As filed with the Securities and Exchange Commission on May 17, 2002
Registration No. 333-84028
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________
ADVANCED MICRO DEVICES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware One AMD Place 94-1692300
(State or Other Jurisdiction of Sunnyvale, CA 94086 (I.R.S. Employer
Incorporation or Organization) (408) 732-2400 Identification Number)
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Thomas M. McCoy, Esq.
Senior Vice President,
General Counsel and Secretary
One AMD Place
Sunnyvale, CA 94086
(408) 732-2400
(Name, Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent For Service)
Copy To:
Tad J. Freese, Esq.
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
(415) 391-0600
Approximate date of commencement of proposed sale to the public:
From time to time after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
________________
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed Proposed Maximum Amount Of
Title Of Each Class Of Amount To Maximum Offering Aggregate Offering Registration
Securities To Be Registered Be Registered Price Per Unit Price(1) Fee
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4.75% Convertible Senior Debentures Due 2022 $500,000,000 100% $500,000,000 $46,000*
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Common Stock, par value $0.01 per share 21,385,800 shares (2)
====================================================================================================================================
* Previously paid with filing of registration statement on March 8, 2002.
(1) Equals the aggregate principal amount of the debentures being registered.
Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o) under the Securities Act.
(2) Represents the number of shares of common stock that are currently issuable
upon conversion of the debentures. Pursuant to Rule 416(a) under the
Securities Act, this registration statement shall be deemed to cover any
additional number of shares of common stock as may be issued from time to
time upon conversion of the debentures as a result of the antidilution
provisions relating to the debentures. No additional consideration will be
received for the common stock, and therefore no registration fee is required
pursuant to Rule 457(i).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is incomplete and may be changed. The +
+selling securityholders may not sell these securities until the registration +
+statement filed with the Securities and Exchange Commission is effective. This+
+prospectus is not an offer to sell these securities and is not soliciting an +
+offer to buy these securities in any state where the offer or sale is not +
+permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 17, 2002
PROSPECTUS
$500,000,000
[LOGO]
Advanced Micro Devices, Inc.
4.75% Convertible Senior Debentures Due 2022
__________________
. In January 2002, we issued and sold $500,000,000 aggregate principal amount
of our 4.75% Convertible Senior Debentures Due 2022 in a private offering.
This prospectus will be used by selling securityholders to resell the
debentures and the common stock issuable upon conversion of the debentures.
. The debentures currently bear interest at an annual rate of 4.75%. On August
1, 2008, August 1, 2011 and August 1, 2016, the interest rate on the
debentures will be reset to a rate per annum equal to the interest rate
payable 120 days prior to such reset date on 5-year U.S. Treasury Notes plus
0.43%. However, in no event will such interest rate be reset below 4.75% or
above 6.75% per annum. Interest is payable February 1 and August 1 of each
year, beginning August 1, 2002. On February 1, 2022, the maturity date of
the debentures, holders of debentures will receive $1,000 plus accrued and
unpaid interest for each debenture.
. Holders may convert all or some of their debentures at any time prior to the
close of business on the business day immediately preceding the maturity
date at a conversion price of $23.38 per share, subject to prior redemption
of the debentures. The conversion price is subject to adjustment. Upon
conversion, a holder will not receive any cash representing accrued and
unpaid interest.
. The debentures are not entitled to any sinking fund. We may redeem the
debentures on or after February 5, 2005 at the prices described in this
prospectus; provided that we may not redeem the debentures prior to February
5, 2006 unless the last reported sale price of our common stock is at least
130% of the then effective conversion price for at least 20 trading days
within a period of 30 consecutive trading days ending within five trading
days of the date of the redemption notice.
. We do not intend to list the debentures on any national securities exchange
or the Nasdaq National Market. Our common stock is listed on the New York
Stock Exchange under the symbol "AMD." On May 16, 2002, the last reported
sale price of our common stock on the New York Stock Exchange was $12.40 per
share.
Investing in the debentures involves risk. See "Risk Factors" beginning on
page 4 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is __________, 2002
_____________
TABLE OF CONTENTS
Page
----
Prospectus Summary ................................................... 1
Risk Factors ......................................................... 4
Use of Proceeds ...................................................... 14
Price Range of Common Stock and
Dividend Policy ................................................... 14
Ratio of Earnings to Fixed Charges ................................... 14
Description of Debentures ............................................ 15
Description of Capital Stock ......................................... 26
Selling Securityholders .............................................. 27
Plan of Distribution ................................................. 29
Material United States Federal Income
Tax Considerations ................................................ 31
Legal Matters ........................................................ 36
Experts .............................................................. 36
Incorporation by Reference ........................................... 36
Where You Can Find More Information .................................. 37
_____________
i
PROSPECTUS SUMMARY
This summary highlights some information contained or incorporated by
reference in this prospectus. It may not contain all of the information that is
important to you. Important information is incorporated by reference into this
prospectus. To understand this offering fully, you should read carefully the
entire prospectus, including "Risk Factors," the incorporated consolidated
financial statements and related notes and the information incorporated by
reference in this prospectus. References in this prospectus to "us," "we," the
"Company" or "AMD" shall mean Advanced Micro Devices, Inc. and our consolidated
subsidiaries, unless the context indicates otherwise.
Advanced Micro Devices, Inc.
We were founded in 1969, became a publicly held company in 1972 and since
1979 have been listed on the New York Stock Exchange under the trading symbol
"AMD." We design, engineer, manufacture, market and sell integrated circuits for
the personal computer, networked computer and communications markets.
We have sales offices worldwide and have manufacturing or testing
facilities in Sunnyvale, California; Austin, Texas; Dresden, Germany;
Aizu-Wakamatsu, Japan; Bangkok, Thailand; Penang, Malaysia; Suzhou, China; and
Singapore. Our mailing address and executive offices are located at One AMD
Place, Sunnyvale, California 94086, and our telephone number at that location is
(408) 732-2400.
The Offering
Issuer .................................... Advanced Micro Devices, Inc.
Securities offered ........................ $500 million aggregate principal amount of 4.75% Convertible Senior Debentures
Due 2022.
Interest .................................. The debentures currently bear interest at an annual rate of 4.75%. On August 1,
2008, August 1, 2011 and August 1, 2016 the interest rate on the debentures
will be reset to a rate per annum equal to the interest rate payable 120 days
prior to such reset date on 5-year U.S. Treasury Notes plus 0.43%. However, in
no event will the interest rate be reset below 4.75% or above 6.75% per annum.
Interest is payable on February 1 and August 1 of each year, beginning on
August 1, 2002.
Maturity date ............................. February 1, 2022.
Conversion rights ......................... Holders may convert all or some of their debentures at any time prior to the
close of business on the business day immediately preceding the maturity date
at a conversion price of $23.38 per share. The initial conversion price is
equivalent to a conversion rate of approximately 42.77 shares per $1,000
principal amount of debentures. The conversion price is subject to adjustment.
Upon conversion, holders will not receive any cash representing accrued
interest. For more information, see "Description of Debentures--Conversion of
Debentures."
Ranking ................................... The debentures are our senior unsecured obligations and will rank equally with
all of our other senior unsecured indebtedness. The debentures effectively rank
behind all of our secured debt to the extent of the value of the assets securing
those debts, and are structurally subordinated to all liabilities, including trade
payables, of our subsidiaries. At March 31, 2002, we had no secured debt outstanding
under our credit facility, and our subsidiaries had approximately $1.1 billion of
outstanding indebtedness and other liabilities. For more information, see
"Description of Debentures--Ranking."
Sinking fund .............................. None.
Optional redemption ....................... We may redeem some or all of the debentures on or after February 5, 2005, at
the redemption prices set forth in this prospectus; provided that we may not
redeem the debentures prior to February 5, 2006 unless the last reported sale
price of our common stock is at least 130% of the then effective conversion
price for at least 20 trading days within a period of 30 consecutive trading
days ending within five trading days of the date of the redemption notice. For
more information, see
1
"Description of Debentures-Optional Redemption by AMD."
Purchase of debentures by us at the option
of the holder ............................ Holders may require us to repurchase all or a portion of their
debentures on February 1, 2009, February 1, 2012 and February 1,
2017 at 100% of the principal amount of the debentures to be
repurchased, plus accrued and unpaid interest to, but excluding,
the repurchase date. For more information, see "Description of
Debentures-Repurchase at Option of the Holder on Purchase Dates."
Fundamental Change .......................... If we undergo a Fundamental Change, as described in this
prospectus, holders will have the option to require us to
repurchase for cash all or any portion of their debentures not
previously called for redemption. We will pay a repurchase price
equal to 100% of the principal amount of the debentures to be
repurchased plus accrued and unpaid interest to, but excluding,
the repurchase date. The purpose of the repurchase option is to
afford holders protection upon the occurrence of certain
transactions that result in a change to our basic structure or
ownership. However, the term "Fundamental Change" may not include
other events that might adversely affect our financial condition.
For more information, see "Description of Debentures-Repurchase
at Option of the Holder Upon a Fundamental Change."
Use of proceeds ............................. The selling securityholders will receive all of the proceeds from
the sale under this prospectus of debentures and the common stock
issuable upon conversion of the debentures. We will not receive
any proceeds from these sales.
United States federal income tax
considerations ........................... Each holder agrees in the indenture, for United States federal
income tax purposes, to treat the debentures as "contingent
payment debt instruments" and to abide by our application of the
Treasury regulations that govern contingent payment debt
instruments, including our determination that the rate at which
interest will be deemed to accrue for federal income tax purpose
will be 9.625% compounded semi-annually, which is the rate
comparable to the rate at which we would borrow on a
noncontingent, nonconvertible borrowing with terms and condition
otherwise comparable to the debentures. Accordingly, each holder
will be required to accrue interest at this rate (subject to
certain adjustments as described in greater detail in "Certain
United States Federal Income Tax Considerations"), with the
result that a U.S. Holder will recognize taxable income
significantly in excess of cash received while the debentures ar
outstanding. In addition, a U.S. Holder will recognize gain upon
a conversion of a debenture into our common stock equal to the
excess, if any, of the value of the common stock received on the
conversion over the sum of the original purchase price of the
U.S. Holder's debenture and accrued but unpaid interest.
Moreover, gain recognized on conversion or other taxable
disposition of a debenture will generally be treated as ordinary
income. However, the proper U.S. federal income tax treatment of
a debenture is uncertain in various respects. If the agreed upon
treatment was successfully challenged by the Internal Revenue
Service, it might be determined that, among other differences, a
holder should have accrued interest income at a lower rate,
should not have recognized income or gain upon the conversion,
and should not have recognized ordinary income upon a taxable
disposition of its debentures. For more information, see "Certai
United States Federal Income Tax Considerations."
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE TAX
TREATMENT OF THE DEBENTURES AND WHETHER A PURCHASE OF THE
DEBENTURES IS ADVISABLE IN LIGHT OF THE AGREED UPON TAX TREATMENT
AND THE INVESTOR'S PARTICULAR TAX SITUATION.
Common stock ................................ Our common stock is listed on The New York Stock Exchange under
the symbol "AMD."
2
We have not authorized any dealer, salesperson or other person to give any
information or to make any representations to you other than the information
contained in this prospectus. You must not rely on any information or
representations not contained in this prospectus as if we had authorized it. The
information contained in this prospectus is current only as of the date on the
cover page of this prospectus, and may change after that date. We do not imply
that there has been no change in the information contained in this prospectus or
in our affairs since that date by delivering this prospectus.
This prospectus incorporates important business and financial information
about us that is not included in or delivered with this prospectus. This
information is available without charge to you upon written or oral request. If
you would like a copy of any of this information, please submit your request to
One AMD Place, Sunnyvale, CA 94086, Attention: Legal Department, or call (408)
732-2400 and ask to speak to someone in our Legal Department.
FORWARD-LOOKING STATEMENTS
Discussions contained in this prospectus and the documents incorporated by
reference in this prospectus include forward-looking statements. These
forward-looking statements involve numerous risks and uncertainties and should
not be relied upon as predictions of future events as we cannot assure you that
the events or circumstances reflected in these statements will be achieved or
will occur. You can identify forward-looking statements by the use of
forward-looking terminology including "believes," "expects," "may," "will,"
"should," "seeks," "approximately," "intends," "plans," "pro forma,"
"estimates," or "anticipates" or the negative of these words and phrases or
other variations of these words and phrases or comparable terminology, or by
discussions of strategy, plans or intentions. These forward-looking statements
are based on current expectations and beliefs and involve numerous risks and
uncertainties that could cause actual results to differ materially. The
forward-looking statements relate to, among other things:
. operating results;
. anticipated cash flows;
. capital expenditures;
. gross margins;
. adequacy of resources to fund operations and capital investments;
. our ability to produce AMD Athlon(TM) and AMD Duron(TM)
microprocessors in the volume required by customers on a timely basis;
. our ability to maintain average selling prices of seventh-generation
microprocessors despite aggressive marketing and pricing strategies of
our competitors;
. our ability to increase customer and market acceptance of our seventh-
and eighth-generation microprocessors;
. our ability, and the ability of third parties, to provide timely
infrastructure solutions, such as motherboards and
chipsets, to support our microprocessors;
. a recovery in the communication and networking industries leading to
an increase in the demand for Flash memory products;
. the effect of foreign currency hedging transactions;
. the process technology transition in our submicron integrated circuit
manufacturing and design facility in Dresden, Germany, known as
Dresden Fab 30; and
. the financing and construction of the Fujitsu AMD Semiconductor
Limited, or FASL, manufacturing facilities.
See "Risk Factors" below, as well as such other risks and uncertainties as
are detailed in our other documents incorporated by reference in this prospectus
for a discussion of the factors that could cause actual results to differ
materially from the forward-looking statements. You are cautioned not to place
undue reliance on forward-looking statements, which reflect management's
analysis only. We assume no obligation to update forward-looking statements.
AMD, Advanced Micro Devices, AMD-K6, AMD Athlon, AMD Duron, AMD Opteron,
Am486, Quantispeed, 3DNow!, Elan and MirrorBit are either trademarks or
registered trademarks of Advanced Micro Devices, Inc. Other terms used to
identify companies and products may be trademarks of their respective owners.
3
RISK FACTORS
You should consider the risk factors below as well as the other information
set forth or incorporated by reference in this prospectus. If any of the
following risks actually occurs, our business, financial condition or results of
operations could be materially and adversely affected. In such case, our ability
to make payments on the debentures could be impaired, the trading price of the
debentures and our common stock could decline, and you could lose all or part of
your investment. This prospectus also contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including the risks faced by us described below, elsewhere in this
prospectus and in the documents incorporated by reference in this prospectus.
Our business, results of operations and financial condition are subject to a
number of risk factors, including the following:
Risks Related to Our Business
Weak market demand for our Flash memory products or any delay in our transition
to MirrorBit Technology may have a material adverse impact on us.
The demand for Flash memory devices continues to be weak due to the
sustained downturn in the communications and networking equipment industries and
excess inventories held by our customers. In addition, we expect competition in
the market for Flash memory devices to increase in 2002 and beyond as competing
manufacturers introduce new products and industry-wide production capacity
increases. We may be unable to maintain or increase our market share in Flash
memory devices as the market develops and Intel and other competitors introduce
competitive products. A continued decline in unit sales of our Flash memory
devices and/or lower average selling prices could have a material adverse effect
on us.
In 2001, we announced a new memory cell architecture, our MirrorBit(TM)
technology that enables Flash memory products to hold twice as much data as
standard Flash memory devices. MirrorBit technology is expected to result in
reduced cost of our products. We plan to produce our first products with
MirrorBit technology in the second half of 2002. Any delay in our transition to
MirrorBit technology, or failure to achieve the cost savings we expect, could
reduce our ability to be competitive in the market and could have a material
adverse effect on us.
If we are unable to develop, produce and successfully market higher-performing
microprocessor products, we may be materially adversely affected.
The microprocessor market is characterized by short product life cycles and
migration to ever-higher performance microprocessors. To compete successfully
against Intel in this market, we must transition to new process technologies at
a fast pace and offer higher-performance microprocessors in significantly
greater volumes. If we fail to achieve yield and volume goals or to offer
higher-performance microprocessors in significant volume on a timely basis, we
could be materially adversely affected.
We must continue to market successfully our seventh-generation Microsoft
Windows compatible microprocessors, the AMD Athlon and AMD Duron
microprocessors. To sell the volume of AMD Athlon and AMD Duron microprocessors
we currently plan to manufacture through 2002, we must increase sales to
existing customers and develop new customers in both consumer and commercial
markets. Our production and sales plans for microprocessors are subject to other
risks and uncertainties, including:
. our ability to achieve a successful marketing position for the AMD
Athlon XP microprocessor, which relies on market acceptance of a
metric based on overall processor performance versus processor speed;
. our ability to maintain average selling prices of microprocessors
despite increasingly aggressive Intel pricing strategies, marketing
programs, new product introductions and product bundling of
microprocessors, motherboards, chipsets and combinations thereof;
. our ability to continue offering new higher performance
microprocessors competitive with Intel's Pentium 4 processor;
. our ability, on a timely basis, to produce microprocessors in the
volume and with the performance and feature set required by customers;
. the pace at which we are able to ramp production in Dresden Fab 30 on
0.13-micron copper interconnect process technology;
. our ability to expand our chipset and system design capabilities;
. the availability and acceptance of motherboards and chipsets designed
for our microprocessors; and
. the use and market acceptance of a non-Intel processor bus or data
transfer path in the design of our seventh- and o eighth- generation
microprocessors, and the availability of chipsets from vendors who
will develop, manufacture and sell chipsets with a non-Intel processor
bus in volumes required by us.
