AMD 2009 Annual Report Download - page 100

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2010. Under the new guidance, the company who is deemed to both (i) have the power to direct the activities of
the variable interest entity that most significantly impact the variable interest entity’s economic performance and
(ii) be exposed to losses and returns will be the primary beneficiary who should then consolidate the variable
interest entity. The Company evaluated whether the governance changes described above would, pursuant to the
new guidance, affect its consolidation of GF. The Company considered the purpose and design of GF, the
activities of GF that most significantly affect the economic performance of GF and the concept of “who has the
power,” as contemplated by the new guidance. Based on the results of this evaluation and in light of the
governance changes whereby the Company believes it now only has protective rights relative to the operations of
GF, the Company concluded that ATIC is the party who has the power to direct the activities of GF that most
significantly impact GF’s performance and is, therefore, the primary beneficiary of GF. Accordingly, beginning
fiscal 2010, the Company will deconsolidate GF and account for GF under the equity method of accounting. The
Company will continue applying the equity method of accounting until it is deemed to no longer have the ability
to significantly influence the operations of GF.
Under the deconsolidation accounting guidelines, the Company’s investment in GF will be recorded at fair
value upon deconsolidation with a gain or loss to be recognized in earnings. The valuation of GF is currently
under way and, therefore, the Company cannot estimate at this time what the effect will be, but it will be
recorded in the financial results of its first fiscal quarter of 2010.
NOTE 4: Noncontrolling Interest
Leipziger Messe and Fab 36 Beteiligungs GmbH, the original unaffiliated limited partners of AMD Fab 36
KG, made considerable contributions to AMD Fab 36 KG. Leipziger Messe and Fab 36 Beteiligungs’
contributions to AMD Fab 36 KG, as set forth in the partnership agreements entered into in 2004, were recorded
in the Company’s financial statements as noncontrolling interest, based on their fair value. The contributions
were not mandatorily redeemable, but rather were subject to redemption outside of the control of the Company.
Each accounting period, the Company increased the carrying value of this noncontrolling interest toward its
ultimate redemption value of these contributions by the guaranteed rate of return of between 11 and 13 percent.
In 2008, the Company redeemed the remaining unaffiliated limited partnership interest held by Fab 36
Beteiligungs GmbH for $95 million. In 2009, the Company redeemed the remaining unaffiliated limited
partnership interest held by Leipziger Messe for $173 million.
The contributions made by ATIC for the formation of GF have also been recorded by the Company as
noncontrolling interest. The table below reflects the changes in noncontrolling interest during the years 2009,
2008 and 2007.
(in millions)
Balance at December 31, 2006 ....................................... $ 237
Debt accretion .................................................... 35
Foreign exchange translation ........................................ (7)
Balance at December 29, 2007 ....................................... 265
Debt accretion .................................................... 33
Purchase of Fab 36 Beteiligungs GmbH limited partner contributions ........ (95)
Return of limited partner contributions ................................ (19)
Foreign exchange translation ........................................ (15)
Balance at December 27, 2008 ....................................... 169
Income attributable to limited partner ................................. 4
Redemption of unaffiliated limited partnership interest, Leipziger Messe ..... (173)
ATIC Contribution
Class A Preferred Shares ....................................... 218
Class B Preferred Shares ........................................ 873
GF net loss attributed to noncontrolling interest ......................... (87)
Class B preferred share accretion ..................................... 72
Balance at December 26, 2009 ....................................... $1,076
92