AMD 2008 Annual Report Download - page 142

• 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 the Company;
• 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 27, 2008, the Company had aggregate outstanding capital lease obligations of $225 million.
Included in this amount is $195 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 $213 million and $215
million as of December 27, 2008 and December 29, 2007, 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 $49 million and $33 million as of
December 27, 2008 and December 29, 2007.
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