4
Our ability to increase microprocessor product revenues and benefit fully
from the substantial investments we have made and continue to make related to
microprocessors depends on the continuing success of the AMD Athlon and AMD
Duron microprocessors, our seventh-generation processors, and the success of
future generations of microprocessors.
We plan to introduce our eighth-generation of microprocessors at the end of
2002. Shipments of our eighth-generation processors for desktops and notebooks,
AMD Athlon processors, are planned to begin in the fourth quarter of 2002.
Shipments of our eighth-generation enterprise class processor for workstations
and servers, the AMD Opteron(TM) processor, are planned to begin in the first
half of 2003. These processors will be produced in Dresden Fab 30 on
130-nanometer process technology employing silicon on insulator (SOI)
technology. These processors are designed to provide high performance for both
32-bit and 64-bit applications. The success of our eighth-generation processors
are subject to risks and uncertainties including our ability to produce them in
a timely manner on new process technologies in the volume and with the
performance and feature set required by customers, market acceptance of them and
the availability of motherboards and chipsets designed for our eighth-generation
processors.
If we fail to achieve continued and expanded market acceptance of our
seventh-generation microprocessors or if we fail to introduce in a timely
manner, or achieve market acceptance for, our eighth-generation microprocessors,
we may be materially adversely affected.
The dominant position of Intel Corporation in the microprocessor market allows
it to control microprocessor and PC system standards, which may limit our
ability to effectively compete in that market.
Intel has dominated the market for microprocessors used in PCs for many
years. As a result, Intel has been able to control x86 microprocessor and PC
system standards and dictate the type of products the market requires of Intel's
competitors. In addition, the financial strength of Intel allows it to market
its product aggressively, target our customers and our channel partners with
special incentives and discipline customers who do business with us. These
aggressive activities can result in lower average selling prices for us and
adversely affect our margins and profitability. Intel also exerts substantial
influence over PC manufacturers and their channels of distribution through the
"Intel Inside" brand program and other marketing programs. As long as Intel
remains in this dominant position, we may be materially adversely affected by
its:
. pricing and allocation strategies;
. product mix and introduction schedules;
. product bundling, marketing and merchandising strategies;
. control over industry standards, PC manufacturers and other PC
industry participants, including motherboard, chipset and basic
input/output system (BIOS) suppliers; and
. user brand loyalty.
We expect Intel to maintain its dominant position in the marketplace as
well as to continue to invest heavily in research and development, new
manufacturing facilities and other technology companies.
Intel also dominates the PC system platform. As a result, PC OEMs are
highly dependent on Intel, less innovative on their own and, to a large extent,
distributors of Intel technology.
In marketing our microprocessors to these OEMs and dealers, we depend on
companies other than Intel for the design and manufacture of core-logic
chipsets, graphics chips, motherboards, BIOS software and other components. In
recent years, many of these third-party designers and manufacturers have lost
significant market share or exited the business. In addition, these companies
produce chipsets, motherboards, BIOS software and other components to support
each new generation of Intel's microprocessors, and Intel has significant
leverage over their business opportunities.
Our microprocessors are not designed to function with motherboards and
chipsets designed to work with Intel microprocessors. Our ability to compete
with Intel in the market for seventh-generation and eighth-generation
microprocessors will depend on our ability to ensure that the microprocessors
can be used in PC platforms designed to support our microprocessors or that
platforms are available that support both Intel processors and our
microprocessors. A failure of the designers and producers of motherboards,
chipsets, processor modules and other system components to support our
microprocessor offerings would have a material adverse effect on us.
5
The cyclical nature of the semiconductor industry may limit our ability to
maintain or increase revenue and profit levels during industry downturns.
The semiconductor industry is highly cyclical, to a greater extent than
other less dynamic or less technology-driven industries. In the past, including
during 2001 and currently, our financial performance has been negatively
affected by significant downturns in the semiconductor industry as a result of:
. the cyclical nature of the demand for the products of semiconductor
customers;
. excess inventory levels by customers;
. excess production capacity; and
. accelerated declines in average selling prices.
If current conditions do not improve in the near term or if these or other
conditions in the semiconductor industry occur in the future, we will be
adversely affected.
Fluctuations in the personal computer market may continue to materially
adversely affect us.
Our business is closely tied to the personal computer industry.
Industry-wide fluctuations in the PC marketplace have materially adversely
affected us, including the industry downturn experienced during 2001 and
currently, and may materially adversely affect us in the future.
Worldwide economic and political conditions may affect demand for our products.
The economic slowdown in the United States and worldwide, exacerbated by
the occurrence and threat of terrorist attacks and consequences of sustained
military action, has adversely affected demand for our microprocessors, Flash
memory devices and other integrated circuits. Similarly, a continued decline of
the worldwide semiconductor market or a significant decline in economic
conditions in any significant geographic area would likely decrease the overall
demand for our products, which could have a material adverse effect on us.
If we were to lose Microsoft Corporation's support for our products or its logo
license, our ability to market our processors may be materially adversely
affected.
Our ability to innovate beyond the x86 instruction set controlled by Intel
depends on support from Microsoft in its operating systems. If Microsoft does
not provide support in its operating systems for our x86 instruction sets,
including our x86-64 technology that will be introduced with our
eighth-generation AMD Athlon and AMD Opteron processors, independent software
providers may forego designing their software applications to take advantage of
our innovations. In addition, we have entered into logo license agreements with
Microsoft that allow us to label our products as "Designed for Microsoft
Windows," which expire in November 2002. If we fail to retain the support and
certification of Microsoft or if we are unable to renew or renegotiate the
license agreements on acceptable terms, our ability to market our processors
could be materially adversely affected.
We plan for significant capital expenditures in 2002 and beyond and if we cannot
generate that capital internally or obtain it externally, we may be materially
adversely affected.
We plan to continue to make significant capital expenditures to support our
microprocessor and Flash memory products both in the near and long term,
including $850.0 million in 2002. These capital expenditures include those
relating to the continued facilitization of our manufacturing facilities known
as Dresden Fab 30, in Dresden, Germany, and Fab 25, in Austin, Texas. These
capital expenditures will be a substantial drain on our cash flow and may also
decrease our cash balances. To the extent that we cannot generate the required
capital internally or obtain such capital externally, we could be materially
adversely affected.
In March 1997, our indirect wholly owned subsidiary, AMD Saxony, entered
into a loan agreement and other related agreements with a consortium of banks
led by Dresdner Bank AG. These agreements require that we partially fund Dresden
Fab 30 project costs in the form of subordinated loans to, or equity investments
in, AMD Saxony. We currently estimate that the construction and facilitization
costs of Dresden Fab 30 will be $2.5 billion when fully equipped by the end of
2003. We had invested $1.9 billion as of March 31, 2002. If we are unable to
meet our obligations to AMD Saxony as required under these agreements, we will
be in default under the loan agreement, which would permit acceleration of
indebtedness.
Our joint venture with Fujitsu Limited, FASL, continues to facilitize its
manufacturing facilities in Aizu - Wakamatsu, Japan, known as FASL JV2 and FASL
JV3.We expect FASL JV2 and FASL JV3, including equipment, to cost approximately
$2.2 billion when fully equipped. As of March 31, 2002, approximately $1.5
billion of this cost had been funded. To the extent that additional funds are
required for the full facilitization of FASL JV2 and FASL JV3, we will be
required to contribute cash or guarantee third-party loans in proportion to our
49.992 percent interest in FASL. In 2000, FASL further expanded its production
capacity through a foundry arrangement with Fujitsu Microelectronics, Inc.
(FMI), a wholly owned subsidiary of Fujitsu Limited. In connection with FMI
equipping its wafer fabrication facility in Gresham, Oregon (the Gresham
Facility) to produce flash memory devices for sale to FASL, we
6
agreed to guarantee the repayment of up to $125.0 million of Fujitsu's
obligations as a co-signer with FMI under its global multicurrency revolving
credit facility (the Credit Facility) with a third-party bank (the Guarantee).
On November 30, 2001, Fujitsu announced that it was closing the Gresham
Facility, due to the downturn of the flash memory market. On March 26, 2002, we
received notice from Fujitsu that FMI had requested an advance of funds from
Fujitsu to avoid default under the Credit Facility. Although we disagree with
Fujitsu as to the amount, if any, of our obligations under the Guarantee,
Fujitsu has indicated its belief that we are obligated to pay the full $125
million. If we are unable to fulfill our obligations with respect to FASL, our
business could be materially and adversely affected.
While the FASL joint venture has been successful to date, there can be no
assurance that Fujitsu and AMD will elect to continue the joint venture in its
present form or at all.
Our inability to quickly adapt to fluctuations in demand for our products
relative to the capacity of our manufacturing facilities could have a material
adverse effect on us.
Because we cannot quickly adapt our manufacturing capacity to rapidly
changing market conditions, at times we underutilize our manufacturing
facilities as a result of reduced demand for certain of our products. We are
substantially increasing our manufacturing capacity by making significant
capital investments in Dresden Fab 30, Fab 25, FASL JV3 and our test and
assembly facility in Suzhou, China. If the increase in demand for our products
is not consistent with our expectations, we may underutilize our manufacturing
facilities, and we could be materially adversely affected. This has in the past
had, and in the future may have, a material adverse effect on our earnings.
There may also be situations in which our manufacturing facilities are
inadequate to meet the demand for certain of our products. Our inability to
obtain sufficient manufacturing capacity to meet demand, either in our own
facilities or through foundry or similar arrangements with others, could have a
material adverse effect on us.
At this time, the most significant risk is that we will have underutilized
capacity in Fab 25 as we continue to transition the production of
microprocessors out of Fab 25 and into Dresden Fab 30 and as we convert Fab 25
to a Flash memory device production facility while demand for flash memory
products remains depressed.
Further, during periods where we are implementing new process technologies,
our manufacturing facilities may not be fully productive. For example, as we
convert Fab 25 to Flash memory device production, Fab 25 will not be fully
productive. Similarly, Dresden Fab 30 is expected to be fully transitioned to
130-nanometer technology by the end of 2002 and fully facilitized by the end of
2003. During these processes, Dresden Fab 30 will not be fully productive. A
substantial delay in the successful conversion of Fab 25 or the technology
transition and facilitization of Dresden Fab 30 could have a material adverse
effect on us.
We cannot be certain that our substantial investments in research and
development of process technologies will lead to improvements in technology and
equipment used to fabricate our products.
We make substantial investments in research and development of process
technologies in an effort to improve the technologies and equipment used to
fabricate our products. For example, the successful development and
implementation of silicon on insulator technology is critical to the Hammer
family of microprocessors currently under development. However, we cannot be
certain that we will be able to develop or obtain or successfully implement
leading-edge process technologies needed to fabricate future generations of our
products.
Any substantial interruption of or problems with our manufacturing operations
could materially adversely affect us.
Any substantial interruption of our manufacturing operations, either as a
result of a labor dispute, equipment failure or other cause, could materially
adversely affect us. Further, manufacturing yields may be adversely affected by,
among other things, errors and interruptions in the fabrication process, defects
in raw materials, implementation of new manufacturing processes, equipment
performance and process controls. A decline in manufacturing yields may have a
material adverse effect on our earnings.
If our products are not compatible with some or all industry-standard software
and hardware, we could be materially adversely affected.
It is possible that our products may not be compatible with some or all
industry-standard software and hardware. Further, we may be unsuccessful in
correcting any such compatibility problems in a timely manner. If our customers
are unable to achieve compatibility with software or hardware after our products
are shipped in volume, we could be materially adversely affected. In addition,
the mere announcement of an incompatibility problem relating to our products
could have a material adverse effect on us.
Costs related to defective products could have a material adverse effect on us.
7
It is possible that one or more of our products may be found to be
defective after the product has been shipped to customers in volume. The cost of
a recall, software fix, product replacements and/or product returns may be
substantial and could have a material adverse effect on us. In addition,
modifications needed to fix the defect may impede performance of the product.
If essential raw materials are not available to manufacture our products, we
could be materially adversely affected.
Certain raw materials we use in the manufacture of our products are
available from a limited number of suppliers. Interruption of supply or
increased demand in the industry could cause shortages and price increases in
various essential materials. If we are unable to procure certain of these
materials, we might have to reduce our manufacturing operations. Such a
reduction could have a material adverse effect on us.
Our operations in foreign countries are subject to significant political and
economic risks, which could have a material adverse effect on us.
Nearly all product assembly and final testing of our products are performed
at our manufacturing facilities in Penang, Malaysia; Bangkok, Thailand; Suzhou,
China; Japan; and Singapore; or by subcontractors in the United States and Asia.
We also depend on foreign foundry suppliers and joint ventures for the
manufacture of a portion of our finished silicon wafers and have international
sales operations. The political and economic risks associated with our
operations in foreign countries include:
. expropriation;
. changes in a specific country's or region's political or economic
conditions;
. trade protection measures and import or export licensing requirements;
. difficulty in protecting our intellectual property;
. changes in foreign currency exchange rates and currency controls;
. changes in freight and interest rates;
. disruption in air transportation between the United States and our
overseas facilities; and
. loss or modification of exemptions for taxes and tariffs;
any of which may have a material adverse effect on us.
Our inability to continue to attract and retain key personnel may hinder our
product development programs.
Our future success depends upon the continued service of numerous key
engineering, manufacturing, marketing, sales and executive personnel. If we are
not able to continue to attract, retain and motivate qualified personnel
necessary for our business, the progress of our product development programs
could be hindered, and we could be otherwise adversely affected.
Our operating results are subject to substantial quarterly, annual and seasonal
fluctuations.
Our operating results are subject to substantial quarterly and annual
fluctuations due to a variety of factors, including decreases in average selling
prices of our products, general worldwide economic conditions, the gain or loss
of significant customers, market acceptance of our products and new product
introductions by us or our competitors. In addition, changes in the mix of
products produced and sold in the mix of sales by distribution channels, in the
availability and cost of products from our suppliers or in production capacity
and manufacturing yields can contribute to periodic fluctuations in operating
results.
Our operating results also tend to vary seasonally. Our revenues are
generally lower in the first, second and third quarters of each year than in the
fourth quarter. This seasonal pattern is largely a result of decreased demand in
Europe during the summer months and higher demand in the retail sector of the PC
market during the winter holiday season.
Our inability to adapt to the rapid technological change characteristic of the
market for our products, could materially adversely affect us.
The market for our products is generally characterized by rapid
technological developments, evolving industry standards, changes in customer
requirements, frequent new product introductions and enhancements, short product
life cycles and severe price competition. Our success depends substantially on
our ability, on a cost-effective and timely basis, to continue to enhance our
existing products, develop and introduce new products that take advantage of
technological advances and meet the demands of our customers.
Intense competition in the integrated circuit industry may materially adversely
affect us.
8
The integrated circuit industry is intensely competitive. Products compete
on performance, quality, reliability, price, adherence to industry standards,
software and hardware compatibility, marketing and distribution capability,
brand recognition and availability. After a product is introduced, costs and
average selling prices normally decrease over time as production efficiency
improves, competitors enter the market and successive generations of products
are developed and introduced for sale. Failure to reduce our costs on existing
products or to develop and introduce, on a cost-effective and timely basis, new
products or enhanced versions of existing products with higher margins, would
have a material adverse effect on us.
Our customers can cancel or revise purchase orders without penalty. We must
commit resources to the manufacture of products without any advance purchase
commitments from customers, which could result in excess costs to us.
Sales of our products are made primarily pursuant to purchase orders for
current delivery or agreements covering purchases over a period of time, which
may be revised or canceled without penalty. As a result, we must commit
resources to the manufacture of products without any advance purchase
commitments from customers. Therefore, the failure of demand for our products to
match the supply of our products could result in the expenditure of excess
costs, which could have a material adverse effect on us.
Our obligations under specific provisions in our agreements with distributors
expose us to material adverse effects when we experience an unexpected
significant decline in the price of our products.
Distributors typically maintain an inventory of our products. In most
instances, our agreements with distributors protect their inventory of our
products against price reductions, as well as products that are slow moving or
have been discontinued. These agreements, which may be canceled by either party
on a specified notice, generally allow for the return of our products. The price
protection and return rights we offer to our distributors could materially
adversely affect us if there is an unexpected significant decline in the price
of our products.
If we cannot adequately protect our technology or other intellectual property,
in the united states and abroad, through patents, copyrights, trade secrets,
trademarks and other measures, we may lose a competitive advantage and incur
significant expenses.
