AMD 2006 Annual Report Download - page 36

Table of Contents
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 or any failure to repay debt when due in an amount in
excess of $50 million would cause a cross default under the October 2006 Term Loan or 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 lenders under the October 2006 Term Loan or 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 subsidies from these governmental entities for Fab 30. From time to time, we also apply for and
obtain subsidies from the State of Saxony, the Federal Republic of Germany and the European Union for certain research and development projects. The subsidy
grant documents typically contain covenants that must be complied with, and noncompliance with the conditions of the grants, allowances and subsidies could
result in the forfeiture of all or a portion of any future amounts to be received, as well as the repayment of all or a portion of amounts received to date. If we are
unable to comply with any of the covenants in the grant documents, we could be materially adversely affected.
If our microprocessors are not compatible with some or all industry-standard software and hardware, we could be materially adversely affected.
Our microprocessors may not be fully compatible with some or all industry-standard software and hardware. Further, we may be unsuccessful in correcting
any such compatibility problems in a timely manner. If our customers are unable to achieve compatibility with software or hardware after our products are
shipped in volume, we could be materially adversely affected. In addition, the mere announcement of an incompatibility problem relating to our products could
have a material adverse effect on us.
Costs related to defective products could have a material adverse effect on us.
Products as complex as those we offer may contain defects or failures when first introduced or when new versions or enhancements to existing products
are released. We cannot assure you that, despite our testing procedures, errors will not be found in new products or releases after commencement of commercial
shipments in the future, which could result in loss of or delay in market acceptance of our products, material recall and replacement costs, delay in recognition or
loss of revenues, writing down the inventory of defective products, the diversion of the attention of our engineering personnel from product development efforts,
defending against litigation related to defective products or related property damage or personal injury, and damage to our reputation in the industry and could
adversely affect our relationships with our customers. In addition, we may have difficulty identifying the end customers of the defective products in the field. As
a result, we could incur substantial costs to implement modifications to correct defects. Any of these problems could materially adversely affect us.
In addition, because we sell directly to consumers, we could be subject to potential product liability claims if one of our products causes, or merely appears
to have caused, an injury. Claims may be made by consumers or others selling our products, and we may be subject to claims against us even if an alleged injury
is due to the actions of others. A product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities
could have a material adverse effect on our business.
31
Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007