AMD 2008 Annual Report Download - page 86

initial conversion rate will be adjusted for certain anti-dilution events. In addition, the conversion rate will be
increased in the case of corporate events that constitute a fundamental change (as defined in the 5.75% Indenture)
of AMD under certain circumstances. Holders of the 5.75% Notes may require us to repurchase the 5.75% Notes
for cash equal to 100% of the principal amount to be repurchased plus accrued and unpaid interest upon the
occurrence of a fundamental change (as defined in the 5.75% Indenture) or a termination of trading (as defined in
the Indenture). Additionally, an event of default (as defined in the 5.75% Indenture) may result in the
acceleration of the maturity of the 5.75% Notes.
The 5.75% Notes rank equally in right of payment with our existing and future senior debt and senior in
right of payment to all of our future subordinated debt. The 5.75% Notes rank junior in right of payment to all
our existing and future senior secured debt to the extent of the collateral securing such debt and are structurally
subordinated to all existing and future debt and liabilities of our subsidiaries.
The net proceeds from the offering, after deducting discounts, commissions and offering expenses payable
by us, were approximately $1.5 billion. We used all of the net proceeds, together with available cash, to repay in
full the remaining outstanding balance of the October 2006 Term Loan. All security interests under the October
2006 Term Loan were released. In connection with this repayment, we recorded a charge of approximately $17
million to write off the remaining unamortized debt issuance costs associated with the October 2006 Term Loan.
We may elect to purchase or otherwise retire our 5.75% Notes with cash, stock or other assets from time to
time in open market or privately negotiated transactions, either directly or through intermediaries, or by tender
offer, when we believe the market conditions are favorable to do so. Such purchases may have a material effect
on our liquidity, financial condition and results of operations.
6.00% Convertible Senior Notes due 2015
On April 27, 2007, we issued $2.2 billion aggregate principal amount of 6.00% Convertible Senior Notes
due 2015. The 6.00% Notes bear interest at 6.00% per annum. Interest is payable in arrears on May 1 and
November 1 of each year beginning November 1, 2007 until the maturity date of May 1, 2015. The terms of the
6.00% Notes are governed by an Indenture (the 6.00% Indenture), dated April 27, 2007, by and between us and
Wells Fargo Bank, National Association, as Trustee.
Upon the occurrence of certain events described in the 6.00% Indenture, the 6.00% Notes will be
convertible into cash up to the principal amount, and if applicable, into shares of our common stock issuable
upon conversion of the 6.00% Notes (the 6.00% Conversion Shares) in respect of any conversion value above the
principal amount, based on an initial conversion rate of 35.6125 shares of common stock per $1,000 principal
amount of 6.00% Notes, which is equivalent to an initial conversion price of $28.08 per share. This initial
conversion price represents a premium of 100% relative to the last reported sale price of our common stock on
April 23, 2007 (the trading date preceding the date of pricing of the 6.00% Notes) of $14.04 per share. The
conversion rate will be adjusted for certain anti-dilution events. In addition, the conversion rate will be increased
in the case of corporate events that constitute a fundamental change (as defined in the 6.00% Indenture) under
certain circumstances. Holders of the 6.00% Notes may require us to repurchase the 6.00% Notes for cash equal
to 100% of the principal amount to be repurchased plus accrued and unpaid interest upon the occurrence of a
fundamental change or a termination of trading (as defined in the 6.00% Indenture). Additionally, an event of
default (as defined in the 6.00% Indenture) may result in the acceleration of the maturity of the 6.00% Notes.
The 6.00% Notes rank equally with our existing and future senior debt and are senior to all of our future
subordinated debt. The 6.00% Notes rank junior to all of our existing and future senior secured debt to the extent
of the collateral securing such debt and are structurally subordinated to all existing and future debt and liabilities
of our subsidiaries.
In connection with the issuance of the 6.00% Notes, on April 24, 2007, we purchased a capped call with
Lehman Brothers OTC Derivatives Inc., or Lehman Brother Derivatives, represented by Lehman Brothers
76