We may not be able to adequately protect our technology or other
intellectual property, in the United States and abroad, through patents,
copyrights, trade secrets, trademarks and other measures. Any patent licensed by
us or issued to us could be challenged, invalidated or circumvented or rights
granted thereunder may not provide a competitive advantage to us. Further,
patent applications that we file may not be issued. Despite our efforts to
protect our rights, others may independently develop similar products, duplicate
our products or design around our patents and other rights. In addition, it is
difficult to cost-effectively monitor compliance with, and enforce, our
intellectual property on a worldwide basis.
From time to time, we have been notified that we may be infringing
intellectual property rights of others. If any such claims are asserted against
us, we may seek to obtain a license under the third party's intellectual
property rights. We cannot assure you that all necessary licenses can be
obtained on satisfactory terms, if at all. We could decide, in the alternative,
to resort to litigation to challenge such claims. Such challenges could be
extremely expensive and time-consuming and could have a material adverse effect
on us. We cannot assure you that litigation related to the intellectual property
rights of us and others will always be avoided or successfully concluded.
Our inability to effectively transition to a new enterprise resource planning
program could have a material adverse effect on us.
We are currently in the process of transitioning to an SAP software system
as our new enterprise resource planning system, which is intended to provide an
integrated information system to serve all of AMD. The first phase of the
implementation was successfully completed in January 2002. Future phases of the
implementation are expected to occur through 2003. We are heavily dependent on
the proper function of our internal systems to conduct our business. System
failure or malfunctioning may result in disruptions of operations and inability
to process transactions. If we encounter unforeseen problems with respect to the
system operations or future implementations, we could be materially adversely
affected.
Failure to comply with applicable environmental regulations could subject us to
fines, suspension of production, alteration or cessation of our manufacturing
operations, or other regulatory action.
Our business involves the use of hazardous materials. If we fail to comply
with governmental regulations related to the use, storage, handling, discharge
or disposal of toxic, volatile or otherwise hazardous chemicals used in our
manufacturing process, we may be subject to fines, suspension of production,
alteration of our manufacturing processes or cessation of our operations. Such
regulations could require us to procure expensive remediation equipment or to
incur other expenses to comply with environmental regulations. Any failure to
control the use of, disposal or storage of, or adequately restrict the discharge
of, hazardous substances
9
could subject us to future liabilities and could have a material adverse effect
on us. Violations of environmental laws may result in criminal and civil
liabilities.
Terrorist attacks, such as the attacks that occurred in New York and Washington,
DC on September 11, 2001, and other acts of violence or war may materially
adversely affect the markets on which the debentures trade, the markets in which
we operate, our operations and our profitability.
Terrorist attacks may negatively affect our operations. These attacks or
armed conflicts may directly impact our physical facilities or those of our
suppliers or customers. Furthermore, these attacks may make travel and the
transportation of our products more difficult and more expensive and ultimately
affect our sales.
Also as a result of terrorism, the United States has entered into an armed
conflict that could have a further impact on our sales, our supply chain, and
our ability to deliver products to our customers. Political and economic
instability in some regions of the world may also result and could negatively
impact our business. The consequences of any of these armed conflicts are
unpredictable, and we may not be able to foresee events that could have an
adverse effect on our business or your investment.
More generally, any of these events could cause consumer confidence and
spending to decrease or result in increased volatility in the United States and
worldwide financial markets and economy. They also could result in or exacerbate
economic recession in the United States or abroad. Any of these occurrences
could have a significant impact on our operating results, revenues and costs and
may result in the volatility of the market price for our securities and on the
future price of our securities.
Our corporate headquarters, research and development activities and other
critical business operations are located in an earthquake zone and these
operations could be interrupted in the event of an earthquake.
Our corporate headquarters, research and development activities related to
process technologies and certain other critical business operations are located
near major earthquake fault lines. In the event of a major earthquake, we could
experience business interruptions, destruction of facilities and/or loss of
life, all of which could materially adversely affect us.
Anti-takeover provisions in our charter documents and Delaware law, as well as
the right of holders of the debentures to require us to repurchase the
debentures upon the occurrence of a Fundamental Change, may make an acquisition
of us more difficult.
Anti-takeover provisions in our charter documents and Delaware law may make
an acquisition of us more difficult. These provisions:
. authorize our board of directors to issue preferred stock without
stockholder approval and to designate the rights, preferences and
privileges of each class; if issued, such preferred stock would increase
the number of outstanding shares of our capital stock and could include
terms that may deter an acquisition of us;
. establish advance notice requirements for nominations to the board of
directors or for proposals that can be acted on at stockholder meetings;
and
. limit who may call stockholder meetings.
In addition, because we are incorporated in Delaware, we are governed by the
provisions of Section 203 of the Delaware General Corporation Law which may
prohibit large stockholders from consummating a merger with or acquisition of
us.
Further, the holders of the debentures have the right to require us to
repurchase the debentures should a Fundamental Change occur. The term
"Fundamental Change" includes specified transactions involving changes to our
basic structure or ownership, but may not include other events that adversely
affect our financial condition. This repurchase option may discourage a
potential acquiror.
These provisions may deter an acquisition of us that might otherwise be
attractive to stockholders.
Risks Related to the Debentures
We have a substantial amount of debt and debt service obligations, which could
adversely affect our financial position and prevent us from fulfilling our
obligations under the debentures.
The following chart shows certain important credit statistics as of
March 31, 2002, as adjusted to give effect to our sale of the debentures:
10
As of March 31, 2002
as adjusted
-----------
Total consolidated indebtedness (including capital leases) ................ $1,387,700,000
Ratio of consolidated indebtedness to stockholders' equity ................ 0.4x
Ratio of earnings to fixed charges ........................................ 0.4x
Our loan and security agreement with Bank of America provides for a
four-year secured revolving line of credit of up to $200.0 million, which
currently expires on July 14, 2003. Under this agreement, we can borrow, subject
to amounts which may be set aside by the lenders, up to 85% of our eligible
accounts receivable from OEMs and 50% of our eligible accounts receivable from
distributors. If the level of cash we hold in the United States declines below
$200.0 million or the amount of borrowings rises to 50% of available credit, we
must comply with financial covenants that require us to maintain particular
adjusted tangible net worth levels, as detailed in the loan and security
agreement. Our obligations under this agreement are secured by a pledge of most
of our accounts receivable, inventory, general intangibles and the related
proceeds. As a result, the debentures will effectively rank behind all of our
secured debt to the extent of the value of the assets securing those debts. As
of March 31, 2002, there was no outstanding amount under the loan agreement.
Our indirect wholly-owned subsidiary, AMD Saxony, is a party to a loan
agreement and other related agreements with a consortium of banks led by
Dresdner Bank AG. These agreements require that we partially fund Dresden Fab 30
project costs in the form of subordinated loans to, or equity investments in,
AMD Saxony. If we are unable to meet our obligations to AMD Saxony as required
under these agreements, we will be in default under the Bank of America loan and
security agreement, which would permit acceleration of indebtedness under both
agreements. In addition, the Dresden Loan Agreement prohibits AMD Saxony from
paying any dividends, so cash held by AMD Saxony will not be available for the
repayment of the debentures. 27.5% of our consolidated assets were held by AMD
Saxony as of March 31, 2002.
To the extent that additional funds are required for the full
facilitization of FASL JV2 and FASL JV3, we will be required to contribute cash
or guarantee third-party loans in proportion to our 49.992 percent interest in
FASL. If we are unable to fulfill our obligations to FASL, our business could be
materially and adversely affected. In 2000, FASL further expanded its production
capacity through a foundry arrangement with Fujitsu Microelectronics, Inc.
(FMI), a wholly owned subsidiary of Fujitsu Limited. In connection with FMI
equipping its wafer fabrication facility in Gresham, Oregon (the Gresham
Facility) to produce flash memory devices for sale to FASL, we agreed to
guarantee the repayment of up to $125 million of Fujitsu's obligations as a
co-signer with FMI under its global multicurrency revolving credit facility (the
Credit Facility) with a third-party bank (the Guarantee). On November 30, 2001,
Fujitsu announced that it was closing the Gresham Facility, due to the downturn
of the flash memory market. On March 26, 2002, we received notice from Fujitsu
that FMI had requested an advance of funds from Fujitsu to avoid default under
the Credit Facility, which notice is required as a condition to our obligations
under the Guarantee. However, to date we have not received a demand for payment
under the terms of the Guarantee from Fujitsu. Furthermore, we continue to
disagree with Fujitsu as to the amount, if any, of our obligations under the
Guarantee. While we continue to discuss this matter with Fujitsu, we cannot at
this time reasonably predict its outcome including any amounts we might be
required to pay Fujitsu, and, therefore, have not recorded any liability in our
consolidated financial statements associated with the Guarantee.
Our ability to make payments on and to refinance our debt or our guarantees
of other parties' debts will depend on our financial and operating performance,
which may fluctuate significantly from quarter to quarter and is subject to
prevailing economic conditions and to financial, business and other factors
beyond our control. We cannot assure you that our business will generate
sufficient cash flow from operations or that future borrowings will be available
to us under our Loan Agreement in an amount sufficient to enable us to pay our
debt or debentures, or to fund our other liquidity needs. We may need to
refinance all or a portion of our debt, including the debentures, on or before
maturity. We cannot assure you that we will be able to refinance any of our
debt, including our Loan Agreement or the debentures, on commercially reasonable
terms or at all.
We may incur substantial additional debt in the future. As of March 31,
2002, we had the ability to borrow $200 million under the Loan Agreement. If new
debt is added to our and our subsidiaries' current debt levels, the risk of our
inability to repay our debt, including the debentures, could intensify.
The debentures will be subordinated to all of our secured indebtedness and our
subsidiaries' existing and future indebtedness.
A substantial portion of our operations is conducted through our
subsidiaries. In fiscal 2001, 71% of our consolidated revenues were generated by
our subsidiaries. The cash flow and our consequent ability to service debt,
including the debentures, may become dependent in part upon the earnings from
the business conducted through subsidiaries and the distribution of those
earnings, or upon loans or other payments of funds by those subsidiaries, to us.
Except to the extent we may be a creditor with recognized claims against our
subsidiaries, the claims of creditors of our subsidiaries will have priority
with respect to the assets and earnings of the subsidiaries over the claims of
creditors of the Company, including holders of the debentures, even though
subsidiary obligations do not constitute senior indebtedness of the Company. As
of March 31, 2002, the indebtedness (including trade payables and capital lease
obligations) of our subsidiaries was $1.1 billion.
11
In addition, any borrowings under our secured credit facility with Bank of
America are secured obligations. The debentures will effectively rank behind all
of our secured debt to the extent of the value of the assets securing those
debts.
We may not have the ability to raise the funds necessary to repurchase the
debentures upon a Fundamental Change or a Purchase Date as required by the
indenture governing the debentures.
Upon the occurrence of a Fundamental Change, we will be required under the
indenture governing the debentures to repurchase up to all outstanding
debentures at the option of the holders of such debentures. Upon the occurrence
of a Fundamental Change or upon a Purchase Date, we cannot assure you that we
would have sufficient financial resources, or would be able to arrange
financing, to pay the repurchase price for all debentures tendered by the
holders. A Fundamental Change may also constitute an event of default under our
loan and security agreement with Bank of America and our Dresdner loan
agreements, which would prohibit us from repurchasing any debentures. Any future
credit agreements or other agreements relating to other indebtedness to which we
become a party may contain similar restrictions and provisions. If we do not
obtain a consent to the repurchase of the debentures upon a Fundamental Change,
we may remain prohibited from repurchasing the debentures. Any failure to
repurchase the debentures when required following a Fundamental Change or
Purchase Date would result in an event of default under the indenture. For more
information, see "Description of Debentures--Repurchase at Option of the Holder
Upon a Fundamental Change and --Repurchase at Option of the Holder on Purchase
Dates." You cannot be sure that a public market will develop for the debentures.
On January 29, 2002, we issued the debentures to the initial purchasers in
a private placement. The debentures are eligible to trade in PORTAL, the Private
Offering, Resale and Trading through Automated Linkages Market of the National
Association of Securities Dealers, Inc., a screen-based automated market for
trading securities for qualified institutional buyers. However, the debentures
resold pursuant to this prospectus will no longer trade on the PORTAL market. As
a result, there may be a limited market for the debentures. We do not intend to
list the debentures on any national securities exchange or on the Nasdaq
National Market.
A public market may not develop for the debentures. Although the initial
purchasers have advised us that they intend to make a market in the debentures,
they are not obligated to do so and may discontinue such market making at any
time without notice. In addition, such market making activity will be subject to
the limits imposed by the Securities Act and the Exchange Act. Accordingly, we
cannot assure you that any market for the debentures will develop or, if one
does develop, that it will be maintained. If a public market for the debentures
fails to develop or be sustained, the trading price of the debentures could be
materially adversely affected.
In addition, the liquidity and the market price of the debentures may be
adversely affected by changes in the overall market for convertible securities
and by changes in our financial performance or prospects, or in the prospects of
the companies in our industry. The market price of the debentures may also be
significantly affected by the market price of our common stock, which could be
subject to wide fluctuations in response to a variety of factors, including
those described in this "Risk Factors" section. As a result, you cannot be sure
that a public market will develop for the debentures.
You should consider the U.S. federal income tax consequences of owning the
debentures and the shares of common stock issuable upon conversion of the
debentures.
We and each holder agree in the indenture to treat the debentures as
indebtedness that is subject to U.S. Treasury regulations governing contingent
payment debt instruments. The following discussion assumes that the debentures
will be so treated, though we cannot assure you that the Internal Revenue
Service will not assert that the debentures should be treated differently. Under
the contingent payment debt regulations, a holder will be required to include
amounts in income, as original issue discount, in advance of cash such holder
receives on a debenture, and to accrue interest on a constant yield to maturity
basis at a rate comparable to the rate at which we would borrow in a
noncontingent, nonconvertible borrowing, even though the debenture will have a
significantly lower yield to maturity. A holder will recognize taxable income
significantly in excess of cash received while the debentures are outstanding.
In addition, under the indenture, a holder will recognize ordinary income, if
any, upon a sale, exchange, conversion or redemption of the debentures at a
gain. In computing such gain, the amount realized by a holder will include, in
the case of a conversion, the amount of cash and the fair market value of shares
received. Holders are urged to consult their own tax advisors as to the U.S.
federal, state and other tax consequences of acquiring, owning and disposing of
the debentures and the shares of common stock issuable upon conversion of the
debentures. For more information, see "Certain United States Federal Income Tax
Considerations."
12
The volatility of the price of our common stock may materially adversely affect
the liquidity and market price of the debentures.
Based on the trading history of our common stock, we believe that the
following factors have caused and are likely to continue to cause the market
price of our common stock to fluctuate substantially:
. quarterly fluctuations in our operating and financial results;
. announcements of new technologies, products and/or pricing by us or
our competitors;
. the pace of new process technology and product manufacturing ramps;
. fluctuations in the stock price and operating results of our
competitors, particularly Intel;
. changes in earnings estimates or buy/sell recommendations by financial
analysts;
. changes in the ratings of our debentures or other securities;
. production yields of key products; and
. general conditions in the semiconductor industry.
In addition, an actual or anticipated shortfall in revenue, gross margins
or earnings from securities analysts' expectations could have an immediate
effect on the trading price of our common stock. Technology company stocks in
general have experienced extreme price and volume fluctuations that are often
unrelated to the operating performance of the companies. Market volatility may
adversely affect the market price of our common stock, which could affect the
price of our debentures and limit our ability to raise capital or to make
acquisitions.
13
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the sale
under this prospectus of the debentures and the common stock issuable upon
conversion of the debentures. We will not receive any proceeds from these sales.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Our common stock is listed and traded on the New York Stock Exchange under
the symbol "AMD." The following table shows, for the periods indicated, the high
and low sales prices on the New York Stock Exchange.
High Low
---- ---
Fiscal year ended December 31, 2000
First quarter* ........................................ $ 30.19 $ 14.00
Second quarter* ....................................... 47.72 25.50
Third quarter* ........................................ 47.50 23.00
Fourth quarter ........................................ 25.44 13.56
Fiscal year ended December 30, 2001
First quarter ......................................... $ 30.15 $ 14.13
Second quarter ........................................ 34.65 18.73
Third quarter ......................................... 30.20 7.80
Fourth quarter ........................................ 18.62 7.69
Fiscal year ended December 29, 2002
First quarter ......................................... $ 20.60 $ 12.63
Second quarter (through May 16, 2002) ................. 15.30 10.40
_____________
* Adjusted to reflect a 2:1 stock split on August 22, 2000.
On May 16, 2002 the last sale price of our common stock as reported on the
New York Stock Exchange was $12.40 per share. As of February 25, 2002, there
were approximately 7,815 holders of record of our common stock.
We have never paid any cash dividends on our common stock and have no
present plans to do so. In addition, we are prohibited by certain of our
borrowing arrangements from paying cash dividends without the prior written
consent of the lender.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratios of earnings to fixed charges for each of our fiscal years from
1997 to 2001 and for the quarter ended March 31, 2002 were as follows:
Year ended Quarter ended
------------------------------------------------ ----------------
1997 1998 1999 2000 2001 March 31, 2002
------- -------- --------- -------- --------- --------------
Ratio of earnings to fixed
charges(1) ....................... -- -- 1.3x 13.0x 0.2x 0.4x
_____________
(1) For purposes of computing this ratio of earnings to fixed changes,
fixed charges consist of interest expense on long-term debt and
capital leases, amortization of deferred financing costs and that
portion of rental expense deemed to be representative of interest.
