Quote Originally Posted by Renalt View Post
Been a long time but you can do two things to an item.

1. Break it down to some of it's raw components to craft something else.

2. If 100% spiritbonded you can turn the item into materia instead.
They took away the part where you lose the item a couple years ago, so you can just repeat whatever process gives the best bond and keep your nice gear while you generate materia.