AMD 2006 Annual Report Download - page 132

Table of Contents
• entering into certain types of transactions with affiliates; and
• consolidating, merging or selling the Company’s assets as an entirety or substantially as an entirety.
In February 2006, the Company redeemed 35 percent (or $210 million) of the aggregate principal amount outstanding of its 7.75% Notes. The holders of
the 7.75% Notes received 107.75 percent of the principal amount of the 7.75% Notes plus accrued interest. In connection with this redemption, the Company
recorded an expense of approximately $16 million, which represents the 7.75% redemption premium paid by the Company, and a charge of $4 million, which
represents 35 percent of the unamortized issuance costs incurred in connection with the original issuance of the 7.75% Notes. The Company included these
charges in other income (expense), net in the consolidated statement of operations for the year ended December 31, 2006.
Issuance costs incurred in connection with this transaction in the amount of approximately $13 million will be amortized ratably over the term of the
7.75% Notes as interest expense, approximating the effective interest method. Of this amount approximately $4 million was charged to other income (expense),
net as a result of the redemption described above.
In October 2006, the holders of the 7.75 % Notes received a security interest that is equal and ratable to that held by the lenders under the October 2006
Term Loan. (See the section entitled “October 2006 Term Loan,” above for more information.)
Capital Lease Obligations
As of December 31, 2006, the Company had aggregate outstanding capital lease obligations of $160 million. Included in this amount is $141 million in
obligations under certain energy supply contracts which AMD Fab 36 KG entered into with local energy suppliers to provide Fab 36 with utilities (gas,
electricity, heating and cooling) to meet the energy demand for its manufacturing requirements. The Company accounted for certain fixed payments due under
these energy supply arrangements as capital leases pursuant to EITF Issue No. 01-8, Determining Whether an Arrangement Contains a Lease and SFAS No. 13,
Accounting for Leases. The capital lease obligations under the energy supply arrangements are payable in monthly installments through 2020.
The gross amount of assets recorded under capital leases totaled approximately $157 million and $116 million as of December 31, 2006 and December 25,
2005, and are included in the related property, plant and equipment category. Amortization of assets recorded under capital leases is included in depreciation
expense. Accumulated amortization of these leased assets was approximately $16 million and $6 million as of December 31, 2006 and December 25, 2005.
Future Payments on Debt and Capital Lease Obligations
For each of the next five years and beyond, the Company’s debt and capital lease payment obligations are:
Fiscal Year
Long-term
debt
(Principal
only)
Capital
leases
(In millions)
2007 $ 119 $ 25
2008 244 26
2009 334 25
2010 327 25
2011 113 26
Beyond 2011 2,500 188
Total 3,637 315
Less: amount representing interest — 155
Total $ 3,637 $ 160
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007