Earnings consist of income (loss) before income taxes and equity in
joint venture, plus fixed charges. Earnings were insufficient to cover
fixed charges by $121 million and $224 million in 1997 and 1998.
14
DESCRIPTION OF DEBENTURES
We issued the debentures under an indenture, dated January 29, 2002,
between us and the Bank of New York, as trustee. The following description is
only a summary of the material provisions of the debentures and the indenture.
We urge you to read these documents in their entirety because they, and not this
description, define the rights of holders of these debentures. You may request
copies of these documents at our address shown under the caption "Incorporation
By Reference." The terms of the debentures include those stated in the indenture
and those made part of the indenture by reference to the Trust Indenture Act of
1939, as amended. For purposes of this description, references to "we", "us",
"our" or "AMD" in this section, include only Advanced Micro Devices, Inc. and
not its subsidiaries.
General
The debentures are our senior unsecured obligations and rank equally with
all our other senior unsecured indebtedness. However, the debentures are
structurally subordinated to indebtedness of our subsidiaries and effectively
subordinated to our secured debt to the extent of the value of the assets
securing such debt. The debentures are convertible into common stock as
described under the caption "--Conversion of Debentures."
We issued $500,000,000 aggregate principal amount of debentures in
denominations of $1,000 and multiples of $1,000. The debentures will mature on
February 1, 2022 unless earlier converted, redeemed at our option or repurchased
by us at the option of the holder on the Purchase Dates or upon a Fundamental
Change.
We are not subject to any financial covenants under the indenture. In
addition, we are not restricted under the indenture from paying dividends,
incurring debt or issuing or repurchasing our securities.
Holders are not afforded protection in the event of a highly leveraged
transaction, or a change in control of us under the indenture except to the
extent described below under the caption "--Repurchase at Option of the Holder
Upon a Fundamental Change."
The debentures bear interest at the initial annual rate of 4.75%. Interest
will be calculated on the basis of a 360-day year of twelve 30-day months. On
August 1, 2008, August 1, 2011 and August 1, 2016 the interest rate on the
debentures will be reset to a rate per annum equal to the interest rate payable
120 days prior to such reset date on 5-year U.S. Treasury Notes plus 0.43%.
However, in no event will the interest rate be reset below 4.75% or above 6.75%
per annum. We will pay interest on February 1 and August 1 of each year,
beginning August 1, 2002 to record holders at the close of business on the
preceding January 15 and July 15, as the case may be, except:
. interest payable upon redemption will be paid to the person to whom
principal is payable, unless the redemption date is an interest
payment date in which case interest shall be paid to the record
holder; and
. as set forth in the next sentence.
In case a holder converts his debenture into common stock during the period
after any record date but prior to the next interest payment date either:
. we will not be required to pay interest on the interest payment date
if the debenture has been called for redemption o on a redemption date
that occurs during this period, but accrued and unpaid interest on
such debenture will be paid on the redemption date; or
. we will not be required to pay interest on the interest payment date
if the debenture is to be repurchased in connection with a Purchase
Date or a Fundamental Change on a Purchase Date or a repurchase date
that occurs during this period, but accrued and unpaid interest on
such debenture will be paid on the Purchase Date or repurchase date,
as applicable or
. if otherwise, any debenture not called for redemption that is
submitted for conversion during this period must also be accompanied
by an amount equal to the interest due on the interest payment date on
the converted principal amount, unless at the time of the conversion
there is a default in the payment of interest on the debentures. See
"--Conversion of Debentures."
We will maintain an office in New York for the payment of interest, which
shall initially be an office or agency of the trustee.
We will pay interest by check mailed to each holder's address as it appears
in the debenture register, provided that a holder with an aggregate principal
amount in excess of $5.0 million will be paid, at the written election of that
holder, by wire transfer in immediately available funds.
15
However, payments to The Depository Trust Company, New York, New York,
which we refer to as DTC, or its nominee will be made by wire transfer of
immediately available funds to the account of DTC or its nominee.
Holders are not required to pay a service charge for registration or
transfer of their debentures. We may, however, require holders to pay any tax or
other governmental charge in connection with the transfer. We are not required
to exchange or register the transfer of:
. any debenture or portion selected for redemption;
. any debenture or portion surrendered for conversion; or
. any debenture or portion surrendered for repurchase but not withdrawn
in connection with a Fundamental Change.
Interest Rate Adjustment
Under the indenture, we and each holder agree, for U.S. federal income tax
purposes, to treat the debentures as indebtedness that is subject to the
regulations governing contingent payment debt instruments and, for purposes of
those regulations, to treat the fair market value of the common stock received
on the conversion as a contingent payment, and the discussion herein assumes
that such treatment is correct. However, the characterization of instruments
such as the debentures and the application of such regulations are uncertain in
several respects. See "Certain United States Federal Income Tax Consequences."
Conversion of Debentures
A holder may convert a debenture, in whole or in part, into our common
stock at any time prior to the close of business on the business day immediately
preceding the maturity date, subject to prior redemption of the debentures. If
we call debentures for redemption, holders may convert the debentures only until
the close of business on the business day prior to the redemption date unless we
fail to pay the redemption price. If a holder has submitted debentures for
repurchase on a Purchase Date or upon a Fundamental Change, that holder may
convert the debentures only if it withdraws its election. A holder may convert
debentures in part so long as that part is $1,000 principal amount or an
integral multiple of $1,000. If any debentures not called for redemption are
converted after a record date for any interest payment date and prior to the
next interest payment date, the debentures must be accompanied by an amount
equal to the interest payable on the next interest payment date on the converted
principal amount unless a default exists at the time of conversion.
The initial conversion price for the debentures is $23.38 per share of
common stock, subject to adjustment as described below. We will not issue
fractional shares of common stock upon conversion of debentures. Instead, we
will pay cash based on the average of the closing sales prices of our common
stock for the five trading days ending on the day prior to the conversion date
for all fractional shares of common stock. Unless a holder converts debentures
on an interest payment date and except as described below, that holder will not
receive any accrued interest or dividends upon conversion.
To convert a debenture (other than a debenture held in book entry form
through DTC) into common stock, a holder must:
. complete and manually sign the conversion notice on the back of the
debenture or facsimile of the conversion notice and deliver this
notice to the conversion agent;
. surrender the debenture to the conversion agent;
. if required, furnish appropriate endorsements and transfer documents;
. if required, pay all transfer or similar taxes; and
. if required, pay funds equal to interest payable on the next interest
payment date.
Holders of debentures held in book-entry form through DTC must follow DTC's
customary practices. The date a holder complies with these requirements is the
conversion date under the indenture. As promptly as practicable on or after the
conversion date, but no later than three business days after the conversion
date, we will issue and deliver to the conversion agent certificates for the
number of full shares of common stock issuable upon conversion, together with
any cash payment for fractional shares.
If a holder delivers a debenture for conversion, that holder will not be
required to pay any taxes or duties for the issue or delivery of common stock on
conversion. However, we will not pay any transfer tax or duty payable as result
of the issuance or delivery of the common stock in a name other than that of the
holder of the debenture. We will not issue or deliver common stock certificates
unless we have been paid the amount of any transfer tax or duty or we have been
provided satisfactory evidence that the transfer tax or duty has been paid.
To mitigate dilution of your equity ownership interests, we will adjust the
conversion price if the following events occur:
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(1) we issue common stock as a dividend or distribution on our common
stock;
(2) we issue to all holders of common stock specified rights or warrants
to purchase our common stock at a price per share less than the then
current market price per share, unless we elect to distribute or
reserve for distribution these rights or warrants for distribution to
the holders of the debentures upon the conversion of the debentures,
provided that the conversion price will be readjusted to the extent
that such rights or warrants are not exercised prior to their
expiration, provided, however, that if such rights or warrants are
exercisable only upon the occurrence of certain triggering events then
the conversion price will not be adjusted until such triggering event
occurs;
(3) we subdivide or combine our common stock;
(4) we distribute to all common stockholders capital stock, evidences of
indebtedness or assets, including securities but excluding:
. rights or warrants listed in (2) above;
. dividends or distributions listed in (1) above; and
. cash distributions listed in (5) below;
(5) we make a dividend or distribution consisting exclusively of cash to
all holders of common stock if the aggregate amount of these
distributions combined together with (A) all other all-cash
distributions made within the preceding 12 months in respect of which
we made no adjustment plus (B) any cash and the fair market value of
other consideration payable in any tender offers by us or any of our
subsidiaries for common stock within the preceding 12 months in
respect for which we made no adjustment, exceeds 12.5% of our market
capitalization, being the product of the then current market price of
the common stock multiplied by the number of shares of our common
stock then outstanding; or
(6) the purchase of common stock pursuant to a tender offer made by us or
any of our subsidiaries involves an aggregate consideration that,
together with (A) any cash and the fair market value of any other
consideration payable in any other tender offer by us or any of our
subsidiaries for common stock expiring within the 12 months preceding
the expiration of the tender offer plus (B) the aggregate amount of
any such-all cash distributions referred to in (5) above to all
holders of common stock within the 12 months preceding the expiration
of the tender offer, in each case, for which we have made no
adjustment, exceeds 12.5% of our market capitalization on the
expiration of such tender offer.
To the extent that we have a stockholder rights plan in effect upon
conversion of the debentures into common stock, holders will receive, in
addition to the common stock, the rights under the rights plan whether or not
the rights have separated from the common stock at the time of conversion,
subject to limited exceptions.
If we reclassify our common stock, consolidate, merge or combine with
another person or sell or convey our property and assets as an entirety or
substantially as an entirety, each debenture then outstanding will, without the
consent of the holder of any debenture, become convertible only into the kind
and amount of securities, cash and other property receivable upon such
reclassification, consolidation, merger, combination, sale or conveyance by a
holder of the number of shares of common stock into which the debenture was
convertible immediately prior to the reclassification, consolidation, merger,
combination, sale or conveyance. This calculation will be made based on the
assumption that the holder of common stock failed to exercise any rights of
election that the holder may have to select a particular type of consideration.
The adjustment will not be made for a consolidation, merger or combination that
does not result in any reclassification, conversion, exchange or cancellation of
our common stock.
We may, from time to time, reduce the conversion price for a period of at
least 20 days if our Board of Directors has made a determination that this
reduction would be in our best interests. Any such determination by our Board of
Directors will be conclusive. We would give holders at least 15 days' notice of
any reduction in the conversion price. In addition, we may reduce the conversion
price if our Board of Directors deems it advisable to avoid or diminish any
income tax to holders of common stock resulting from any stock or rights
distribution or due to the non-occurrence of such a distribution. See "Certain
United States Federal Income Tax Considerations."
Holders may in some situations be deemed to have received a distribution
subject to United States federal income tax as a dividend in the event of any
taxable distribution to holders of common stock, in certain other situations
requiring a conversion price adjustment or due to the non-occurrence of an
adjustment. See "Certain United States Federal Income Tax Considerations."
We will not be required to make an adjustment in the conversion price
unless the adjustment would require a change of at least 1% in the conversion
price. However, we will carry forward any adjustments that are less than 1% of
the conversion price.
17
Except as described above in this section, we will not adjust the conversion
price for any issuance of our common stock or convertible or exchangeable
securities or rights to purchase our common stock or convertible or exchangeable
securities.
Optional Redemption by AMD
We may not redeem the debentures at our option prior to February 5, 2005.
Thereafter, we may redeem the debentures at our option in whole or in part, upon
not less than 15, nor more than 60, days' notice by mail to holders of the
debentures. However, we may not redeem the debentures prior to February 5, 2006,
unless the last reported sale price of our common stock is at least 130% of the
then effective conversion price for at least 20 trading days within a period of
30 consecutive trading days ending within five trading days of the date of the
redemption notice.
The redemption prices (expressed as a percentage of principal amount) are
as follows for debentures redeemed during the periods set forth below:
Redemption
Period Price
------ -----
Beginning on February 5, 2005 through February 4, 2006 ........... 102.375%
Beginning on February 5, 2006 through February 4, 2007 ........... 101.583
Beginning on February 5, 2007 through February 4, 2008 ........... 100.792
Beginning on February 5, 2008 .................................... 100.000
in each case together with accrued interest to, but excluding, the redemption
date. Subject to the next sentence, we will pay accrued and unpaid interest to
the same holder that receives the redemption payment. However, if the redemption
date is an interest payment date, interest shall be paid to the record holder on
the relevant record date.
If less than all of the outstanding debentures are to be redeemed, the
trustee shall select the debentures to be redeemed in principal amounts of
$1,000 or multiples of $1,000 by lot, pro rata or by another method the trustee
considers fair and appropriate. If a portion of a holder's debentures is
selected for partial redemption and that holder converts a portion of its
debentures, the converted portion shall be deemed to be of the portion selected
for redemption.
No sinking fund is provided for the debentures.
Repurchase at Option of the Holder on Purchase Dates
On the Purchase Dates of February 1, 2009, February 1, 2012 and February 1,
2017, a holder has the right to require us to repurchase all or any portion of
that holder's debentures that is equal to $1,000 or a whole multiple of $1,000
for which the holder has delivered, and not withdrawn, a written purchase
notice, subject to certain additional conditions. A holder may submit debentures
for repurchase to the paying agent at any time from the opening of business on
the date that is 30 days prior to an applicable Purchase Date until the close of
business on the date that is five days prior to such Purchase Date.
We will repurchase the debentures at a price equal to 100% of the principal
amount to be repurchased plus accrued and unpaid interest to, but excluding, the
applicable Purchase Date. If the applicable Purchase Date is an interest payment
date, we will pay interest on the interest payment date to the record holder on
the relevant record date.
We will give notice on a date not less than 30 days prior to each Purchase
Date to all record holders, stating among other things, the procedures that
holders must follow to require us to repurchase debentures.
The repurchase notice given by a holder electing to require us to
repurchase the debentures shall state:
. the certificate numbers of the debentures to be delivered for
repurchase;
. the portion of the principal amount at maturity of debentures to be
repurchased, which must be $1,000 or an integral multiple of $1,000;
and
. that the debentures are to be repurchased by us pursuant to the
applicable provisions of the debentures and the indenture.
18
A holder may withdraw any repurchase notice by delivering a written notice
of withdrawal to the paying agent prior to the close of business on the business
day prior to the Purchase Date, which shall state the principal amount at
maturity being withdrawn, the certificate numbers of the debentures being
withdrawn; and the principal amount at maturity of the debentures that remains
subject to the repurchase notice, if any.
We will comply with all applicable provisions of Rule 13e-4 and any other
tender offer rules under the Exchange Act in connection with any repurchase
offer.
Payment of the repurchase price for a debenture for which a holder has
delivered, and not validly withdrawn, a repurchase notice is conditioned upon
delivery of the debenture, together with necessary endorsements, to the paying
agent at any time after delivery of the repurchase notice. We will promptly pay
the repurchase price for the debenture following the later of the applicable
Purchase Date or the time of delivery of the debenture.
If the paying agent holds money or securities sufficient to pay the
repurchase price of the debenture on the business day following the applicable
Purchase Date in accordance with the terms of the indenture, then, immediately
after the applicable Purchase Date, the debenture will cease to be outstanding
and interest on such debenture will cease to accrue, whether or not the
debenture is delivered to the paying agent. Thereafter, all other rights of the
holder shall terminate, other than the right to receive the repurchase price
upon delivery of the debenture.
Our ability to repurchase debentures may be limited by the terms of our
then existing borrowing or financial agreements.
Repurchase at Option of the Holder Upon a Fundamental Change
If a Fundamental Change occurs prior to February 1, 2022, a holder has the
right to require us to repurchase all or any portion of its debentures that is
equal to $1,000 or a whole multiple of $1,000, on a repurchase date set by us
that is no earlier than 25 days and no later than 35 days after the date of our
notice of the Fundamental Change.
We will repurchase the debentures at a price equal to 100% of the principal
amount to be repurchased, plus accrued and unpaid interest to, but excluding,
the repurchase date. If the repurchase date is an interest payment date, we will
pay interest on the interest payment date to the record holder on the relevant
record date. Otherwise, we will pay accrued and unpaid interest to the same
holder that receives the principal amount to be repurchased.
We will mail to all record holders a notice of the Fundamental Change
within 25 days after the occurrence of the Fundamental Change. The notice must
describe the Fundamental Change, holders' right to elect repurchase of the
debentures and the repurchase date. We are also required to deliver to the
trustee a copy of the Fundamental Change notice. If a holder elects to exercise
its repurchase right, that holder must deliver to us or our designated agent at
any time from the date of our notice of Fundamental Change until the close of
business on the date that is five business days prior to the repurchase date,
written notice of the holder's exercise of his repurchase right, together with
any debentures to be repurchased, duly endorsed for transfer. Following the
repurchase date we will pay promptly the repurchase price for debentures
surrendered for redemption.
