AMD 2005 Annual Report Download - page 66

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and is subject to prevailing economic conditions and financial, business and other factors, many of which are beyond our control. We cannot assure you that we
will continue to generate sufficient cash flow or that we will be able to borrow funds in amounts sufficient to enable us to service our debt or to meet our working
capital and capital expenditure requirements. If we are not able to generate sufficient cash flow from operations or to borrow sufficient funds to service our debt
due to a failure to meet drawdown conditions or otherwise, we may be required to sell assets or equity, reduce capital expenditures, refinance all or a portion of
our existing debt or obtain additional financing. We cannot assure you that we will be able to refinance our debt, sell assets or equity or borrow more funds on
terms acceptable to us, if at all.
Our debt instruments impose restrictions on us that may adversely affect our ability to operate our business.
The indenture governing our 7.75% Notes contains various covenants that limit our ability to:
• incur additional indebtedness;
• Pay dividends and make other restricted payments;
• make certain investments;
• create or permit certain liens;
• create or permit restrictions on the ability of certain restricted subsidiaries to pay dividends or make other distributions to us;
• use the proceeds from sales of assets;
• enter into certain types of transactions with affiliates; and
• consolidate or merge or sell our assets as an entirety or substantially as an entirety.
In addition, the Fab 36 Loan Agreements contain restrictive covenants, including a prohibition on the ability of AMD Fab 36 KG and its affiliated limited
partners to pay us dividends and other payments and also require us to maintain specified financial ratios when group consolidated cash is below specified
amounts. Our ability to satisfy these covenants, financial ratios and tests can be affected by events beyond our control. We cannot assure you that we will meet
those requirements. A breach of any of these covenants, financial ratios or tests could result in a default under the applicable agreement.
Moreover, our agreements contain cross-default provisions whereby a default under one agreement would likely result in cross default under agreements
covering other borrowings. For example, the occurrence of a default with respect to any indebtedness that results in acceleration of the maturity date or any
failure to repay debt when due in an amount in excess of $50 million would cause a cross default under the indenture governing our 7.75% Notes. The occurrence
of a default under any of these borrowing arrangements would permit the applicable lenders or note holders to declare all amounts outstanding under those
borrowing arrangements to be immediately due and payable. If the note holders or the trustee under the indenture governing our 7.75% Notes accelerates the
repayment of borrowings, we cannot assure you that we will have sufficient assets to repay those borrowings and our other indebtedness.
If we are unable to comply with the covenants in the subsidy grant documents that we receive from the State of Saxony, the Federal Republic of
Germany and/or the European Union for Fab 30, Fab 36 or other research and development projects we may undertake in Germany, we may forfeit or
have to repay our subsidies, which could materially adversely affect us.
We receive capital investment grants and allowances from the State of Saxony and the Federal Republic of Germany for Fab 36. We have also received
capital investment grants and allowances as well as interest
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Source: ADVANCED MICRO DEVIC, 10-K, February 27, 2006