AMD 2008 Annual Report Download - page 76

Effects of Restructuring Plans
In the second and fourth fiscal quarters of 2008 we implemented restructuring plans to reduce our cost
structure. The plans primarily involve the termination of employees. In addition, the restructuring plan
implemented in the fourth fiscal quarter of 2008 involves additional cost reduction actions that either have taken
place during the fourth fiscal quarter of 2008 or will take place in 2009. The restructuring charges for the
restructuring plan implemented during the second fiscal quarter of 2008 represent primarily severance and costs
related to the continuation of certain employee benefits and the costs related to the termination of a contract. The
restructuring charges for the restructuring plan implemented during the fourth fiscal quarter of 2008 represent
primarily severance and costs related to the continuation of certain employee benefits, contract or program
termination costs, asset impairments and exit costs for facility site consolidations and closures. The second
quarter 2008 restructuring plan was substantially completed during the fourth quarter of 2008. The fourth quarter
2008 restructuring plan is expected to be substantially completed during 2009. For 2008 these restructuring
charges were $90 million. Of the $90 million, approximately $28 million will result in cash expenditures in 2009.
These charges have been aggregated and appear on the line item entitled “Restructuring charges” in our 2008
consolidated statement of operations.
In December 2002, we initiated a restructuring plan (the 2002 Restructuring Plan) to further align the cost
structure to industry conditions resulting from weak customer demand and industry-wide excess inventory. The
2002 Restructuring Plan resulted in the consolidation of facilities, primarily at the Sunnyvale, California site and
at sales offices worldwide. We vacated and are attempting to sublease certain facilities that we currently occupy
under long-term operating leases through 2011. At December 27, 2008 and December 29, 2007, we had
approximately $32 million and $50 million respectively of 2002 restructuring related accruals recorded which
will continue to be paid through 2011.
In January 2009 we announced additional headcount reductions primarily focused on manufacturing and
sales, marketing, and general and administrative functions and cost reduction activities including temporary
salary reductions for employees in the United States and Canada and suspension of certain benefits such as our
401(k) plan matching program. These additional cost reduction actions will result in additional charges in the
first and second quarters of 2009.
Interest Income
Interest income of $39 million in 2008 decreased from $73 million in 2007, primarily due to a 39 percent
decrease in weighted-average interest rates and lower average cash balances during 2008 compared to 2007.
Interest income of $73 million in 2007 decreased from $116 million in 2006, primarily due to lower average
cash and marketable securities balances in 2007 compared to 2006, partially offset by a 7 percent increase in
weighted-average interest rates in 2007 compared to 2006.
Interest Expense
2008 2007 2006
(In millions)
Total interest charges ....................................................... $375 $390 $136
Less: interest capitalized ..................................................... (9) (23) (10)
Interest expense ............................................................ $366 $367 $126
Total interest charges of $375 million in 2008 decreased by $15 million from $390 million in 2007
primarily due to a lower outstanding aggregate debt balance in 2008 compared to 2007. During 2008, we repaid
$134 million of the principal amount outstanding under our Fab 36 Term Loan and repurchased $63 million of
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