AMD 2006 Annual Report Download - page 35

Table of Contents
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,
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.
In addition, amounts outstanding under our October 2006 Term Loan are secured by, among other things, our accounts receivable, a pledge of the capital
stock of specific material subsidiaries, specific intercompany debt, and proceeds from any sale of our equity interest in Spansion Inc. Moreover, as a result of the
security interest granted to Morgan Stanley, holders of our outstanding 7.75% Senior Notes due 2012 (7.75% Notes) received an equal and ratable security
interest. These assets are not available to be used as security in other borrowing arrangements, which may also have a material adverse effect on our ability to
borrow additional 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 October 2006 Term Loan and the indenture governing our 7.75% Notes contain various covenants that limit our ability to:
• incur additional indebtedness, except specified permitted debt;
• pay dividends and make other restricted payments;
• make certain investments if a default or an event of default exists, or if specified financial conditions are not satisfied;
• 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;
• consolidate, merge or sell assets as an entirety or substantially as an entirety unless specified conditions are met;
• enter into certain types of transactions with affiliates;
• make or commit to make any capital expenditures in the ordinary course of business exceeding a certain amount;
• issue or sell any shares of capital stock of our restricted subsidiaries;
• permit domestic wholly-owned restricted subsidiaries to guarantee our indebtedness unless they also guarantee the October 2006 Term Loan; and
• permit our Consolidated Net Senior Secured Leverage Ratio (as defined in the October 2006 Term Loan) to exceed 2.25 to 1.00.
In addition, the Fab 36 Loan Agreements contain restrictive covenants, including a prohibition on the ability of our Germany subsidiary, AMD Fab 36
Limited Liability Company & Co. KG, or 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.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007