8-KLeadership ChangesAcquisitions & DispositionsMaterial Agreements+4

ADVANCED MICRO DEVICES INC 8-K Report, Material Agreement (Oct 30, 2006)

Filed October 30, 2006For Securities:AMD

Summary

Advanced Micro Devices Inc. (AMD) filed an 8-K report on October 30, 2006, detailing the consummation of its acquisition of ATI Technologies Inc. on October 24, 2006. This strategic move significantly expands AMD's market presence, particularly in the graphics processing unit (GPU) and integrated graphics markets, aiming to compete more effectively with industry rivals. The acquisition was financed through a combination of existing cash, marketable securities, and a substantial $2.5 billion term loan facility. The report also outlines the terms of this new credit facility, including interest rates, repayment schedule, and covenants that impose certain limitations on AMD's future financial activities and strategic decisions. Furthermore, AMD announced the appointment of two new directors to its board, James D. Fleck and John E. Caldwell, who were previously associated with ATI, signaling integration efforts at the highest governance level. Investors should note that detailed financial statements and pro forma information related to the ATI acquisition will be provided in a subsequent amendment.

Key Highlights

  • 1AMD has successfully completed the acquisition of ATI Technologies Inc. as of October 24, 2006.
  • 2The acquisition was financed in part by a new $2.5 billion term loan facility.
  • 3The Credit Agreement includes specific covenants that may restrict AMD's future operations and financial flexibility.
  • 4The total consideration for the acquisition involved approximately $4.3 billion in cash and 57,946,017 shares of AMD common stock.
  • 5AMD granted stock options and restricted stock units to its executive officers on October 24, 2006.
  • 6Two former ATI directors, James D. Fleck and John E. Caldwell, have joined AMD's Board of Directors.
  • 7AMD will file an amendment to this 8-K by January 9, 2007, to include financial statements and pro forma information for the acquired ATI business.

Frequently Asked Questions

This 8-K filing primarily announces the consummation of Advanced Micro Devices Inc.'s (AMD) acquisition of ATI Technologies Inc. and details the financing arrangements, including a new $2.5 billion credit facility.

The acquisition was funded through a combination of AMD's existing cash, cash equivalents, marketable securities, and a new $2.5 billion term loan facility entered into with several financial institutions.

The credit agreement bears variable interest rates (base rate or Eurodollar Rate plus margins) and requires quarterly principal repayments starting December 2006 through December 2013. AMD can prepay without penalty, but must also make mandatory prepayments from specific events like debt incurrence, stock issuance, or asset sales. The agreement also includes covenants that limit AMD's ability to incur additional debt, create liens, sell assets, make restricted payments, and exceed certain financial ratios.

Detailed financial statements and pro forma financial information related to the acquired ATI business are not included in this initial filing. AMD has stated these will be provided in an amendment to this Current Report on Form 8-K, to be filed no later than January 9, 2007.