Intel 2006 Annual Report Download - page 77

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For 2006, 693 million of the company’s outstanding stock options (372 million in 2005 and 357 million in 2004) were
excluded from the calculation of diluted earnings per common share because the exercise prices of these stock options were
greater than or equal to the average market value of the common shares. These options could be included in the calculation in
the future if the average market value of the common shares increases and is greater than the exercise price of these options.
Note 5: Common Stock Repurchase Program
The company has an ongoing authorization, as amended in November 2005, from the Board of Directors to repurchase up to
$25 billion in shares of Intel’s common stock in open market or negotiated transactions. During 2006, the company
repurchased 226 million shares of common stock at a cost of $4.6 billion (418 million shares at a cost of $10.6 billion during
2005 and 301 million shares at a cost of $7.5 billion during 2004). Since the program began in 1990, the company has
repurchased and retired 2.8 billion shares at a cost of approximately $57 billion. As of December 30, 2006, $17.3 billion
remained available for repurchase under the existing repurchase authorization.
Note 6: Borrowings
Short
-Term Debt
Short-term debt included non-interest-bearing drafts payable of $178 million and the current portion of long-term debt of $2
million as of December 30, 2006 (drafts payable of $295 million and the current portion of long-
term debt of $18 million as of
December 31, 2005). The company also has the ability to borrow under the company’s commercial paper program, which has
a pre-authorized limit of $3.0 billion. During 2006, there were no borrowings under the company’s commercial paper
program, and maximum borrowings reached $150 million during 2005. No commercial paper was outstanding as of December
30, 2006 or December 31, 2005. The company’s commercial paper was rated A-1+ by Standard & Poor’s and P-1 by Moody’
s
at December 30, 2006.
Long
-Term Debt
Long-term debt at fiscal year-ends was as follows:
In 2005, the company issued $1.6 billion of 2.95% junior subordinated convertible debentures (the debentures) due 2035. The
debentures are initially convertible, subject to certain conditions, into shares of the company’s common stock at a conversion
rate of 31.7162 shares of common stock per $1,000 principal amount of debentures, representing an initial effective
conversion price of approximately $31.53 per share of common stock. Holders may surrender the debentures for conversion at
any time. The conversion rate will be subject to adjustment for certain events outlined in the indenture governing the
debentures, but will not be adjusted for accrued interest. In addition, the conversion rate will increase for a holder who elects
to convert the debentures in connection with certain share exchanges, mergers, or consolidations involving Intel, as described
in the indenture governing the debentures. The debentures, which pay a fixed rate of interest semiannually, have a contingent
interest component that will require the company to pay interest based on certain thresholds and for certain events
commencing on December 15, 2010, as outlined in the indenture. The maximum amount of contingent interest that will accrue
is 0.40% per year. The fair value of the related embedded derivative was not significant at December 30, 2006 or December
31, 2005.
66
(In Millions)
2006 2005
Junior subordinated convertible debentures due 2035 at 2.95%
$
1,586
$
1,585
Euro debt due 2007
–
2018 at 7%
–
11%
103
378
Arizona bonds adjustable 2010, due 2035 at 4.375%
160
160
Other debt
1
1
1,850
2,124
Less: current portion of long
-
term debt
(2
)
(18
)
Total long
-
term debt
$
1,848
$
2,106