AMD 2004 Annual Report Download - page 48

Table of Contents
Pursuant to the terms of the July 2003 Spansion Term Loan, Spansion is required to comply with the following financial covenants during an enhanced
covenant period, which occurs if either Spansion’s net domestic cash balance (as defined in the July 2003 Spansion Term Loan) as of the last day of any fiscal
quarter is below $60 million or if its net worldwide cash balance (as defined in the July 2003 Spansion Term Loan) as of the last day of any fiscal quarter is
below $130 million:
• maintain an adjusted tangible net worth (as defined in the July 2003 Spansion Term Loan) of not less than $850 million;
• achieve EBITDA according to the following schedule:
Period Amount
(in millions)
For the four quarters ending December 2004 $ 550
For the four quarters ending in 2005 $ 640
For the four quarters ending in 2006 $ 800
• maintain a fixed charge coverage ratio (as defined in the July 2003 Spansion Term Loan) according to the following schedule:
Period Ratio
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
In addition, during an enhanced covenant period, Spansion is restricted in its ability to pay cash dividends to us or Fujitsu.
As of December 26, 2004, Spansion’s net domestic cash balance was $119 million and its net worldwide cash balance was $196 million. Because
Spansion was not in an enhanced covenant period, the preceding financial covenants were not applicable.
Spansion Japan Term Loan and Guarantee
As a result of the formation of Spansion, the third-party loans of the Manufacturing Joint Venture were refinanced from the proceeds of a term loan entered
into between Spansion Japan, which owns the assets of the Manufacturing Joint Venture, 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 Spansion 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 26, 2004. Repayment occurs in equal, consecutive, quarterly principal
installments ending in June 2007. As of December 26, 2004, $127 million was outstanding under this term loan agreement. Spansion 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. Pursuant to the terms of the Spansion Japan Term Loan, 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 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
(approximately $579 million based on the exchange rate as of December 26, 2004);
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005