A Fundamental Change will be considered to have occurred if:
. our common stock or other common stock into which the debentures are
convertible is neither listed for trading on an o United States
national securities exchange nor approved for trading on the Nasdaq
National Market or another established automated over-the-counter
trading market in the United States; or
. one of the following "change in control" events occurs:
. any person or group is a beneficial owner of more than 50% of the
voting power of our outstanding securities entitled to generally
vote for directors;
. our stockholders approve any plan or proposal for our
liquidation, dissolution or winding up;
. we consolidate with or merge into any other corporation or any
other corporation merges into us and, as a result, our
outstanding common stock is changed or exchanged for other assets
or securities unless our stockholders immediately before the
transaction own, directly or indirectly, immediately following
the transaction more than 50% of the combined voting power of the
corporation resulting from the transaction in substantially the
same proportion as their ownership of our voting stock
immediately before the transaction;
. we convey, transfer or lease all or substantially all of our
assets to any person; or
. continuing directors do not constitute a majority of our Board of
Directors at any time.
19
However, a change in control will not be deemed to have occurred if:
. the last sale price of our common stock for any five trading days
during the 10 trading days immediately before the change in control is
equal to at least 105% of the conversion price; or
. all of the consideration, excluding cash payments for fractional
shares in the transaction constituting the change in o control,
consists of common stock traded on a United States national securities
exchange or quoted on the Nasdaq National Market, and as a result of
the transaction the debentures become convertible solely into that
common stock.
The term "continuing director" means at any date a member of our Board of
Directors:
. who was a member of our Board of Directors on January 1, 2002; or
. who was nominated or elected by at least a majority of the directors
who were continuing directors at the time of the nomination or
election or whose election to our Board of Directors was recommended
by at least a majority of the directors who were continuing directors
at the time of the nomination or election or by the nominating
committee comprised of our independent directors.
Under the above definition of continuing directors, if the current Board of
Directors resigns after approving new directors, no change in control would
occur, even though our current directors would then cease to be directors.
The interpretation of the phrase "all or substantially all" used in the
definition of change in control would likely depend on the facts and
circumstances existing at the time. As a result, there may be uncertainty as to
whether or not a sale or transfer of "all or substantially all" of our assets
has occurred.
We will comply with any applicable provisions of Rule 13e-4 and any other
tender offer rules under the Exchange Act in the event of a Fundamental Change.
These repurchase rights could discourage a potential acquiror of AMD.
However, this repurchase feature is not the result of management's knowledge of
any specific effort to obtain control of AMD by means of a merger, tender offer
or solicitation, or part of a plan by management to adopt a series of
anti-takeover provisions. The term "Fundamental Change" is limited to certain
specified transactions and may not include other events that might adversely
affect our financial condition. Our obligation to offer to repurchase the
debentures upon a Fundamental Change would not necessarily afford holders
protection in the event of a highly leveraged transaction, reorganization,
merger or similar transaction involving AMD.
We may be unable to repurchase the debentures in the event of a Fundamental
Change. If a Fundamental Change were to occur, we may not have enough funds to
pay the repurchase price for all tendered debentures. In addition, a Fundamental
Change could result in an event of default under loan agreements we may enter
into in the future. Our loan agreements could also prohibit, in certain
situations, repurchases of the debentures. Any future credit facilities or other
agreements relating to our indebtedness may contain similar provisions, or
expressly prohibit the repurchase of the debentures.
Ranking
The debentures are our senior unsecured obligations and rank equally with
all our other senior unsecured debt. However, the debentures are structurally
subordinated to indebtedness of our subsidiaries, which, as of March 31, 2002,
was $1.1 billion. In addition, the debentures are effectively subordinated to
our secured debt to the extent of the value of the assets securing such debt.
We are obligated to pay reasonable compensation to the trustee and to
indemnify the trustee against certain losses, liabilities or expenses incurred
by the trustee in connection with its duties relating to the debentures. The
trustee's claims for these payments will generally be senior to those of holders
of debentures in respect of all funds collected or held by the trustee.
The debentures are obligations exclusively of AMD. As a result, our cash flow
and our ability to service our indebtedness, including the debentures, is
partially dependent upon the earnings of our subsidiaries. In addition, we are
partially dependent on the distribution of earnings, loans or other payments by
our subsidiaries to us. Our subsidiaries are separate and distinct legal
entities. Our subsidiaries have no obligation to pay any amounts due on the
debentures or to provide us with funds for our payment obligations, whether by
dividends, distributions, loans or other payments. In addition, any payment of
dividends, distributions, loans or advances by our subsidiaries to us could be
subject to statutory or contractual restrictions, such as the restrictions on
AMD Saxony's ability to pay dividends and state law requirements regarding the
declaration and payment of dividends. Payments to us by our subsidiaries will
also be contingent upon our subsidiaries' earnings and business considerations.
Our right to receive any assets of any subsidiary upon its liquidation or
reorganization, and, therefore, right to participate in those assets, will be
effectively subordinated to the claims of that subsidiary's creditors, including
trade creditors. In addition, even if we were a creditor of any of our
subsidiaries, our right as a creditor would be subordinate to any security
interest in the assets of our subsidiaries and any indebtedness of our
subsidiaries senior to that held by us.
20
Events of Default
Each of the following constitutes an event of default under the indenture:
(1) default in paying interest on the debentures when it becomes due and
the default continues for a period of 30 days or more;
(2) default in paying principal, or premium, if any, or the repurchase
price in connection with a Purchase Date or a Fundamental Change on
the debentures when due;
(3) default in the performance, or breach, of any covenant in the
indenture (other than defaults specified in clause (1) or (2) above)
and the default or breach continues for a period of 60 days or more
after written notice has been given to us by the trustee, or to us and
the trustee by the holders of at least 25% in aggregate principal
amount of the outstanding debentures;
(4) failure to give notice to holders of optional repurchase upon a
Fundamental Change;
(5) the occurrence of events of bankruptcy, insolvency or similar
proceedings with respect to us or any of our significant subsidiaries;
(6) we fail or any of our significant subsidiaries fails to make any
payment at maturity on any indebtedness, including ( any applicable
grace periods, in an amount in excess of $25.0 million in the
aggregate for all such indebtedness and such amount has not been paid
or discharged within 30 days after notice is given in accordance with
the indenture; or
(7) a default by us or any of our significant subsidiaries on any
indebtedness that results in the acceleration of indebtedness in an
amount in excess of $25.0 million in the aggregate for all such
indebtedness, without this indebtedness being discharged or the
acceleration being rescinded or annulled for 30 days after notice is
given in accordance with the indenture.
For purposes of the above, "significant subsidiary" has the meaning given
to that term in rule 1-02 of Regulation S-X under the Securities Exchange Act of
1934, except that references to income from continuing operations are changed to
revenues.
If an event of default, other than an event of default described in clause
(5) above with respect to us, occurs and is continuing, then the trustee or the
holders of at least 25% in principal amount of the outstanding debentures may,
and the trustee at the request of the holders of not less than 25% in principal
amount of the outstanding debentures will, by written notice require immediate
repayment of the entire principal amount of the outstanding debentures, together
with all accrued and unpaid interest and premium, if any. If any event of
default described in clause (5) above with respect to us occurs, the principal
amount of all the debentures will automatically become immediately due and
payable.
After a declaration of acceleration described above, the holders of a
majority in principal amount of outstanding debentures may, under conditions set
forth in the indenture, rescind this accelerated payment requirement if we have
deposited with the trustee a sum sufficient to pay all amounts due on the
debentures and all amounts due to the trustee under the indenture and all
existing Events of Default, except for nonpayment of the principal and interest
on the debentures that has become due solely as a result of the accelerated
payment requirement, have been cured or waived and if the rescission of
acceleration would not conflict with any judgment or decree. The holders of a
majority in principal amount of the outstanding debentures also have the right
to waive past defaults, except a default in paying the principal, redemption
price, repurchase price in connection with a Purchase Date or upon a Fundamental
Change or interest on any outstanding debenture, or in respect of a covenant or
a provision that cannot be modified or amended without the consent of all
holders of the debentures.
Holders of at least 25% in principal amount of the outstanding debentures
may seek to institute a proceeding only after they have made written request and
offered indemnity reasonably satisfactory to the trustee to institute a
proceeding and the trustee has failed to do so within 60 days after it received
this notice. In addition, within this 60-day period the trustee must not have
received directions inconsistent with this written request by holders of a
majority in principal amount of the outstanding debentures. These limitations do
not apply, however, to a suit instituted by a holder of a debenture for the
enforcement of the payment of principal, redemption price, repurchase price in
connection with a Purchase Date or upon a Fundamental Change or interest on or
after the due dates for payment.
21
During the existence of an event of default, the trustee is required to
exercise the rights and powers vested in it under the indenture and use the same
degree of care and skill in its exercise as a prudent person would under the
circumstances in the conduct of that person's own affairs. If an event of
default has occurred and is continuing, the trustee is not under any obligation
to exercise any of its rights or powers at the request or direction of any of
the holders unless the holders have offered to the trustee indemnity reasonably
satisfactory to the trustee. Subject to limited exceptions, the holders of a
majority in principal amount of the outstanding debentures have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee, or exercising any trust or power conferred on the
trustee.
The trustee will, within 60 days after any default occurs, give notice of
the default to the holders of the debentures, unless the default was already
cured or waived. However, unless there is a default in paying principal or
interest when due, the trustee can withhold giving notice to the holders if it
determines in good faith that the withholding of notice is in the interest of
the holders.
We are required to furnish to each trustee an annual statement as to
compliance with all conditions and covenants under the indenture.
Supplemental Indentures
The trustee and we may enter into a supplemental indenture without the
consent of any holder in order to:
. cure ambiguities, defects or inconsistencies;
. provide for the assumption of our obligations in the case of a merger
or consolidation of us;
. make any change that would provide any additional rights or benefits
to the holders;
. secure the debentures;
. evidence and provide for the acceptance of appointment under the
indenture by a successor trustee; or
. make any change that does not adversely affect the rights of any
holder in any material respect.
The trustee and we may enter into a supplemental indenture with the consent
of the holders of not less than a majority of the aggregate principal amount of
the outstanding debentures. However, no modification or amendment may, without
the consent of the holder of each outstanding debenture affected:
. change the record or payment dates for interest payments or reduce the
rate of interest on any debenture;
. extend the stated maturity of any debenture;
. reduce the principal amount, redemption price or repurchase price in
connection with a Fundamental Change with respect to any debenture;
. make any debenture payable in money or securities other than that
stated in the debenture;
. make any change that adversely affects the right to require us to
purchase a debenture;
. impair or adversely affect the right to convert, or receive payment
with respect to, a debenture, or right to institute suit for the
enforcement of any payment with respect to, or conversion of, the
debentures;
. change the provisions in the indenture that relate to modifying or
amending the indenture; or
. extend time for payment or otherwise waive a payment default with
respect to the debentures.
Consolidation, Merger or Sale of Assets
We will not consolidate or combine with or merge with or into or, directly
or indirectly, sell, assign, convey, lease, transfer or otherwise dispose of all
or substantially all of our properties and assets to any person or persons in a
single transaction or series of transactions, unless:
. we shall be the continuing person or the resulting, surviving or
transferee person (the "surviving entity") is a o corporation or
limited liability company organized and existing under the laws of the
United States or any State or the District of Columbia;
. the surviving entity will expressly assume all of our obligations
under the debentures and the indenture, and will o execute a
supplemental indenture which will be delivered to the trustee and will
be in form and substance reasonably satisfactory to the trustee;
. immediately after giving effect to the transaction, no default shall
have occurred and be continuing; and
22
. we or the surviving entity will have delivered to the trustee an
opinion of counsel stating that the transaction or series of
transactions and the supplemental indenture, if any, complies with the
applicable provisions of the indenture.
If any consolidation or merger or any sale, assignment, conveyance, lease,
transfer or other disposition of all or substantially all of our properties and
assets occurs in accordance with the indenture, the successor corporation will
succeed to, and be substituted for, and may exercise every right and power we
have under the indenture with the same effect as if such successor corporation
had been named as AMD. Except for any lease, we will be discharged from all
obligations and covenants under the indenture and the debentures.
Discharge
The indenture provides that we may terminate our obligations under the
indenture at any time by delivering all outstanding debentures to the trustee
for cancellation if we have paid all sums payable by us under the indenture. At
any time after all of the debentures have become due and payable we may
terminate our substantive obligations under the indenture, other than our
obligations to pay the principal of, and interest on, the debentures, by
depositing with the trustee money or U.S. Government obligations sufficient to
pay all remaining indebtedness on the debentures when due.
Governing Law
The laws of the State of New York will govern the indenture and the
debentures.
Information Concerning the Trustee
We have appointed the Bank of New York, as trustee under the indenture, as
paying agent, conversion agent, registrar and custodian with regard to the
debentures. The trustee or its affiliates may from time to time in the future
provide banking and other services to us in the ordinary course of their
business.
Book-Entry System
The debentures were issued in the form of a global certificate registered
in the name of the depositary or its nominee.
The global certificate was deposited with, or on behalf of, the depositary,
a securities depositary, and is registered in the name of the depositary or a
nominee of the depositary. The depositary is thus the only registered holder of
the debentures.
Debentures that are issued as described below under "--Certificated
Debentures" will be issued in definitive form. Upon the transfer of debentures
in definitive form, such debentures will, unless the global securities have
previously been exchanged for debentures in definitive form, be exchanged for an
interest in the global securities representing the principal amount of
debentures being transferred.
Purchasers of debentures may hold interests in the global certificates
through the depositary if they are participants in the depositary system.
Purchasers may also hold interests through a securities intermediary --banks,
brokerage houses and other institutions that maintain securities accounts for
customers -- that has an account with the depositary. The depositary will
maintain accounts showing the security holdings of its participants, and these
participants will in turn maintain accounts showing the security holdings of
their customers. Some of these customers may themselves be securities
intermediaries holding securities for their customers. Thus, each beneficial
owner of a book-entry certificate will hold that certificate indirectly through
a hierarchy of intermediaries, with the depositary at the "top" and the
beneficial owner's own securities intermediary at the "bottom."
The debentures of each beneficial owner of a book-entry certificate are
evidenced solely by entries on the books of the beneficial owner's securities
intermediary. The actual purchaser of debentures is generally not considered the
owner under the indenture. The book-entry system for holding securities
eliminates the need for physical movement of certificates and is the system
through which most publicly traded securities is held in the United States.
However, the laws of some jurisdictions require some purchasers of securities to
take physical delivery of their securities in definitive form. These laws may
impair the ability of a beneficial owner to transfer book-entry debentures.
Investors who purchase debentures in offshore transactions in reliance on
Regulation S under the Securities Act may hold their interests in the global
certificate indirectly through Euroclear Bank S.A./N.V., as operator of the
Euroclear System ("Euroclear"), and Clearstream Banking, Societe Anonyme
("Clearstream"), if they are participants in such systems, or indirectly through
organizations that are participants in such systems. Euroclear and Clearstream
will hold interests in the global certificate on behalf of their participants
through their respective depositaries, which in turn will hold such interests in
the global certificate in the depositaries' names on the books of the
depositary.
Transfers between participants in Euroclear and Clearstream are effected in
the ordinary way in accordance with their respective rules and operating
procedures. If a holder requires physical delivery of a definitive certificate
for any reason, including to sell certificates to persons in jurisdictions that
require such delivery of such certificates or to pledge such certificates,
23
such holder must transfer its interest in the global certificate in accordance
with the normal procedures of the depositary and the procedures set forth in the
indenture.
Cross-market transfers between the depositary, on the one hand, and
directly or indirectly through Euroclear or Clearstream participants, on the
other, are effected in the depositary in accordance with the depositary rules on
behalf of Euroclear or Clearstream, as the case may be, by its respective
depositary; however, such cross-market transactions require delivery of
instructions to Euroclear or Clearstream, as the case may be, by the
counterparty in such system in accordance with its rules and procedures and
within its established deadlines (Brussels time). Euroclear or Clearstream, as
the case may be, will, if the transaction meets its settlement requirements,
deliver instructions to its respective depositary to take action to effect final
settlement on its behalf by delivering or receiving interests in the global
certificate in the depositary, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to the
depositary. Euroclear participants and Clearstream participants may not deliver
instructions directly to the depositaries for Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in the global certificate from a
depositary participant is credited during the securities settlement processing
day (which must be a business day for Euroclear or Clearstream, as the case may
be) immediately following the depositary settlement date and such credit or any
interests in the global certificate settled during such processing day is
reported to the relevant Euroclear or Clearstream participant on such day. Cash
received in Euroclear or Clearstream as a result of sales of interests in the
global certificate by or through a Euroclear or Clearstream participant to a
depositary participant is received with value on the depositary settlement date,
but is available in the relevant Euroclear or Clearstream cash account only as
of the business day following settlement in the depositary.
A beneficial owner of book-entry debentures represented by a global
certificate may exchange the shares for definitive, certified debentures only if
the conditions for such an exchange, as described under "-- Certificated
Debentures" are met.
In this prospectus, references to actions taken by holder of debentures
mean actions taken by the depositary upon instructions from its participants,
and references to payments and notices of redemption to holders of debentures
mean payments and notices of redemption to the depositary as the registered
holder of the debentures for distribution to participants in accordance with the
depositary's procedures.
