AMD 2009 Annual Report Download - page 52

In 2009, we also made significant progress in improving our balance sheet by significantly reducing our
debt. Without taking into account GF’s indebtedness, during 2009 we reduced our debt by approximately $1.2
billion. We enter 2010 with a new business model, compelling products and stronger customer demand in an
improved economic environment. In addition, beginning in the first quarter of 2010, we will no longer
consolidate the operations of GF. As a result, we expect that in the future, our consolidated cost of sales will be
higher and operating expenses will be lower. We also expect that interest expense will be significantly lower
because we no longer consolidate GF’s indebtedness.
GLOBALFOUNDRIES
On March 2, 2009, we consummated the transactions contemplated by the Master Transaction Agreement
among us, ATIC, and WCH, pursuant to which we formed GF. At the Closing, we contributed certain assets and
liabilities to GF, including, among other things, shares of the groups of German subsidiaries owning our
manufacturing facilities, certain manufacturing assets, real property, tangible personal property, employees,
inventories, books and records, a portion of our patent portfolio, intellectual property and technology, rights
under certain material contracts and authorizations necessary for GF to carry on its business. In exchange we
received GF securities consisting of one Class A Ordinary Share, 1,090,950 Class A Preferred Shares and
700,000 Class B Preferred Shares, and the assumption of certain liabilities by GF. ATIC contributed $1.4 billion
of cash to GF in exchange for GF securities consisting of one Class A Ordinary Share, 218,190 Class A Preferred
Shares, 172,760 Class B Preferred Shares, $202 million aggregate principal amount of 4% Class A Subordinated
Convertible Notes (the Class A Notes) and $807 million aggregate principal amount of 11% Class B
Subordinated Convertible Notes (the Class B Notes), and transferred $700 million of cash to us in exchange for
the transfer by us of 700,000 GF Class B Preferred Shares.
At the Closing, we also issued to WCH, for an aggregate purchase price of $125 million, 58 million shares
of our common stock and warrants to purchase 35 million shares of our common stock at an exercise price of
$0.01 per share (the Warrants). The Warrants are currently exercisable and expire on March 2, 2019. The shares
issuable under these Warrants have been included in our basic earnings per share calculation from the third
quarter of 2009 when the Warrants became exercisable.
Under the Master Transaction Agreement, the cash consideration that WCH and ATIC paid and the
securities that they received are as follows:
• Cash paid by WCH to AMD for the purchase of 58 million shares of AMD common stock and
Warrants: $125 million;
• Cash paid by ATIC to GF for the aggregate principal amount of Class A Notes, which are convertible
into 201,810 Class A Preferred Shares: $202 million;
• Cash paid by ATIC to GF for the aggregate principal amount of Class B Notes, which are convertible
into 807,240 Class B Preferred Shares: $807 million;
• Cash paid by ATIC to GF for 218,190 Class A Preferred Shares: $218 million;
• Cash paid by ATIC to GF for 172,760 Class B Preferred Shares: $173 million; and
• Cash paid by ATIC to AMD for 700,000 Class B Preferred Shares: $700 million.
As of the Closing, AMD and ATIC owned 1,090,950, or 83.3 percent, and 218,190, or 16.7 percent,
respectively, of Class A Preferred Shares, and ATIC owned 100 percent of the Class B Preferred Shares and 100
percent of the Class A Notes and Class B Notes.
In July 2009, ATIC contributed $260 million of cash to GF in exchange for GF securities consisting of $52
million aggregate principal amount of Class A Notes and $208 million aggregate principal amount of Class B
44