AMD 2010 Annual Report Download - page 112

The Company may elect to purchase or otherwise retire the remaining amount of the 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 it believes the market conditions are favorable to do so.
6.00% Convertible Senior Notes due 2015
On April 27, 2007, the Company issued $2.2 billion aggregate principal amount of the 6.00% Notes. The
6.00% Notes are general unsecured senior obligations. Interest is payable 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 the Company and Wells Fargo
Bank, National Association, as Trustee.
In the first quarter of 2009, the Company adopted the new guidance for accounting for convertible debt that
may be fully or partially settled in cash upon conversion and modified its accounting for its 6.00% Notes. To
retrospectively apply this new guidance, the proceeds from the issuance of the Company’s 6.00% Notes were
allocated between a liability (issued at a discount) and equity in a manner that reflects interest expense at the
market interest rate for similar nonconvertible debt as of the original issuance date of the 6.00% Notes. The debt
discount is being accreted from issuance through April 2015, the period the 6.00% Notes are expected to be
outstanding, with the accretion recorded as additional non-cash interest expense. The equity component is
included in the paid-in-capital portion of stockholders’ equity on the Company’s consolidated balance sheet. The
initial value of the equity component ($259 million), which reflects the equity conversion feature of the 6.00%
Notes, is equal to the initial debt discount.
In 2008 and 2009, the Company repurchased $60 million and $344 million, respectively, in aggregate
principal amount of its 6.00% Notes for $21 million and $161 million, respectively. The Company recorded a net
gain of approximately $34 million and $174 million, respectively, which is recorded in “Other income (expense),
net” in the consolidated statements of operations.
In 2010, the Company repurchased $1,016 million in aggregate principal amount of our outstanding 6.00%
Notes, for a total of $1,011 million. The Company recognized a $24 million net loss on the repurchases, which is
recorded in “Other income (expense), net” in the consolidated statements of operations. As of December 25,
2010, the remaining outstanding aggregate principal amount of the Company’s 6.00% Notes was $780 million
and the remaining carrying value was approximately $723 million, net of debt discount of $57 million.
The accounting for the repurchases of the 6.00% Notes requires that the amounts paid be allocated between
the liability and equity components in a manner that reflects interest expense at the market interest rate for
similar nonconvertible debt as of the repurchase dates of the 6.00% Notes. The equity component is included in
the paid-in-capital portion of stockholders’ equity on the Company’s consolidated balance sheet. For the
repurchase of its 6.00% Notes during 2010, the Company allocated $57 million of the $1,011 million aggregate
cash payment to the equity component and reduced the carrying amount of the debt by $954 million.
Information related to equity and debt components:
December 25,
2010
December 26,
2009
(In millions)
Carrying amount of the equity component ................ $171 $ 228
Principal amount of the 6.00% Notes .................... 780 1,796
Unamortized discount(1) ............................... (57) (155)
Net carrying amount ................................. $723 $1,641
(1) As of December 25, 2010, the remaining period over which the unamortized discount will be amortized is
52 months.
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