In order to ensure that the depositary's nominee timely exercises a right
conferred by the debentures, the beneficial owner of that debenture must
instruct the broker or other direct or indirect participant through which it
holds an interest in that debenture to notify the depositary of its desire to
exercise that right. Different firms have different deadlines for accepting
instructions from their customers. Each beneficial owner should consult the
broker or other direct or indirect participant through which it holds an
interest in the debentures in order to ascertain the deadline for ensuring that
timely notice will be delivered to the depositary.
The depositary is a limited purpose trust company organized under the laws
of the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under Section 17A of the Exchange Act. The rules
applicable to the depositary and its participants are on file with the SEC.
We will not have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in the book-entry securities or for maintaining, supervising or
reviewing any records relating to beneficial ownership interests.
The depositary may discontinue providing its services as securities
depositary at any time by giving reasonable notice. Under those circumstances,
in the event that a successor securities depositary is not appointed, definitive
certificates are required to be printed and delivered.
The information in this section concerning the depositary and the
depositary's book-entry system has been obtained from third-party sources that
we believe to be reliable.
Certificated Debentures
The debentures represented by the global securities are exchangeable for
certificated debentures in definitive form of like tenor as such debentures if:
. the depositary notifies us that it is unwilling or unable to continue
as depositary for the global securities or if o at any time the
depositary ceases to be a clearing agency registered under the
Exchange Act and, in either case, a successor depositary is not
appointed by us within 90 days after the date of such notice; or
. an event of default has occurred and is continuing with respect to the
global securities and the debentures have become due and payable and
the trustee requests certificated debentures.
24
Any debentures that are exchangeable pursuant to the preceding sentence are
exchangeable for certificated debentures issuable in authorized denominations
and registered in such names as the depositary shall direct. Subject to the
foregoing, the global securities are not exchangeable, except for global
securities of the same aggregate principal amount to be registered in the name
of the depositary or its nominee. In addition, such certificates will bear an
appropriate legend.
25
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 750,000,000 shares of common
stock, par value $0.01 per share, and 1,000,000 shares of preferred stock, $0.10
par value per share. As of February 25, 2002, approximately 341,243,469 shares
of common stock were issued and outstanding. As of February 25, 2002, there were
no shares of preferred stock issued and outstanding.
Common Stock
The holders of common stock are entitled to one vote per share on all
matters to be voted on by stockholders, including the election of directors.
Stockholders are not entitled to cumulative voting rights, and, accordingly, the
holders of a majority of the shares voting for the election of directors can
elect the entire board if they choose to do so and, in that event, the holders
of the remaining shares will not be able to elect any person to the board of
directors.
The holders of common stock are entitled to receive such dividends, if any,
as may be declared from time to time by the board of directors, in its
discretion, from funds legally available therefore and subject to prior dividend
rights of holders of any shares of preferred stock which may be outstanding.
However, the terms of our current credit arrangements restrict our ability to
declare or pay dividends on our common stock. Upon liquidation or dissolution of
our company subject to prior liquidation rights of the holders of preferred
stock, the holders of common stock are entitled to receive on a pro rata basis
our remaining assets available for distribution. Holders of common stock have no
preemptive or other subscription rights, and there are no conversion rights or
redemption or sinking fund provisions with respect to such shares. All
outstanding shares of common stock are, and all shares of common stock issued
upon conversion of the debentures being offered in this prospectus will be,
fully paid and non-assessable by us.
Preferred Stock
The board of directors has the authority, without action by the
stockholders, to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, which may be
greater than the rights of the common stock. It is not possible to state the
actual effect of the issuance of any shares of preferred stock upon the rights
of holders of the common stock until the board of directors determines the
specific rights of the holders of such preferred stock. However, the effects
might include, among other things:
. restricting dividends on the common stock;
. diluting the voting power of the common stock;
. impairing the liquidation rights of the common stock; or
. delaying or preventing a change of control of AMD without further
action by the stockholders.
Transfer Agent
The transfer agent and registrar for our common stock is Equiserve Trust
Company, N.A., and its telephone number is (781) 575-2000.
26
SELLING SECURITYHOLDERS
The debentures were originally issued by us and sold by the initial
purchasers of the debentures (1) in a transaction exempt from the registration
requirements of the Securities Act to persons reasonably believed by the initial
purchasers to be qualified institutional buyers in reliance on Rule 144A under
the Securities Act and (2) outside the United States pursuant to Regulation S of
the Securities Act. Selling securityholders, including their transferees,
pledgees or donees or their successors, may from time to time offer and sell
pursuant to this prospectus any or all of the debentures and shares of common
stock issuable upon conversion of the debentures
The following table sets forth information, as of May 17, 2002, with
respect to the selling securityholders and the principal amounts of debentures
beneficially owned by each selling securityholder that may be offered pursuant
to this prospectus. The information is based on information provided by or on
behalf of the selling securityholders. The selling securityholders may offer
all, some or none of the debentures or the common stock issuable upon conversion
of the debentures. Because the selling securityholders may offer all or some
portion of the debentures or the common stock, we cannot estimate the amount of
the debentures or the common stock that will be held by the selling
securityholders upon termination of any of these sales. In addition, the selling
securityholders identified below may have sold, transferred or otherwise
disposed of all or a portion of their debentures since the date on which they
provided the information regarding their debentures in transactions exempt from
the registration requirements of the Securities Act. The percentage of
debentures outstanding beneficially owned by each selling securityholder is
based on $500 million aggregate principal amount of debentures outstanding. The
number of shares of common stock owned prior to the offering includes shares of
common stock issuable upon conversion of the debentures. The percentage of
common stock outstanding beneficially owned by each selling securityholder is
based on 341,457,931 shares of common stock outstanding on May 3, 2002. The
number of shares of common stock issuable upon conversion of the debentures
offered hereby is based on a conversion price of $23.38 per share and a cash
payment in lieu of any fractional share.
Principal Amount
of Debentures
Beneficially
Owned Percentage of Shares of Common Percentage of Conversion
and Offered Debentures Stock Owned Prior Common Stock Shares
Name Hereby Outstanding to the Offering (1) Outstanding (2) Offered Hereby (3)
---- ------------------ -------------- -------------------- ---------------- -----------------
Alpine Associates .............. $ 10,300,000 2.06% 440,547 * 440,547
Alpine Partners, L.P. .......... 1,400,000 * 59,880 * 59,880
Alta Partners Holdings, LDC .... 25,250,000 5.05% 1,079,982 * 1,079,982
American Samoa Government ...... 37,000 * 1,582 * 1,582
Banc of America Securities
LLC .......................... 1,240,000 * 53,036 * 53,036
Bear Sterns & Co. Inc. ......... 5,000,000 1.00% 213,857 * 213,857
BP Amoco PLC Master Trust ...... 1,339,000 * 57,271 * 57,271
Credit Suisse First Boston
Corporation (4) .............. 22,440,000 4.49% 959,794 * 959,794
D.E. Shaw Investments, L.P...... 1,000,000 * 42,771 * 42,771
D.E. Shaw Valence, L.P. ........ 4,000,000 * 171,086 * 171,086
DeAm Convertible Arbitrage
Fund Ltd. .................... 6,300,000 1.26% 269,461 * 269,461
Deutsche Bank Alex Brown ....... 6,500,000 1.30% 278,015 * 278,015
Dodeca Fund, L.P. .............. 1,000,000 * 42,771 * 42,771
Federated Equity Funds, on
behalf of its Federated
Kaufman Fund ................. 20,000,000 4.00% 855,431 * 855,431
Federated Equity Income
Fund, Inc. ................... 20,000,000 4.00% 855,431 * 855,431
Federated Insurance Series,
on behalf of its Federated
Equity Income Fund II ........ 830,000 * 35,500 * 35,500
Fidelity Contrafund ............ 18,550,000 3.71% 793,413 * 793,413
First Union International
Capital Markets .............. 21,000,000 4.20% 898,203 * 898,203
First Union Securities Inc. .... 24,750,000 4.95% 1,058,597 * 1,058,597
Gartmore Variable Insurance
Trust, on behalf of its
Federated GVIT Equity
Income Fund................... 500,000 * 21,385 * 21,385
Global Bermuda Limited
Partnership .................. 1,500,000 * 64,157 * 64,157
Goldman Sachs and Company ...... 12,750,000 2.55% 545,337 * 545,337
Grace Brothers Management
L.L.C. ....................... 2,500,000 * 106,928 * 106,928
Grace Brothers, Ltd. ........... 1,000,000 * 42,771 * 42,771
Highbridge International LLC ... 32,000,000 6.40% 1,368,691 * 1,368,691
Hotel Union & Hotel Industry
of Hawaii Pension Plan ....... 402,000 * 17,194 * 17,194
Jefferies & Company Inc. ....... 9,000 * 384 * 384
J.P. Morgan Securities Inc. .... 26,000,000 5.20% 1,112,061 * 1,112,061
27
Principal Amount
of Debentures
Beneficially Shares of Common Conversion
Owned Percentage of Stock Owned Percentage of Shares
and Offered Debentures Prior to the Common Stock Offered
Name Hereby Outstanding Offering (1) Outstanding (2) Hereby (3)
---- ------------------ -------------- -------------------- ---------------- --------------
KBC Financial Products 5,000,000 1.00% 213,857 * 213,857
(Cayman Islands) ..................
Lakeshore International, Ltd....... 6,000,000 1.20% 256,629 * 256,629
Lancer Securities Cayman .......... 600,000 * 25,662 * 25,662
LDG Limited ....................... 420,000 * 17,964 * 17,964
Lincoln National Convertible
Securities Fund ................. 1,500,000 * 64,157 * 64,157
Marathon Global Convertible Master 13,000,000 2.60% 556,030 * 556,030
Fund Ltd...........................
Merrill Lynch, Pierce, Fenner &
Smith Inc.......................... 600,000 * 25,662 * 25,662
Morgan Stanley & Co................ 15,000,000 3.00% 641,573 * 641,573
Nomura Securities International
Inc.............................. 4,000,000 * 171,086 * 171,086
Ohio National Fund, Inc. on behalf
of its Equity Income Portfolio .. 100,000 * 4,277 * 4,277
Oppenheimer Convertible Securities
Fund ............................ 5,000,000 1.00% 213,857 * 213,857
Palladin Securities LLC ........... 1,100,000 * 47,048 * 47,048
Robertson Stephens ................ 20,000,000 4.00% 855,431 * 855,431
Royal Bank of Canada .............. 5,000,000 1.00% 213,857 * 213,857
S.G. Cowen Securities Corp......... 1,500,000 * 64,157 * 64,157
TD Securities (USA) Inc............ 3,000,000 * 128,314 * 128,314
Teachers Insurance and Annuity
Association ..................... 15,000,000 3.00% 641,573 * 641,573
The Estate of James Campbell ...... 238,000 * 10,179 * 10,179
TQA Master Fund, Ltd............... 3,120,000 * 133,447 * 133,447
TQA Master Plus Fund, Ltd.......... 3,120,000 * 133,447 * 133,447
Viacom Inc. Pension Plan Master
Trust ........................... 40,000 * 1,710 * 1,710
White River Securities LLC ........ 5,000,000 1.00% 213,857 * 213,857
Zurich Institutional Benchmarks
Master Fund Ltd.................. 2,355,000 * 100,727 * 100,727
Any other holder of debentures or
future transferee, pledgee,
done or successor of any
holder ......................... 121,710,000 24.34% 5,205,731 * 5,205,731
------------------ -------------- -------------------- ---------------- --------------
Total $500,000,000 100.0% 21,385,768 5.90% 21,385,768
================== ============== ==================== ================ ==============
--------------
* Less than one percent of the debentures or common stock outstanding, as
applicable
(1) Includes shares of common stock issuable upon conversion of the
debentures, assuming a conversion price of $23.38 and a cash payment in
lieu of any fractional share interest. The conversion price is subject
to adjustment as described under "Description of Debentures--Conversion
Rights."
(2) Calculated based on Rule 13d-3(d)(i) under the Securities Exchange Act
of 1934 using 341,457,931 shares of common stock outstanding on May 3,
2002. In calculating this amount, we treated as outstanding the number
of shares of common stock issuable upon conversion of all of that
particular holder's debentures. However, we did not assume the
conversion of any other holder's debentures.
(3) Consists of shares of common stock issuable upon conversion of the
debentures, assuming a conversion price of $23.38 per share and a cash
payment in lieu of any fractional share interest. The conversion price
is subject to adjustment as described under "Description of
Debentures--Conversion Rights."
(4) Credit Suisse First Boston Corporation is a broker-dealer and was an
initial purchaser of the debentures.
Information concerning other selling securityholders will be set forth
in prospectus supplements from time to time, if required. Information concerning
the securityholders may change from time to time and any changed information
will be set forth in supplements to this prospectus if and when necessary. In
addition, the conversion price, and therefore, the number of shares of common
stock issuable upon conversion of the debentures, is subject to adjustment under
certain circumstances. Accordingly, the number of shares of common stock into
which the debentures are convertible may increase or decrease.
The initial purchasers purchased all of the debentures from us in a
private transaction in January 2002. All of the debentures were "restricted
securities" under the Securities Act prior to this registration. The selling
securityholders have represented to us that they purchased the shares for their
own account for investment only and not with a view toward selling or
distributing them, except pursuant to sales registered under the Securities Act
or exempt from such registration.
28
PLAN OF DISTRIBUTION
The selling securityholders and their successors, which term includes
their transferees, pledgees or donees or their successors may sell the
debentures and the underlying common stock directly to purchasers or through
underwriters, broker-dealers or agents, who may receive compensation in the form
of discounts, concessions or commissions from the selling securityholders or the
purchasers. These discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved.
The common stock may be sold in one or more transactions at:
. fixed prices;
. prevailing market prices at the time of sale;
. prices related to the prevailing market prices;
. varying prices determined at the time of sale; or
. negotiated prices.
These sales may be effected in transactions:
. on any national securities exchange or quotation service
on which our common stock may be listed or quoted at the
time of sale, including the New York Stock Exchange;
. in the over-the-counter market;
. otherwise than on such exchanges or services or in the
over-the-counter market;
. through the writing of options, whether the options are
listed on an options exchange or otherwise; or
. through the settlement of short sales.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as agent on both sides of the trade.
In connection with the sale of the debentures and the underlying common
stock or otherwise, the selling securityholders may enter into hedging
transactions with broker-dealers or other financial institutions. These
broker-dealers or financial institutions may in turn engage in short sales of
the common stock in the course of hedging the positions they assume with selling
securityholders. The selling securityholders may also sell the debentures and
the underlying common stock short and deliver these securities to close out such
short positions, or loan or pledge the debentures or the underlying common stock
to broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling securityholders from the sale of
the debentures or the underlying common stock offered by them hereby will be the
purchase price of the debentures or common stock less discounts and commissions,
if any. Each of the selling securityholders reserves the right to accept and,
together with their agents from time to time, to reject, in whole or in part,
any proposed purchase of common stock to be made directly or through agents. We
will not receive any of the proceeds from this offering.
Our outstanding common stock is listed for trading on the New York
Stock Exchange. We do not intend to list the debentures for trading on any
national securities exchange or on the New York Stock Exchange and can give no
assurance about the development of any trading market for the debentures.
In order to comply with the securities laws of some states, if
applicable, the debentures and the underlying common stock may be sold in these
jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the debentures may not be sold unless they have been
registered or qualified for sale or an exemption from registration or
qualification requirements is available and is complied with.
The selling securityholders and any broker-dealers or agents that
participate in the sale of the debentures and the underlying common stock may be
deemed to be "underwriters" within the meaning of Section 2(l1) of the
Securities Act. Profits
29
on the sale of the debentures and the underlying common stock by selling
securityholders and any discounts, commissions or concessions received by any
broker-dealers or agents might be deemed to be underwriting discounts and
commissions under the Securities Act. Selling securityholders who are deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act will
be subject to the prospectus delivery requirements of the Securities Act. To the
extent the selling securityholders may be deemed to be "underwriters," they may
be subject to statutory liabilities, including, but not limited to, Sections 11,
12 and 17 of the Securities Act.
The selling securityholders and any other person participating in a
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder. Regulation M of the Exchange Act may limit
the timing of purchases and sales of any of the securities by the selling
securityholders and any other person. In addition, Regulation M may restrict the
ability of any person engaged in the distribution of the securities to engage in
market-making activities with respect to the particular securities being
distributed for a period of up to five business days before the distribution.
The selling securityholders have acknowledged that they understand their
obligations to comply with the provisions of the Exchange Act and the rules
thereunder relating to stock manipulation, particularly Regulation M, and have
agreed that they will not engage in any transaction in violation of such
provisions.
To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholder and any underwriter,
broker-dealer or agent regarding the sale of the common stock by the selling
securityholders.
A selling securityholder may decide not to sell any debentures or the
underlying common stock described in this prospectus. We cannot assure holders
that any selling securityholder will use this prospectus to sell any or all of
the debentures or the underlying common stock. Any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 or Rule 144A of the
Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to
this prospectus. In addition, a selling securityholder may transfer, devise or
gift the debentures and the underlying common stock by other means not described
in this prospectus.
