Summary
This 8-K/A filing from Advanced Micro Devices (AMD) on April 2, 2009, provides an amendment to a previous report concerning restructuring expenses. The company updated its estimates for a December 2008 restructuring plan, now projecting approximately $50 million in expenses for Q1 2009. These costs are primarily related to severance, employee benefits, contract terminations, asset impairments, and facility closures, with about $45 million expected to be cash expenditures within 2009. While further cost reduction actions are anticipated for the remainder of 2009 and beyond, AMD does not expect these additional charges to be material to its financial results. A notable update also concerns the December 2002 restructuring plan. Due to Spansion Inc.'s Chapter 11 bankruptcy filing and their indication to not perform under a sublease agreement with AMD, the company expects to record an additional $5 million charge in Q1 2009 related to this older restructuring. Investors should note the ongoing nature of restructuring charges and the impact of tenant bankruptcy on previously established agreements.
Key Highlights
- 1AMD expects to record approximately $50 million in restructuring expenses in Q1 2009 related to its December 2008 plan.
- 2The majority of the Q1 2009 restructuring expenses ($45 million) are expected to result in cash expenditures during 2009.
- 3Key components of the 2009 restructuring costs include severance ($23M), contract terminations ($13M), asset impairments ($7M), and facility exit costs ($7M).
- 4AMD anticipates further cost reduction actions in the remainder of 2009 and beyond, primarily related to facility consolidations/closures, but does not expect these to be material.
- 5An additional $5 million charge is expected in Q1 2009 related to the December 2002 restructuring plan.
- 6This additional charge is due to Spansion Inc.'s Chapter 11 bankruptcy and their indication not to honor a sublease agreement with AMD.