Business Context and Reporting Period
Company: Applied Materials, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: September 17, 2004
Event: Entry into material definitive agreements regarding credit facilities.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, margins, or specific debt balances. It details the terms of two amended credit agreements:
- 364-Day Credit Agreement: $250,000,000 facility.
- Three-Year Credit Agreement: $250,000,000 facility.
- Outstanding Advances: None as of the filing date.
Material Changes Versus Prior Period
On September 17, 2004, Applied Materials amended both credit agreements with the following key changes:
- Extension: The 364-Day Credit Agreement term was extended to September 16, 2005.
- Covenant Removal: Both agreements removed the financial covenant limiting consolidated debt.
- Condition Precedent Removal: Both agreements eliminated the requirement for the company to represent that no material adverse changes have occurred as a condition for each advance.
- Interest Rates: Rates will fluctuate based in part on the company's long-term senior unsecured credit ratings.
Guidance, Outlook, Risks, and Contingencies
Risks and Default Triggers: The amended agreements contain affirmative and negative covenants, including limitations on liens and requirements for consolidated tangible net worth. A default may be triggered by:
- Failure to comply with financial covenants.
- Failure to pay material debt obligations in excess of $75 million.
- Acceleration of such obligations.
Consequences of Default: A default would permit participating banks to restrict access to the credit facility and require immediate repayment of outstanding advances and interest.
Management Commentary: The filing notes that other than the credit agreements, there is no material relationship between Applied Materials and the lenders, though routine banking business is conducted with some of them.
Investor Verification Checklist
- Verify the current status of the company's long-term senior unsecured credit ratings to understand interest rate implications.
- Confirm the company's consolidated tangible net worth to ensure compliance with remaining covenants.
- Monitor for any future draws on the $500 million total credit capacity.
- Review subsequent filings for any material adverse changes that may impact the validity of the removed representations.