With respect to a particular offering of the debentures and the
underlying common stock, to the extent required, an accompanying prospectus
supplement or, if appropriate, a post-effective amendment to the registration
statement of which this prospectus is a part will be prepared and will set forth
the following information:
. the specific debentures or common stock to be offered and sold;
. the names of the selling securityholders;
. the respective purchase prices and public offering prices and
other material terms of the offering;
. the names of any participating agents, broker-dealers or
underwriters; and
. any applicable commissions, discounts, concessions and
other items constituting, compensation from the selling
securityholders.
We entered into the registration rights agreement for the benefit of
holders of the debentures to register their debentures and the underlying common
stock under applicable federal and state securities laws under certain
circumstances and at certain times. The registration rights agreement provides
that the selling securityholders and AMD will indemnify each other and their
respective directors, officers and controlling persons against specific
liabilities in connection with the offer and sale of the debentures and the
underlying common stock, including liabilities under the Securities Act, or will
be entitled to contribution in connection with those liabilities. We will pay
all of our expenses and specified expenses incurred by the selling
securityholders incidental to the registration, offering and sale of the
debentures and the underlying common stock to the public, but each selling
securityholder will be responsible for payment of commissions, concessions, fees
and discounts of underwriters, broker-dealers and agents.
30
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material United States federal income tax
considerations relating to the purchase, ownership and disposition of the
debentures and common stock into which debentures may be converted, but does not
purport to be a complete analysis of all the potential tax considerations
relating thereto. This summary is based upon the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury Regulations promulgated
thereunder, administrative rulings and judicial decisions as of the date hereof.
These authorities may be changed, possibly retroactively, so as to result in
United States federal income tax consequences different from those set forth
below. We have not sought any ruling from the Internal Revenue Service (the
"IRS") with respect to the statements made and the conclusions reached in the
following summary, and there can be no assurance that the Internal Revenue
Service will agree with such statements and conclusions.
This discussion applies to you only if you hold the debentures and the
common stock into which such debentures are convertible as capital assets. This
discussion also does not address the tax considerations arising under the laws
of any foreign, state or local jurisdiction, or under United States federal
estate or gift tax laws (except as specifically described below with respect to
non-U.S. holders). In addition, this discussion does not address tax
considerations applicable to an investor's particular circumstances or to
investors that may be subject to special tax rules, including, without
limitation:
. banks, insurance companies or other financial institutions;
. holders subject to the alternative minimum tax;
. tax-exempt organizations;
. foreign persons or entities (except to the extent specifically set
forth below);
. dealers in securities or currencies;
. traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings;
. holders whose "functional currency" is not the United States dollar;
. persons that will hold debentures as a position in a hedging
transaction, "straddle" or "conversion transaction" for tax purposes;
or
. persons deemed to sell debentures or common stock under the
constructive sale provisions of the Code.
In addition, if a partnership (including any entity treated as a
partnership for United States tax purposes) is a holder, the tax treatment of a
partner in the partnership will generally depend upon the status of the partner
and the activities of the partnership. A holder that is a partnership, and
partners in such partnership, should consult their own tax advisors regarding
the tax consequences of the purchase, ownership and disposition of debentures
and common stock into which debentures may be converted.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION
OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION AS
WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE FEDERAL ESTATE OR GIFT TAX RULES
OR UNDER THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION OR
UNDER ANY APPLICABLE TAX TREATY.
Classification of the Debentures
Under the indenture governing the debentures, we and each holder of the
debentures agree, for U.S. federal income tax purposes, to treat the debentures
as indebtedness that is subject to the regulations governing contingent payment
debt instruments (the Contingent Debt Regulations) in the manner described
below. We believe that the debentures will be so treated, and the remainder of
this discussion assumes that the debentures will be so treated and does not
address any possible differing treatment of the debentures. However, no rulings
have been or will be sought from the IRS or a court with respect to the
applicability of the Contingent Debt Regulations to the debentures and,
accordingly, no assurance can be given that the IRS or a court will agree with
the treatment described herein. Any differing treatment could affect the amount,
timing and character of income, gain or loss in respect of an investment in the
debentures. In particular, a holder might be required to accrue original issue
discount at a lower rate, might not recognize income, gain or loss upon
conversion of the debentures to common stock, and might recognize capital gain
or loss upon a taxable disposition of the debentures. Holders should consult
their tax advisors concerning the tax treatment of holding the debentures.
31
U.S. Holders
The following is a summary of certain United States federal income tax
consequences that will apply to you if you are a "U.S. holder" of debentures or
shares of common stock. For purposes of this discussion, a "U.S. holder" is a
beneficial owner of debentures or share of common stock that is:
. an individual citizen or resident of the United States;
. a corporation (or an entity treated as a corporation) or partnership
created or organized in the United States or under the laws of the
United States, any state thereof, or the District of Columbia;
. an estate the income of which is subject to United States federal
income taxation regardless its source; or
. a trust subject to the primary supervision of a United States court
and the control of one or more United States persons.
Accrual of Interest
Under the Contingent Debt Regulations, actual cash payments on the
debentures, if any, will not be reported separately as taxable income, but will
be taken into account under such regulations. As discussed more fully below, the
effect of the Contingent Debt Regulations will be to:
. require you, regardless of your usual method of tax accounting, to use
the accrual method with respect to the debentures;
. require you to accrue original issue discount at the comparable yield
(as described below) which will be substantially in excess of interest
payments actually received by you; and
. generally result in ordinary rather than capital treatment of any
gain, and to some extent loss, on the sale, exchange, repurchase or
redemption of the debentures.
If you purchase a debenture at a price equal to the adjusted issue price
(as defined below) of the debenture, you will be required to accrue an amount of
original issue discount for U.S. federal income tax purposes, for each accrual
period prior to and including the maturity date of the debenture that equals:
. the product of (i) the adjusted issue price (as defined below) of the
debentures as of the beginning of the accrual o period and (ii) the
comparable yield to maturity (as defined below) of the debentures,
adjusted for the length of the accrual period;
. divided by the number of days in the accrual period; and
. multiplied by the number of days during the accrual period that you
held the debentures.
The issue price of a debenture is $1,000, which reflects the first price at
which a substantial amount of the debentures is sold to the public, excluding
bond houses, brokers or similar persons or organizations acting in the capacity
of underwriters, placement agents or wholesalers. The adjusted issue price of a
debenture will be its issue price increased by any original issue discount
previously accrued, determined without regard to any adjustments to original
issue discount accruals described below, and decreased by the projected amounts
of any payments previously made with respect to the debentures.
Under the Contingent Debt Regulations, you will be required to include
original issue discount in income each year, regardless of your usual method of
tax accounting, based on the comparable yield of the debentures. We have
determined the comparable yield of the debentures based on the rate, as of the
initial issue date, at which we would issue a fixed rate nonconvertible debt
instrument with no contingent payments but with terms and conditions similar to
the debentures. Accordingly, we have determined that the comparable yield is an
annual rate of 9.625%, compounded semi-annually.
We are required to furnish to you the comparable yield and, solely for tax
purposes, a projected payment schedule that includes the actual interest
payments, if any, on the debentures and estimates the amount and timing of
contingent interest payments and payment upon maturity on the debentures taking
into account the fair market value of the common stock that might be paid upon a
conversion of the debentures. You may obtain the projected payment schedule by
submitting a written request for it to us at the address set forth in "Where You
Can Find More Information." By purchasing the debentures, you agree in the
indenture to be bound by our determination of the comparable yield and projected
payment schedule. For U.S. federal income tax purposes, you must use the
comparable yield and the schedule of projected payments in determining your
original issue discount accruals, and the adjustments thereto described below,
in respect of the debentures.
The comparable yield and the projected payment schedule are not provided
for any purpose other than the determination of your original issue discount and
adjustments thereof in respect of the debentures and do not constitute a
projection or representation regarding the actual amount of the payments on a
debenture.
32
Adjustments to Interest Accruals on the Debentures
If the actual contingent payments made on the debentures differ from the
projected contingent payments, adjustments will be made for the difference. If,
during any taxable year, you receive actual payments with respect to the
debentures for that taxable year that in the aggregate exceed the total amount
of projected payments for the taxable year, you will incur a positive adjustment
equal to the amount of such excess. Such positive adjustment will be treated as
additional original issue discount in such taxable year. For these purposes, the
payments in a taxable year include the fair market value of property received in
that year. If you receive in a taxable year actual payments that in the
aggregate are less than the amount of projected payments for the taxable year,
you will incur a negative adjustment equal to the amount of such deficit. A
negative adjustment will:
. first, reduce the amount of original issue discount required to be
accrued in the current year;
. second, any negative adjustments that exceed the amount of original
issue discount accrued in the current year will o be treated as
ordinary loss to the extent of your total prior original issue
discount inclusions with respect to the debentures, reduced to the
extent such prior original issue discount was offset by prior negative
adjustments; and
. third, any excess negative adjustments will be treated as a regular
negative adjustment in the succeeding taxable year.
If you purchase debentures for more or less than the adjusted issue price
of the debentures on the acquisition date, then you must, upon acquiring the
debenture, reasonably allocate the difference between your tax basis and the
adjusted issue price to daily portions of interest or projected payments over
the remaining term of the debentures. U.S. Holders should consult their tax
advisors regarding these allocations.
If your basis is greater than the adjusted issue price, then the amount of
the difference allocated to a daily portion of interest or to a projected
payment is treated as a negative adjustment on the date the daily portion
accrues or the payment is made. On the date of the adjustment, your adjusted
basis in the debenture is reduced by the amount you treat as a negative
adjustment.
If your basis is less than the adjusted issue price, then the amount of the
difference allocated to a daily portion of interest or to a project payment is
treated as a positive adjustment on the date the daily portion accrues or the
payment is made. On the date of the adjustment, your adjusted basis in the
debenture is increased by the amount you treat as a positive adjustment.
Sale, Exchange, Conversion or Redemption of the Debentures
Upon the sale, exchange, repurchase or redemption of a debenture, as well
as upon a conversion of a debenture, you will recognize gain or loss equal to
the difference between your amount realized and your adjusted tax basis in the
debenture. As a holder of a debenture, you agree that under the Contingent Debt
Regulations, the amount realized will include the fair market value of our
common stock that you receive on conversion as a contingent payment. Such gain
on a debenture generally will be treated as interest income. Loss from the
disposition of a debenture will be treated as ordinary loss to the extent of
your prior net original issue discount inclusions with respect to the
debentures. Any loss in excess of that amount will be treated as capital loss,
which will be long-term if the debentures were held for more than one year. The
deductibility of capital losses is subject to limitations.
Special rules apply in determining the tax basis of a debenture. Your basis
in a debenture is generally increased by original issue discount you previously
accrued on the debentures (determined without taking into account any
adjustments, other than adjustments to reflect discount or premium to the
adjusted issue price, if any), and reduced by the projected amount of any
payments previously scheduled to be made, and increased or reduced by the amount
of any positive or negative adjustment, respectively, that you are required to
make if you purchased the debenture at a price other than the adjusted issue
price.
Under this treatment, your tax basis in the common stock received upon
conversion of a debenture will equal the then current fair market value of such
common stock. Your holding period for our common stock will commence on the day
after conversion.
Given the uncertain tax treatment of instruments such as the debentures,
holders should contact their tax advisors concerning the tax treatment on
conversion of a debenture and the ownership of our common stock.
Dividends
Distributions, if any, made on our common stock after a conversion
generally will be included in your income as ordinary dividend income to the
extent of our current or accumulated earnings and profits. Distributions in
excess of our current and accumulated earnings and profits will be treated as a
return of capital to the extent of your basis in the common stock and thereafter
as capital gain.
Holders of convertible debt instruments such as the debentures may, in
certain circumstances, be deemed to have received distributions of stock if the
conversion price of such instruments is adjusted. However, adjustments to the
conversion price made
33
pursuant to a bona fide reasonable adjustment formula which has the effect of
preventing the dilution of the interest of the holders of the debt instruments
will generally not result in a constructive distribution of stock. Certain of
the possible adjustments provided in the debentures (including, without
limitation, adjustments in respect of taxable dividends to our stockholders)
will not qualify as being pursuant to a bona fide reasonable adjustment formula.
If such adjustments are made, you will be deemed to have received constructive
distributions taxable as dividends to the extent of our current and accumulated
earnings and profits even though you have not received any cash or property as a
result of such adjustments. In addition, the failure to provide for the
adjustment of the conversion price where such an adjustment is necessary to
prevent dilution may result in taxable dividend income to holders of common
stock.
Sale, Exchange or Redemption of Common Stock
Upon the sale, exchange or redemption of common stock you generally will
recognize capital gain or loss equal to the difference between (i) the amount of
cash and the fair market value of any property received upon the sale or
exchange and (ii) your adjusted tax basis in the common stock. Such capital gain
or loss will be long-term capital gain or loss if your holding period in common
stock is more than one year at the time of the sale, exchange or redemption.
Long-term capital gains recognized by certain non-corporate U.S. holders,
including individuals, will generally be subject to a maximum rate of tax of 20%
(18% for capital assets acquired after December 31, 2000, and held for more than
five years at the time of the sale, exchange or redemption). Your basis and
holding period in common stock received upon conversion of a debenture are
determined as discussed above under "Sale, Exchange, Conversion or Redemption of
the Debentures." The deductibility of capital losses is subject to limitations.
Backup Withholding and Information Reporting
Backup withholding of United States federal income tax may apply to
payments made pursuant to the terms of a debenture or common stock if you are a
U.S. holder and not an "exempt recipient" and if you fail to provide certain
identifying information (such as your TIN) in the manner required. Generally,
individuals are not exempt recipients. Corporations are exempt recipients, and
other entities may be exempt recipients. Payments made in respect of a debenture
or common stock must be reported to the Internal Revenue Service, unless you are
an exempt recipient or otherwise establish an exemption. The rate of backup
withholding tax is currently 30% and is scheduled to be reduced to 28% by the
year 2006. Any amount withheld from a payment to you under the backup
withholding rules is allowable as a refund or credit against your United States
federal income tax, provided that the required information is furnished to the
Internal Revenue Service in a timely manner.
Non-U.S. Holders
The following discussion is a summary of the U.S. federal tax consequences
that will apply to you if you are a "non-U.S. holder" of debentures or shares of
common stock. For purposes of this discussion, a "non-U.S. holder" means a
beneficial owner that is not a U.S. holder.
Special rules may apply to certain non-U.S. holders such as "controlled
foreign corporations", "passive foreign investment companies" and "foreign
personal holding companies". Such entities should consult their own tax advisors
to determine the United States federal, state, local and other tax consequences
that may be relevant to them.
Payments of Interest
Payments of interest on the debentures (including amounts taken into income
as interest under the accrual rules described above under " -- U.S. Holders" and
amounts attributable to the shares of our common stock received upon a
conversion of the debentures) made to a non-U.S. holder that are not effectively
connected with a United States trade or business will not be subject to United
States withholding tax, provided that:
. you do not own, actually or constructively, 10% or more of the total
combined voting power of all classes of our stock entitled to vote
within the meaning of Section 871(h)(3) of the Code;
. such non-U.S. holder is not a "controlled foreign corporation" with
respect to which we are a "related person";
. you are not a bank whose receipt of interest (including original issue
discount) on a debenture is described in Section 881(c)(3)(A) of the
Code;
. our common stock is actively traded within the meaning of Section
871(h)(4)(C)(v)(I) and we are not a "United States real property
holding corporation"; and
(a) you provide your name and address, and certify, under penalties of
perjury, that you are not a United States person (which certification
may be made on an Internal Revenue Service Form W-8BEN) or (b) a
securities clearing organization, bank, or other financial institution
that holds customers' securities in the ordinary course of its
business holds the debenture on your behalf and certifies, under
penalties of perjury, that it has received Internal Revenue Service
34
Form W-8BEN from you or from another qualifying financial institution
intermediary, and provides a copy of the Internal Revenue Service Form
W-8BEN. If the debentures are held by or through certain foreign
intermediaries or certain foreign partnerships, such foreign
intermediaries or partnerships must also satisfy the certification
requirements of applicable Treasury Regulations.
If you cannot satisfy the requirements described above, then payments of
interest that are not effectively connected with a United States trade or
business will be subject to the 30% United States federal withholding tax,
unless you provide us with a properly executed Internal Revenue Service Form
W-8BEN claiming an exemption from or reduction in withholding under the benefit
of an applicable tax treaty.
If you are engaged in a trade or business in the United States and interest
on a debenture is effectively connected with the conduct of that trade or
business, you will be required to pay United States federal income tax on that
interest on a net income basis (although such interest is exempt from the 30%
withholding tax if you provided the requisite certification on Internal Revenue
Service Form W-8ECI) in the same manner as if you were a United States person as
defined under the Code, except as otherwise provided by an applicable tax
treaty. In addition, if you are a foreign corporation, you may be subject to a
branch profits tax equal to 30% (or lower applicable treaty rate) of your
earnings and profits for the taxable year, subject to adjustments, that are
effectively connected with your conduct of a trade or business in the United
States. For this purpose, interest(including original issue discount)will be
included in the earnings and profits of such foreign corporation.
