AMD 1997 Annual Report Download - page 87

ADVANCED MICRO DEVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Stock Purchase Plan. The Company has an employee stock purchase plan (ESPP)
that allows participating employees to purchase, through payroll deductions,
shares of the Company's common stock at 85 percent of the fair market value at
specified dates. At December 28, 1997, 7,015 employees were eligible to
participate in the plan and 1,379,195 common shares remained available for
issuance under the plan. A summary of stock purchased under the plan is shown
below.
1997 1996 1995
------- ------- -------
(THOUSANDS EXCEPT
EMPLOYEE PARTICIPANTS)
Aggregate purchase price........................... $14,470 $13,138 $11,457
Shares purchased................................... 673 1,035 501
Employee participants.............................. 3,046 2,963 2,825
Stock Appreciation Rights Plans. The Company maintains three stock
appreciation rights plans under which stock appreciation rights (SARs) either
have been or may be granted to key employees. The number of SARs exercised
plus common stock issued under the stock option plans may not exceed the
number of shares authorized under the stock option plans. SARs may be granted
in tandem with outstanding stock options, in tandem with future stock option
grants or independently of any stock options. Generally, the terms of SARs
granted under the plans are similar to those of options granted under the
stock option plans, including exercise prices, exercise dates and expiration
dates. To date, the Company has granted only limited SARs, which become
exercisable only in the event of certain changes in control of the Company.
Restricted Stock Award Plan. The Company established the 1987 restricted
stock award plan under which up to two million shares of common stock may be
issued to employees, subject to terms and conditions determined at the
discretion of the Board of Directors. The Company entered into agreements to
issue 15,000 and 320,609 shares in 1997 and 1996, respectively. To date,
agreements covering 243,712 shares have been canceled without issuance and
1,501,559 shares have been issued pursuant to prior agreements. At
December 28, 1997, agreements covering 491,941 shares were outstanding under
the plan and no shares remained available for future awards. Outstanding
awards vest under varying terms within five years.
Stock-Based Compensation. As permitted under SFAS 123, the Company has
elected to follow APB 25 and related Interpretations in accounting for stock-
based awards to employees. Pro forma information regarding net income (loss)
and net income (loss) per share is required by SFAS 123 for awards granted
after December 31, 1994, as if the Company had accounted for its stock-based
awards to employees under the fair value method of SFAS 123. The fair value of
the Company's stock-based awards to employees was estimated using a Black-
Scholes option pricing model. The Black-Scholes model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, the Black-Scholes model requires the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's stock-based awards to employees have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its stock-
based awards to employees. The fair value of the Company's stock-based awards
to employees was estimated assuming no expected dividends and the following
weighted-average assumptions:
OPTIONS ESPP
------------------- -------------------
1997 1996 1995 1997 1996 1995
----- ----- ----- ----- ----- -----
Expected life (years).............. 3.35 3.16 2.43 0.25 0.25 0.25
Expected stock price volatility.... 54.69% 48.02% 53.29% 68.41% 47.81% 42.15%
Risk-free interest rate............ 6.21% 6.44% 5.88% 5.37% 5.29% 5.69%
F-22
Source: ADVANCED MICRO DEVIC, 10-K405, March 03, 1998