AMD 2012 Annual Report Download - page 104

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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 29, 2012, the outstanding aggregate principal
amount of the 6.00% Notes was $580 million and the remaining carrying value was approximately $555 million,
net of debt discount of $25 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 29,
2012
December 31,
2011
(In millions)
Carrying amount of the equity component ................ $162 $162
Principal amount of the 6.00% Notes .................... 580 580
Unamortized discount(1) ............................... (25) (34)
Net carrying amount ................................. $555 $546
(1) As of December 29, 2012, the remaining period over which the unamortized discount will be amortized is
28 months.
Information related to interest rates and expense:
2012 2011 2010
(In millions, except percentages)
Effective interest rate ................................................. 8% 8% 8%
Interest cost related to contractual interest coupon ........................... $44 $45 $93
Interest cost related to amortization of the discount .......................... $ 9 $11 $20
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 the Company’s common stock
issuable upon conversion of the 6.00% Notes 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 the Company’s 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
96