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AMZN » Topics » Debt Repurchase Authorization

These excerpts taken from the AMZN 10-K filed Jan 30, 2009.

Debt Repurchase Authorization

In February 2008 our Board of Directors authorized a debt repurchase program, replacing our previous debt repurchase authorization in its entirety, pursuant to which we may from time to time repurchase (through open market repurchases or private transactions), redeem, or otherwise retire up to an aggregate of all of our outstanding 6.875% PEACS and 4.75% Convertible Subordinated Notes. In 2008, we called for redemption the remaining principal of our 4.75% Convertible Subordinated Notes. See “4.75% Convertible Subordinated Notes.”

Debt Repurchase Authorization

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">In February 2008 our Board of Directors authorized a debt repurchase program, replacing our previous debt repurchase authorization in its entirety,
pursuant to which we may from time to time repurchase (through open market repurchases or private transactions), redeem, or otherwise retire up to an aggregate of all of our outstanding 6.875% PEACS and 4.75% Convertible Subordinated Notes. In 2008,
we called for redemption the remaining principal of our 4.75% Convertible Subordinated Notes. See “4.75% Convertible Subordinated Notes.”

SIZE="2">6.875% PEACS

In February 2000, we completed an offering of €690 million of our 6.875% PEACS. The 6.875% PEACS are
convertible, at the holder’s option, into our common stock at a conversion price of €84.883 per share ($118.62, based on the exchange rates as of December 31, 2008). Due to changes in the Euro/U.S. Dollar exchange ratio, our
remaining principal debt obligation under this instrument since issuance in February 2000 has increased by $99 million as of December 31, 2008. Total common stock issuable, as of December 31, 2008, upon conversion of our outstanding
6.875% PEACS was 2.8 million shares, which is excluded from our calculation of earnings per share as its effect is currently anti-dilutive. The U.S. Dollar equivalent principal, interest, and conversion price fluctuate based on the
Euro/U.S. Dollar exchange ratio. Interest on the 6.875% PEACS is payable annually in arrears in February of each year. The 6.875% PEACS are unsecured and are subordinated to any existing and future senior indebtedness. We have the right to redeem
the 6.875% PEACS, in whole or in part, by paying the principal, plus any accrued and unpaid interest. No premium payment is required for early redemption.

FACE="Times New Roman" SIZE="2">Upon the occurrence of a “fundamental change” prior to the maturity of the 6.875% PEACS, each holder thereof has the right to require us to redeem all or any part of such holder’s 6.875% PEACS at a
price equal to 100% of the principal amount of the notes being redeemed, together with accrued interest. As defined in the indenture, a “fundamental change” is the occurrence of certain types of transactions in which our stockholders do
not receive publicly-traded securities.

The indenture governing the 6.875% PEACS contains certain affirmative covenants for us, including
making principal and interest payments when due, maintaining our corporate existence and properties, and paying taxes and other claims in a timely manner. We were in compliance with these covenants through December 31, 2008.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">In 2006, we redeemed principal amounts of €250 million ($300 million based on the Euro to U.S. Dollar exchange rate on the date of
redemption) of our outstanding 6.875% PEACS. As a result of these redemptions, in 2006 we recorded a charge classified in “Other expense (income), net,” of approximately $6 million related to the redemption, consisting of $3 million in
unamortized deferred issuance charges and $3 million relating to unrealized losses on our terminated currency swap that previously hedged a portion of our 6.875% PEACS.

FACE="Times New Roman" SIZE="2">Based upon quoted market prices, the fair value of the 6.875% PEACS was $332 million and $358 million (outstanding principal of €240 million) as of December 31, 2008 and 2007. Such amounts are
determined based on quoted prices in active markets for similar instruments (Level 2 as defined under SFAS No. 157). See “Note 1—Description of Business and Accounting Policies” for further discussion.

STYLE="margin-top:18px;margin-bottom:0px; margin-left:2%">4.75% Convertible Subordinated Notes

SIZE="2">In February 1999, we completed an offering of $1.25 billion of 4.75% Convertible Subordinated Notes. The 4.75% Convertible Subordinated Notes were convertible into our common stock at the holders’ option at a conversion price of
$78.0275 per share.

 


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Table of Contents



AMAZON.COM, INC.

FACE="Times New Roman" SIZE="2">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 


In 2008, we called for redemption of the remaining principal amount of $899 million of our
outstanding 4.75% Convertible Subordinated Notes. Holders elected to convert $605 million in principal amount of the 4.75% Convertible Subordinated Notes, and we issued 7.8 million shares of our common stock as a result; we redeemed the
remaining $294 million of the called principal amount for cash.

This excerpt taken from the AMZN 10-K filed Feb 11, 2008.

Debt Repurchase Authorization

In February 2008 our Board of Directors authorized a debt repurchase program, replacing our previous debt repurchase authorization in its entirety, pursuant to which we may from time to time repurchase (through open market repurchases or private transactions), redeem, or otherwise retire up to an aggregate of all of our outstanding 4.75% Convertible Subordinated Notes and 6.875% PEACS. The outstanding principal of our 4.75% Convertible Subordinated Notes as of this authorization was $899 million, and the outstanding principal amount of our 6.875% PEACS was €240 million.

EXCERPTS ON THIS PAGE:

10-K (2 sections)
Jan 30, 2009
10-K
Feb 11, 2008

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