AMD 2001 Annual Report Download - page 251

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Stock Purchase Plan. The Company has an employee stock purchase plan (ESPP) that
allows eligible and 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. As of December 30, 2001, 6,346,135 common
shares remained available for issuance under the plan. A summary of stock
purchased under the plan is shown below:
--------------------------------------------------------------------------------
(Thousands) 2001 2000 1999
--------------------------------------------------------------------------------
Aggregate purchase price $ 16,816 $ 12,388 $ 13,294
Shares purchased 1,220 815 861
================================================================================
Stock Appreciation Rights. The Company may grant stock appreciation rights
(SARs) to key employees under the 1992 stock incentive plan. 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 incentive plan. The Company may
grant SARs 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 plan are similar to those of options granted under the
stock incentive plans, including exercise prices, exercise dates and expiration
dates. To date, the Company has granted only limited SARs, which become
exercisable in the event of certain changes in control of AMD.
Restricted Stock Awards. In 1998, the Company adopted the 1998 stock incentive
plan under which the Company was authorized to issue two million shares of
common stock to employees who are not covered by Section 16 of the Securities
Exchange Act of 1934, as amended, subject to terms and conditions determined at
the discretion of the Company's Board of Directors. To date, the Company has
canceled agreements covering 40,791 shares without issuance and the Company has
issued 370,524 shares pursuant to prior agreements. As of December 30, 2001,
agreements covering 128,683 shares were outstanding. Activity under this plan is
included in the accompanying tables summarzing activity under the Company's
employee stock plans.
Shares Reserved for Issuance. The Company had a total of approximately
80,435,119 shares of common stock reserved as of December 30, 2001 for issuance
under employee stock option plans and the ESPP, including restricted stock
awards.
Stock-Based Compensation. The Company uses the intrinsic value method to account
for stock-based awards to employees. As permitted under SFAS 123, the Company
has elected to follow APB 25 and related interpretations in accounting for
stock-based awards to employees and elects to make pro forma fair value
disclosures as permitted by SFAS 123. The Company estimates the fair value of
its stock-based awards to employees using a Black-Scholes option pricing model.
The Black-Scholes model was developed for use in estimating the fair value of
traded options that have no vesting restrictions and are fully transferable. In
addition, the Black-Scholes model requires the input of highly subjective
assumptions including expected stock price volatility. Because our 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
our stock-based awards to employees. The fair value of our stock-based awards to
employees was estimated assuming no expected dividends and the following
weighted-average assumptions:
---------------------------------------------------------------------------------------------------------
Options ESPP
----------------------------------------------------------------------
2001 2000 1999 2001 2000 1999
---------------------------------------------------------------------------------------------------------
Expected life (years) 3.02 4.27 3.45 0.25 0.25 0.25
Expected stock price volatility 83.43% 72.10% 68.72% 85.03% 87.95% 67.10%
Risk-free interest rate 3.57% 6.55% 5.48% 2.58% 5.95% 4.77%
---------------------------------------------------------------------------------------------------------
40
Source: ADVANCED MICRO DEVIC, 10-K, March 07, 2002