AMD 2005 Annual Report Download - page 53

Table of Contents
Fujitsu has 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. As of December 25, 2005, $72 million was outstanding under this term loan agreement. Spansion Japan’s assets are pledged as
security for its borrowings under this agreement.
Spansion Capital Lease Guarantee
We guaranteed certain capital leases entered into by Spansion and its subsidiaries totaling $35 million as of December 25, 2005. The amounts guaranteed
are reduced by the actual amount of lease payments paid by Spansion over the lease terms.
Spansion Operating Lease Guarantees
We guaranteed certain operating leases entered into by Spansion and its subsidiaries totaling $7 million as of December 25, 2005. The amounts guaranteed
are reduced by the actual amount of lease payments paid by Spansion over the lease terms.
No liability has been recognized for these guarantees related to Spansion under the provisions of FIN 45 because we concluded the fair value of the
guarantees is not significant after considering various factors including the recent IPO of Spansion, its credit rating, the ability of Spansion to make the payments
on these obligations and the short maturity of the indebtedness.
Other Financial Matters
Termination of Revolving Credit Facility. On December 23, 2005, we terminated the Amended and Restated Loan and Security Agreement dated as of
July 7, 2003 among us, AMD International Sales & Services Ltd., Bank of America, N.A., as agent and the other lenders party thereto and repaid all of our
existing obligations in full. Because no amounts were drawn under this credit facility at the time of our termination, the amount we paid to the lenders, which
consisted of outstanding fees and expenses, was not material. As part of the termination, the lenders terminated and released all security interests and liens held
by them as security for our obligations.
Secondary Equity Offering. On January 27, 2006, we closed the offering of 14,096,000 shares of our common stock. The net proceeds to us from this
equity offering, after deducting underwriting commissions and discounts, but prior to deducting offering expenses, were approximately $495 million. We will use
approximately $226 million of the net proceeds from this offering to fund the redemption of 35 percent of the aggregate principal amount of our 7.75% Senior
Notes due 2012. We intend to use the balance of the net proceeds for capital expenditures, working capital and other general corporate purposes, including the
possible repayment of indebtedness.
Depending on our cash position, we may from time to time elect to retire certain of our outstanding debt through open market or privately negotiated
transactions or by tender offer or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual
restrictions and other factors.
Spansion Agency Agreement. We have entered into an agency agreement with Spansion pursuant to which we have agreed to continue to ship products to
and invoice Spansion’s customers in our name on behalf of Spansion until Spansion has the capability to do so on its own. Prior to shipping the product to
Spansion’s customers, we purchase the applicable product from Spansion and pay Spansion the same amount that we invoice Spansion’s customers. In
performing these services, we act as Spansion’s agent for the sale of Spansion’s Flash memory products, and we do not receive a commission or fees for these
services. Under the agreement, Spansion assumes full responsibility for its products and these transactions, including establishing the pricing and determining
product specifications. Spansion also assumes credit and inventory risk related to these product sales.
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Source: ADVANCED MICRO DEVIC, 10-K, February 27, 2006