AMD 2011 Annual Report Download - page 105

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The Company may elect to refinance the outstanding amount of our 5.75% Notes, or to purchase or
otherwise retire the outstanding amount of its 5.75% Notes in open market or privately negotiated transactions,
either directly or through intermediaries. Otherwise, the Company will pay off the outstanding amount of the
5.75% Notes at maturity.
6.00% Convertible Senior Notes due 2015
On April 27, 2007, the Company issued $2.2 billion aggregate principal amount of the 6.00% Convertible
Senior Notes due 2015(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 2011, the Company repurchased $200 million in aggregate principal amount of its 6.00% Notes in open
market transactions for $202 million. Prior to 2011, the Company repurchased $1.4 billion in aggregate principal
amount of the 6.00% Notes for $1.2 billion. As of December 31, 2011, the outstanding aggregate principal
amount of the 6.00% Notes was $580 million and the remaining carrying value was approximately $546 million,
net of debt discount of $34 million.
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.
For the repurchase of its 6.00% Notes during 2011, the Company allocated $9 million of the $200 million
aggregate cash payment to the equity component and reduced the carrying amount of the debt by $191 million.
Information related to equity and debt components:
December 31,
2011
December 25,
2010
(In millions)
Carrying amount of the equity component ................ $162 $171
Principal amount of the 6.00% Notes .................... 580 780
Unamortized discount(1) ............................... (34) (57)
Net carrying amount ................................. $546 $723
(1) As of December 31, 2011, the remaining period over which the unamortized discount will be amortized is
40 months.
Information related to interest rates and expense:
2011 2010 2009
(In millions, except percentages)
Effective interest rate ......................................... 8% 8% 8%
Interest cost related to contractual interest coupon ................... $45 $93 $117
Interest cost related to amortization of the discount .................. $11 $20 $ 25
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