AMD 2007 Annual Report Download - page 27

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• create or permit certain liens;
• create or permit restrictions on the ability of certain restricted subsidiaries to pay dividends or make other distributions to us;
• use the proceeds from the sale of assets;
• enter into certain types of transactions with affiliates; and
• consolidate, merge or sell assets as an entirety or substantially as an entirety unless specified conditions are met.
In addition, our Fab 36 term loan facility agreement among our German subsidiary, AMD Fab 36 Limited Liability Company & Co. KG, as borrower, and
a consortium of banks lead by Dresdner Bank AG, as lenders, dated April 21, 2004 (Fab 36 Term Loan), contains restrictive covenants, including a prohibition
on the ability of AMD Fab 36 KG and its affiliated limited partners to pay us dividends and other payments and also require us to maintain specified financial
ratios when group consolidated cash is below specified amounts. Our ability to satisfy these covenants, financial ratios and tests can be affected by events beyond
our control. We cannot assure you that we will meet those requirements. A breach of any of these covenants, financial ratios or tests could result in a default
under the applicable agreement.
Our loan agreements contain cross-default provisions whereby a default under one agreement would likely result in cross defaults 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 indentures governing our 5.75% Convertible Senior Notes due 2012 (5.75% Notes), 6.00%
Convertible Senior Notes due 2015 (6.00% Notes) and 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 note holders
or the trustees under the indentures governing our 5.75% Notes, 6.00% Notes or 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 maintain our cost management efforts, our business could be materially adversely affected.
During 2007, we took a number of actions to manage our expenses and realign our cost structure. We anticipate that during the first quarter of 2008, our
operating expenses will increase by approximately five percent compared to the fourth quarter of 2007. We cannot assure you that we will be able to maintain our
expenses at appropriately reduced levels, and if we are unable to do so, our goal of achieving profitability could fail to materialize in accordance with our
expectations. In addition, if these reductions are not effectively managed, we may experience unanticipated effects from these reductions causing harm to our
business and customer relationships.
We may not realize all of the anticipated benefits of our acquisition of ATI Technologies Inc.
The success of our acquisition of ATI depends, in part, on our ability to realize the anticipated synergies, cost savings and growth opportunities from
integrating the businesses of ATI with the businesses of AMD, and failure to realize these anticipated benefits could cause our business to be materially adversely
affected. Our success in realizing these benefits and the timing of this realization depends upon our successful integration of ATI’s operations. The integration of
two independent companies is a complex, costly, and time-consuming process. The difficulties of combining the operations of the companies include, among
others:
• retaining key employees;
• bridging possible differences in cultures and management philosophies;
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Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008