AMD 2008 Annual Report Download - page 94

In February 2006, we 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, we recorded a charge 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.
We may elect to purchase or otherwise retire the remaining principal outstanding under our 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 we believe the market conditions are favorable to do
so. Such purchases may have a material effect on our liquidity, financial condition and results of operations.
Capital Lease Obligations
As of December 27, 2008, we 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 our wafer fabrication facilities in Dresden, Germany with utilities (gas,
electricity, heating and cooling) to meet the energy demands for our manufacturing requirements. We account 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.
Operating Leases
We lease certain of our facilities, including our executive offices in Sunnyvale, California, and in some
jurisdictions we lease the land on which these facilities are built, under non-cancelable lease agreements that
expire at various dates through 2018. We lease certain of our manufacturing and office equipment for terms
ranging from one to five years. Our total future non-cancelable lease obligations as of December 27, 2008 were
$267 million, of which $38 million is accrued as a liability for certain facilities that were included in our 2002
and 2008 Restructuring Plans. We will make these payments through 2011.
Unconditional Purchase Commitments
Total non-cancelable purchase commitments as of December 27, 2008 were $2 billion for periods through
2020. These purchase commitments include $809 million related to contractual obligations of our Dresden
facilities to purchase energy and gas and approximately $934 million representing future payments to IBM for
the period from December 27, 2008 through 2015 pursuant to our amended and restated joint development
agreement. As IBM’s services are being performed ratably over the life of the agreement, we expense the
payments as incurred. The IBM agreement and the related payment obligations as well as the purchase
commitments of our Dresden facilities to purchase energy and gas will be transferred to The Foundry Company
upon consummation of the transactions contemplated by the Master Transaction Agreement. The remaining
purchase commitments also include non-cancelable contractual obligations to purchase raw materials, natural
resources and office supplies.
In connection with the acquisition of ATI, we made several commitments to the Minister of Industry under
the Investment Canada Act including that we will: increase spending on research and development in Canada to a
specified amount over the course of a three-year period when compared to ATI’s expenditures in this area in
prior years; maintain Canadian employee headcount at specified levels by the end of the three-year anniversary
of the acquisition; increase by a specified amount the number of our Canadian employees focusing on research
and development; attain specified Canadian capital expenditures over a three-year period; maintain a presence in
Canada via a variety of commercial activities for a period of five years; and nominate a Canadian for election to
our Board of Directors over the next five years. The remaining minimum required Canadian capital expenditures
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