AMD 2009 Annual Report Download - page 68

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Interest Income
Interest income of $16 million in 2009 decreased from $39 million in 2008 primarily due to a 66 percent
decrease in weighted-average interest rates during 2009 compared to 2008 partially offset by an increase in
average cash balances during 2009.
Interest income of $39 million in 2008 decreased from $73 million in 2007, primarily due to a 39 percent
decrease in weighted-average interest rates and lower average cash balances during 2008 compared to 2007.
Interest Expense
2009 2008 2007
(In millions)
Total interest charges ................................................ $439 $400 $405
Less: interest capitalized .............................................. (1) (9) (23)
Interest expense ..................................................... $438 $391 $382
Total interest charges of $439 million in 2009 increased by $39 million from $400 million in 2008 primarily
due to GF’s issuance of Class A Notes and Class B Notes to ATIC on March 2, 2009. These notes resulted in $92
million of interest expense in 2009. The increase was partially offset by a decrease of interest expense due to a
lower principal amount outstanding under the 700 million euro Term Loan Facility Agreement among AMD Fab
36 KG and a consortium of banks led by Dresdner Bank AG (Fab 36 Term Loan) and our 6.00% Convertible
Senior Notes due 2015 (6.00% Notes) due to repurchases occurring in the second and third quarters of 2009.
There was $1 million of interest capitalization in 2009 related to GF’s construction of Fab 2, its semiconductor
facility in Saratoga County, New York.
Total interest charges of $400 million in 2008 decreased by $5 million from $405 million in 2007 primarily
due to a lower outstanding aggregate debt balance in 2008 compared to 2007. During 2008, we repaid $134
million of the principal amount outstanding under the Fab 36 Term Loan and repurchased $63 million of silent
partnership contributions (which we classified as debt) from the unaffiliated partners of AMD Fab 36 KG. In
addition, we did not incur any interest pursuant to our Credit Agreement with Morgan Stanley Senior Funding
Inc., dated October 24, 2006 (October 2006 Term Loan) in 2008 whereas in 2007 we incurred interest through
August 2007. These factors were partially offset by the increased interest incurred on our 6.00% Notes and
5.75% Notes, which were outstanding for all of 2008 but only for a portion of 2007.
Capitalized interest expense of $9 million in 2008 decreased by $14 million from $23 million in 2007.
Capitalized interest expense decreased by an aggregate of $17 million from 2007 to 2008 because we
discontinued capitalizing interest for Fab 36 in the first quarter of 2008 when it was in full production and we
discontinued capitalizing interest for our campus in Austin, Texas in the fourth quarter of 2007 upon completion
of construction. This was partially offset by a $3 million increase in capitalized interest expense related to the
conversion of the Fab 38 facility in Dresden, Germany.
In the first quarter of 2009 we retrospectively adopted new accounting guidance for certain convertible debt
(see Note 11 of Notes to Consolidated Financial Statements). This new guidance requires issuers of certain
convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for
the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the
issuer’s nonconvertible debt borrowing rate. This adoption impacted our accounting for our 6.00% Notes
whereby the equity component was included in the capital in excess of par value portion of stockholders’ equity
on the balance sheet and the value of the equity component was treated as an original issue discount for purposes
of accounting for the debt component. Higher interest expense resulted by recognizing accretion of the
discounted carrying value of the 6.00% Notes to their face amount as interest expense over the term of the 6.00%
Notes. Because the guidance required retrospective adoption, interest expense reported in the accompanying
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