AMD 2007 Annual Report Download - page 132

Table of Contents
The indenture governing the 7.75% Notes contains certain covenants that limit, among other things, the Company’s ability and the ability of the
Company’s restricted subsidiaries, which include all of the Company’s subsidiaries, from:
• incurring additional indebtedness, except specified permitted debt;
• paying dividends and making other restricted payments;
• making certain investments if an event of a default exists, or if specified financial conditions are not satisfied;
• creating or permitting certain liens;
• creating or permitting restrictions on the ability of the restricted subsidiaries to pay dividends or make other distributions to us;
• using the proceeds from sales of assets;
• 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 the 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, 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 may elect to purchase or otherwise retire the remaining principal outstanding under the Company’s 7.75% Notes with cash, stock or other
assets from time to time in open market or privately negotiated transactions, either directly or through intermediaries, or by tender offer, when the Company
believes the market conditions are favorable to do so. Such purchases may have a material effect on the Company’s liquidity, financial condition and results of
operations.
Capital Lease Obligations
As of December 29, 2007, the Company had aggregate outstanding capital lease obligations of $234 million. Included in this amount is $213 million in
obligations under certain energy supply contracts which AMD entered into with local energy suppliers to provide the Company’s Dresden, Germany wafer
fabrication plants 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 FASB Statement 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 $215 million and $157 million as of December 29, 2007 and December 31,
2006, 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 $33 million and $16 million as of December 29, 2007 and December 31, 2006.
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Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008