASL
LLC has granted a security interest in certain property, plant and equipment as security under the July 2003 FASL Term Loan.
The July 2003 FASL Term Loan Agreement restricts FASL LLC’s ability to pay cash dividends in respect of membership interests if FASL LLC’s net
domestic cash balance (as defined in the July 2003 FASL Term Loan) 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. 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
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Source: ADVANCED MICRO DEVIC, 10-K, March 09, 2004