AMD 2004 Annual Report Download - page 39

Table of Contents
• achieve EBITDA (earnings before interest, taxes, depreciation and amortization) according to the following schedule:
Period Amount
(in millions)
Four fiscal quarters ending December 31, 2004 $ 950
Four fiscal quarters ending March 31, 2005 and four fiscal quarters ending each fiscal quarter
thereafter $ 1,050
As of December 26, 2004, net domestic cash, as defined, totaled $831 million and the preceding financial covenants were not applicable. Our obligations
under our revolving credit facility are secured by all of our accounts receivable, inventory, general intangibles (excluding intellectual property) and the related
proceeds, excluding Spansion’s accounts receivable, inventory and general intangibles.
Spansion Japan Revolving Loan Agreement
In March 2004, Spansion Japan Limited, a subsidiary of Spansion, entered into a revolving credit facility agreement with certain Japanese financial
institutions in the aggregate amount of 15 billion yen (approximately $145 million as of December 26, 2004). Spansion Japan can draw under the facility until
March 24, 2005.
The revolving facility consists of two tranches: tranche A in the aggregate amount of up to nine billion yen (approximately $87 million as of December 26,
2004) and tranche B in the aggregate amount of up to six billion yen (approximately $58 million as of December 26, 2004). However, as described in more detail
below, the total amount that Spansion Japan can draw is limited based on the value of Spansion Japan’s accounts receivable from Fujitsu, which are pledged as
security to the lenders. As of December 26, 2004, there were no borrowings outstanding under this facility.
Amounts borrowed under tranche A bear interest at a rate of TIBOR plus 0.55 percent. Amounts borrowed under tranche B bear interest at a rate of
TIBOR plus 1.2 percent. Spansion Japan must first fully draw under tranche A prior to drawing amounts under tranche B. Borrowings must be used for working
capital purposes and must be repaid no later than April 24, 2005.
Pursuant to the terms of the revolving credit facility agreement, Spansion 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 (mid-year) period;
• maintain an adjusted tangible net worth (as defined in the agreement) at an amount not less than 60 billion yen (approximately $579 million as of
December 26, 2004) as of the last day of each fiscal quarter;
• maintain total net income plus depreciation of $213 million as of the last day of fiscal year 2004; and
• ensure that as of the last day of each of the third and fourth quarter of 2004, the ratio of (a) net income plus depreciation to (b) the sum of interest
expenses plus the amount of scheduled debt repayments plus capital expenditures for its facilities located in Aizu-Wakamatsu, Japan, for such period, is
not less than 120%.
As of December 26, 2004, Spansion Japan was in compliance with these financial covenants.
As security for amounts outstanding under the revolving facility, Spansion Japan pledged its accounts receivable from Fujitsu. The accounts receivable are
held in trust pursuant to the terms of a trust agreement. Under the trust agreement, Spansion Japan is required to maintain the value of its accounts receivable at
specified thresholds (as defined by the trust agreement), based upon the amounts outstanding under tranche A and tranche B. In addition, the trustee collects
payments from Fujitsu into a separate trust account and releases these amounts to Spansion Japan, subject to the calculated thresholds, upon instruction from the
agent for the lenders. At any
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005