Sale, Exchange or Redemption of the Debentures or Common Stock
Any gain realized upon the sale, exchange or other taxable disposition of a
debenture (except with respect to amounts taken into income as interest under
the accrual rules described above under " -- U.S. Holders" or amounts
attributable to the shares of our common stock received upon a conversion of the
debentures, which in each case would be taxable as described above under " --
Payments of Interest") or shares of our common stock generally will not be
subject to United States federal income tax unless:
. that gain is effectively connected with your conduct of a trade or
business in the United States;
. you are an individual who is present in the United States for 183 days
or more in the taxable year of that disposition, and certain other
conditions are met;
. you are subject to Code provisions applicable to certain United States
expatriates: or
. in the case of common stock held by you, we are or have been a "United
States real property holding corporation" for United States federal
income tax purposes at any time during the shorter of the five-year
period ending on the date of disposition or the period that you held
our common stock. We do not believe that we are currently, and we do
not anticipate becoming, a "United States real property holding
corporation".
A holder described in the first bullet point above will be required to pay
United States federal income tax on the net gain derived from the sale, except
as otherwise required by an applicable tax treaty, and if such holder is a
foreign corporation, it may also be required to pay a branch profits tax at a
30% rate or a lower rate if so specified by an applicable income tax treaty. A
holder described in the second bullet point above will be subject to a 30%
United States federal income tax on the gain derived from the sale, which may be
offset by United States source capital losses, even though the holder is not
considered a resident of the United States.
Dividends
Distributions on common stock after conversion will constitute a dividend
for United States federal income tax purposes to the extent of our current or
accumulated earnings and profits as determined under United States federal
income tax principles. Dividends generally will be subject to United States
withholding tax at a 30% rate, except where an applicable United States income
tax treaty provides for the reduction or elimination of such withholding tax.
For dividends that are effectively connected with a non-U.S. holder's conduct of
a trade or business in the United States, generally a non-U.S. holder will be
taxed in the same manner as a U.S. holder (unless an applicable tax treaty
otherwise provides), and a corporate non-U.S. holder may also be subject to a
branch profits tax at a 30% rate or a lower rate if so specified by an
applicable income tax treaty.
The conversion price of the debentures is subject to adjustment in certain
circumstances. Any such adjustment could, in certain circumstances, give rise to
a deemed distribution to you. See "U.S. Holders -- Dividends" above. In such
case, the deemed distribution would be subject to the rules described above.
United States Federal Estate Tax
A debenture held by an individual who at the time of death is not a citizen
or resident of the United States (as specially defined for United States federal
estate tax purposes) will not be subject to United States federal estate tax if
the individual did not
35
actually or constructively own 10% or more of the total combined voting power of
all classes of our stock and, at the time of the individual's death, payments
with respect to such debenture would not have been effectively connected with
the conduct by such individual of a trade or business in the United States.
Common stock held by an individual who at the time of death is not a citizen or
resident of the United States (as specially defined for United States federal
estate tax purposes) will be included in such individual's estate for United
States federal estate tax purposes, unless an applicable estate tax treaty
otherwise applies.
Backup Withholding and Information Reporting
You may have to comply with specific certification procedures to establish
that you are not a United States person in order to avoid information reporting
and backup withholding tax requirements with respect to payments of principal
and interest on the debentures. In addition, we may be required to report
annually to the Internal Revenue Service and to you the amount of, and the tax
withheld respect to, any interest or dividends paid to you, regardless of
whether any tax was actually withheld. Copies of these information returns may
also be made available under the provisions of a specific treaty or agreement to
the tax authorities of the country in which the non-U.S. holder resides.
Any amounts withheld under the backup withholding rules from a payment to
you will be allowed as a refund or credit against your United States federal
income tax provided that the required information is furnished to the Internal
Revenue Service in a timely manner.
THE PRECEDING DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS MAY NOT ADDRESS CONSIDERATIONS APPLICABLE TO AN INVESTOR'S
PARTICULAR CIRCUMSTANCES OR TO INVESTORS THAT MAY BE SUBJECT TO SPECIAL RULES.
ACCORDINGLY, YOU ARE URGED TO CONSULT YOUR TAX ADVISORS AS TO THE PARTICULAR TAX
CONSIDERATIONS TO YOU OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE
DEBENTURES AND THE COMMON STOCK INTO WHICH THE DEBENTURES ARE CONVERTIBLE,
INCLUDING THE EFFECT AND APPLICABILITY OF STATE, LOCAL, FOREIGN OR OTHER TAX
LAWS, AS WELL AS THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.
LEGAL MATTERS
Certain legal matters relating to the offering will be passed upon for us
by Latham & Watkins, San Francisco, California. Certain tax matters relating to
the offering will be passed upon for us by McDermott, Will & Emery, Chicago,
Illinois.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included or incorporated by reference in our
Annual Report on Form 10-K for the year ended December 30, 2001, as set forth in
their report, which is incorporated by reference in this prospectus and
elsewhere in the registration statement. Our financial statements and schedule
are incorporated by reference in reliance on Ernst & Young LLP's report, given
on their authority as experts in accounting and auditing.
INCORPORATION BY REFERENCE
We have elected to "incorporate by reference" certain information into this
prospectus. By incorporating by reference, we can disclose important information
to you by referring you to another document we have filed with the SEC. The
information incorporated by reference is deemed to be part of this prospectus,
except for information incorporated by reference that is superseded by
information contained in this prospectus. This prospectus incorporates by
reference the documents set forth below that we have previously filed with the
SEC:
AMD SEC Filings (File No. 1-7882) Period Ended
--------------------------------- ------------
Annual Report on Form 10-K (including information specifically incorporated by
reference into our Form 10-K from our 2001 Annual Report to Stockholders and
Proxy Statement for our 2002 Annual Meeting of Stockholders), as amended .............. December 30, 2001
Quarterly Report on Form 10-Q ........................................................... March 31, 2002
Current Reports on Form 8-K ............................................................. filed on January 23, 2002
Current Report on Form 8-K .............................................................. filed on January 24, 2002
Current Report on Form 8-K .............................................................. filed on January 30, 2002
Current Report on Form 8-K .............................................................. filed on April 24, 2002
The description of our common stock as set forth in our Registration Statement on filed on June 28, 1973
36
Form 8-A . .....................................................
All documents that we file with the SEC pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act from the date of this prospectus to the end of
the offering of the debentures under this prospectus shall also be deemed to be
incorporated in this prospectus by reference.
You may obtain copies of these documents from us without charge (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents) by writing to us at Advanced
Micro Devices, Inc., One AMD Place, Sunnyvale, California 94086, or calling us
at (408) 732-2400.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information requirements of the Securities Exchange
Act of 1934, as amended. Accordingly, we file annual, quarterly and periodic
reports, proxy statements and other information with the SEC relating to our
business, financial statements and other matters (File No. 1-7882). You may read
and copy any documents we have filed with the SEC at prescribed rates at the
SEC's Public Reference Room at Room 1024--Judiciary Plaza, 450 Fifth Street,
N.W., Washington, DC 20549. You can obtain copies of these materials at
prescribed rates by writing to the SEC's Public Reference Section at the address
set forth above, or by calling (800) SEC-0330. Our SEC filings are also
available to you free of charge at the SEC's web site at http://www.sec.gov.
Information contained in our web site is not part of this prospectus.
37
[LOGO]
$500,000,000
ADVANCED MICRO DEVICES, INC.
4.75% CONVERTIBLE SENIOR DEBENTURES DUE 2022
PROSPECTUS
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. You should not assume that the information contained or
incorporated by reference in this prospectus is accurate as of any date other
than the date of this prospectus. We are not making an offer of these securities
in any state where the offer is not permitted.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by the
registrant in connection with the registration for resale of the 4.75%
Convertible Senior Debentures Due 2022. All of the amounts shown are estimates
except the Securities and Exchange Commission (the "Commission") registration
fee.
Amount
------
Commission Registration Fee ....................... $ 46,000
*Costs of Printing ................................ 10,000
*Legal Fees and Expenses .......................... 100,000
*Accounting Fees and Expenses ..................... 50,000
*Miscellaneous Expenses ........................... 9,000
----------
*Total ....................................... $ 215,000
*Estimated
ITEM 15. LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS.
We are a Delaware corporation. Subsection (b)(7) of Section 102 of the
Delaware General Corporation Law (the "DGCL"), enables a corporation in its
original certificate of incorporation or an amendment thereto to eliminate or
limit the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of the director's fiduciary duty,
except (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) pursuant to
Section 174 of the DGCL (providing for liability of directors for unlawful
payment of dividends or unlawful stock purchases or redemptions) or (iv) for any
transaction from which the director derived an improper personal benefit.
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any present or former director, officer, employee or agent of the
corporation, or any individual serving at the corporation's request as a
director, officer, employee or agent of another organization, who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation),
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding provided that such director, officer, employee
or agent acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, provided further that such director, officer,
employee or agent had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
present or former director, officer, employee or agent who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that such person acted in any of the capacities set forth
above, against expenses (including attorneys' fees) actually and reasonably
incurred by the person in connection with the defense or settlement of such
action or suit provided that such director, officer, employee or agent acted in
good faith and in a manner reasonably believed to be in, or not opposed to, the
best interests of the corporation, except that no indemnification may be made in
respect to any claim, issue or matter as to which such director, officer,
employee or agent shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all of the circumstances of the
case, such director or officer is fairly and reasonably entitled to indemnity
for such expenses which the Court of Chancery or such other court shall deem
proper.
Section 145 further provides that to the extent a director, officer,
employee or agent has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith; that indemnification and advancement of expenses provided
for, by, or granted pursuant to, Section 145 shall not be deemed exclusive of
any other rights to which the indemnified party may be entitled; and empowers
the corporation to purchase and maintain insurance on
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behalf of a present or former director, officer, employee or agent of the
corporation, or any individual serving at the corporation's request as a
director, officer or employee of another organization, against any liability
asserted against him or incurred by him in any such capacity, or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liabilities under Section 145.
Article 7 of our certificate of incorporation, as amended (see Exhibit
3.1), provides for the elimination of liability of our directors to the extent
permitted by Section 102(b)(7) of the DGCL. Article VIII of our By-Laws, as
amended (see Exhibit 3.2), provides for indemnification of our directors or
officers or those individuals serving at our request as a director or officer of
another organization, to the extent permitted by Delaware law. In addition, we
are bound by agreements with certain of our directors and officers which
obligate us to indemnify such persons in various circumstances. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by one of our directors, officers or controlling
persons in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
We have in effect a directors and officers liability insurance policy
indemnifying our directors and officers and the directors and officers of our
subsidiaries within a specific limit for certain liabilities incurred by them,
including liabilities under the Securities Act. We pay the entire premium of
this policy.
We have entered into separate indemnification agreements with each of
our directors and officers. These agreements require us, among other things, to
indemnify such director or officer against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such individual in connection with any action, suit or proceeding arising out
of such individual's status or service as one of our directors or officers,
provided that such individual acted in good faith and in a manner he reasonably
believed to be in or not opposed to our best interests and, in the case of a
criminal proceeding, had no reasonable cause to believe that his conduct was
unlawful, and to advance expenses incurred by such individual in connection with
any proceeding against such individual with respect to which such individual may
be entitled to indemnification by us.
We believe that our certificate of incorporation and bylaw provisions,
our directors and officers liability insurance policy and our indemnification
agreements are necessary to attract and retain qualified persons to serve as our
directors and officers.
ITEM 16. INDEX TO EXHIBITS.
Number Exhibit
------ -------
3.1 Restated Certificate of Incorporation, filed as Exhibit 3.1 to
AMD's Annual Report on Form 10-K/A for the fiscal year ended
December 26, 1999, and incorporated herein by reference.*
3.2 Bylaws, as amended, filed as Exhibit 3.2 to AMD's Annual Report on
Form 10-K for the fiscal year ended December 26, 1999, and
incorporated herein by reference.*
3.3 Certificate of Amendment of Restated Certificate of Incorporation,
filed as Exhibit 3.3 to AMD's Quarterly Report on Form 10-Q for the
period ended July 2, 2000, and incorporated herein by reference.*
4.1 Indenture dated as of January 29, 2002, between AMD and the Bank of
New York, as Trustee, regarding the 4.75% Convertible Senior
Debentures Due 2022, filed as Exhibit 4.14 to AMD's Annual Report
on Form 10-K for the fiscal year ended December 30, 2001, and
incorporated herein by reference.*
4.2 Form of AMD 4.75% Convertible Debenture Due 2022, filed as Exhibit
4.15 to AMD's Annual Report on Form 10-K for the fiscal year ended
December 30, 2001, and incorporated by reference.*
4.3 Registration Rights Agreement dated as of January 29, 2002, among
AMD, Credit Suisse First Boston Corporation and Salomon Smith
Barney Inc., egarding the 4.75% Convertible Senior Debentures Due
2022, filed as Exhibit 4.16 to AMD's Annual Report on Form 10-K for
the fiscal year ended December 30, 2001, and
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incorporated herein by reference.*
5.1 Opinion of Latham & Watkins.
8.1 Opinion of McDermott, Will & Emery.
12.1 Statement of Computation of Ratios.
23.1 Consent of Latham & Watkins (included in Exhibit 5.1).
23.2 Consent of Independent Auditors.
24.1 Power of Attorney.*
25.1 Statement of Eligibility under the Trust Indenture Act of 1939 of
a Corporation Designated to Act as Trustee of the Bank of New
York (Form T-1).*
____________________________
* Previously filed
ITEM 17. UNDERTAKINGS.
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total increase or decrease in volume of
securities offered would not exceed that which was registered) and any deviation
from the low or high of the estimated maximum offering range may be reflected in
the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price, set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration Statement
or any material change to such information in the registration statement;
provided, however, that clauses (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by those clauses is
contained in periodic reports filed with or furnished to the Commission by the
Company pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned registrant herby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
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C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the provisions described above, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Sunnyvale, state of California, on the 16th day of
May, 2002.
ADVANCED MICRO DEVICES, INC.
By /s/ Robert J. Rivet
----------------------------------------
Robert J. Rivet
Senior Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the 16th day of May, 2002.
SIGNATURE TITLE
--------- -----
Director, President and Chief Executive Officer (Principal Executive
* Officer)
-----------------------------------------
Hector de J. Ruiz
Chairman
*
-----------------------------------------
W. J. Sanders III
Senior Vice President and Chief Financial Officer (Principal Financial and
Accounting Officer)
/s/ Robert J. Rivet
-----------------------------------------
Robert J. Rivet
Director
*
-----------------------------------------
Friedrich Baur
Director
*
-----------------------------------------
Charles M. Blalack
Director
*
-----------------------------------------
R. Gene Brown
Director
*
-----------------------------------------
Robert B. Palmer
Director
*
-----------------------------------------
Joe L. Roby
Director
*
-----------------------------------------
Leonard Silverman
* By /s/ Robert J. Rivet
------------------------------------
Robert J. Rivet, attorney-in-fact
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EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
3.1 Restated Certificate of Incorporation, filed as Exhibit 3.1
to AMD's Annual Report on Form 10-K/A for the fiscal year
ended December 26, 1999, and incorporated herein by
reference.*
3.2 Bylaws, as amended, filed as Exhibit 3.2 to AMD's Annual
Report on Form 10-K for the fiscal year ended December 26,
1999, and incorporated herein by reference.*
3.3 Certificate of Amendment to Restated Certificate of
Incorporation, filed as Exhibit 3.3 to AMD's Quarterly
Report on Form 10-Q for the period ended July 2, 2000, and
incorporated herein by reference.*
4.1 Indenture dated as of January 29, 2002, between AMD and the
Bank of New York, as Trustee, regarding the 4.75%
Convertible Senior Debentures Due 2022, filed as Exhibit 4.14
to AMD's Annual Report on Form 10-K for the fiscal year
ended December 30, 2001, and incorporated herein by
reference.*
4.2 Form of AMD 4.75% Convertible Debenture Due 2022, filed as
Exhibit 4.15 to AMD's Annual Report on Form 10-K for the
fiscal year ended December 30, 2001, and incorporated by
reference.*
4.3 Registration Rights Agreement dated as of January 29,
2002, among AMD, Credit Suisse First Boston Corporation
and Salomon Smith Barney Inc., regarding the 4.75%
Convertible Senior Debentures Due 2022, filed as Exhibit
4.16 to AMD's Annual Report on Form 10-K for the fiscal
year ended December 30, 2001, and incorporated herein by
reference.*
5.1 Opinion of Latham & Watkins.
8.1 Opinion of McDermott, Will & Emery.
12.1 Statement of Computation of Ratios.
23.1 Consent of Latham & Watkins (included in Exhibit 5.1).
23.2 Consent of Independent Auditors.
24.1 Power of Attorney.*
25.1 Statement of Eligibility under the Trust Indenture Act of
1939 of a Corporation Designated to Act as Trustee
of the Bank of New York (Form T-1).*
________________________
* Previously filed.
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