AMD 2010 Annual Report Download - page 31

• require us to use a substantial portion of our cash flow from operations to make debt service payments;
• place us at a competitive disadvantage compared to our less leveraged competitors; and
• increase our vulnerability to the impact of adverse economic and industry conditions.
We may not be able to generate sufficient cash to service our debt obligations.
Our ability to make payments on and to refinance our debt will depend on our financial and operating
performance, which may fluctuate significantly from quarter to quarter, and is subject to prevailing economic
conditions and financial, business and other factors, many of which are beyond our control. We cannot assure
you that we will be able to generate sufficient cash flow or that we will be able to borrow funds in amounts
sufficient to enable us to service our debt or to meet our working capital requirements. If we are not able to
generate sufficient cash flow from operations or to borrow sufficient funds to service our debt, we may be
required to sell assets or equity, reduce expenditures, refinance all or a portion of our existing debt or obtain
additional financing. We cannot assure you that we will be able to refinance our debt, sell assets or equity or
borrow more funds on terms acceptable to us, if at all.
Our debt instruments impose restrictions on us that may adversely affect our ability to operate our
business.
The indentures governing our 8.125% Notes and 7.75% Notes contain various covenants which limit our
ability to:
• incur additional indebtedness;
• pay dividends and make other restricted payments;
• make certain investments, including investments in our unrestricted subsidiaries;
• 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 sales of assets;
• enter into certain types of transactions with affiliates; and
• consolidate or merge or sell our assets as an entirety or substantially as an entirety.
In addition, the guarantee agreement related to the euro 700 Million Term Loan Facility that we transferred
to GF contains restrictive covenants that require us to maintain specified financial ratios when group
consolidated cash is below specified amounts. Our ability to satisfy these 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 financial ratios or tests could result in a default under the term loan facility, which could cause the lenders
to exercise their rights under the guarantee agreement.
The agreements governing our borrowing arrangements 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 7.75% Notes,
8.125% Notes, 5.75% Notes and 6.00% Notes. The occurrence of a default under any of these borrowing
arrangements would permit the applicable note holders to declare all amounts outstanding under those borrowing
arrangements to be immediately due and payable. If the note holders or the trustee under the indentures
governing our 7.75% Notes, 8.125% Notes, 5.75% Notes or 6.00% Notes accelerate the repayment of
borrowings, we cannot assure you that we will have sufficient assets to repay those borrowings and our other
indebtedness.
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