AMD 2009 Annual Report Download - page 98

into GF Class B Preferred Shares at the option of the holder at any time prior to the close of business on the
business day immediately preceding the maturity date at the conversion ratio in effect on the date of conversion.
The Class B Notes will automatically convert into GF Class B Preferred Shares upon the earlier of (i) a GF IPO,
(ii) certain change of control transactions of GF or (iii) the close of business on the business day immediately
preceding the maturity date. As of December 26, 2009, the aggregate principal amount of Class B Notes is
$1,015 million, which is comprised of the original Class B Notes and additional Class B Notes issued in
exchange for $208 million of cash received from ATIC in July 2009, according to the Funding Agreement.
Based on the structure of the transaction, pursuant to the guidance on accounting for interests in variable
interest entities, during 2009 GF was considered to be a variable interest entity of the Company and the Company
was deemed to be the primary beneficiary. Therefore, the Company was required to consolidate the accounts of
GF from March 2, 2009 through December 26, 2009. For this period, ATIC’s noncontrolling interest, represented
by its equity interests in GF, is presented outside of stockholders’ equity in the Company’s consolidated balance
sheet due to ATIC’s right to put those securities back to the Company in the event of a change of control of
AMD during the two years following the Closing. The Company’s net income (loss) attributable to its common
stockholders per share consists of its consolidated net income (loss), as adjusted for (i) the portion of GF’s
earnings or losses attributable to ATIC, which is based on ATIC’s proportional ownership interest in GF’s
Class A Preferred Shares (16.7% as of December 26, 2009), and (ii) the non-cash accretion on GF’s Class B
Preferred Shares attributable to the Company, based on its proportional ownership interest of GF’s Class A
Preferred Shares (83.3% as of December 26, 2009).
At the Closing, AMD, ATIC and GF also entered into a Shareholders’ Agreement (the Shareholders’
Agreement), a Funding Agreement (the Funding Agreement), and a Wafer Supply Agreement (the Wafer Supply
Agreement), certain terms of which are summarized below.
Shareholders’ Agreement. The Shareholders’ Agreement sets forth the rights and obligations of AMD and
ATIC as shareholders of GF. The initial GF board of directors (GF Board) consisted of eight directors, and AMD
and ATIC each designated four directors. After the Reconciliation Event (discussed above), the number of
directors a GF shareholder may designate increases or decreases according to the percentage of GF’s shares it
owns on a fully diluted basis. The Company currently designates three directors to the GF Board.
Pursuant to the Shareholders’ Agreement, if a change of control of AMD occurs within two years of
Closing, ATIC will have the right to put any or all GF securities (valued at their fair market value) held by ATIC
and its permitted transferees to the Company in exchange for cash, or if a change of control of AMD occurs after
a specified event, ATIC will have the option to purchase in cash any or all of GF securities (valued at their fair
market value) held by the Company and its permitted transferees.
Funding Agreement. The Funding Agreement provides for the future funding of GF and governs the terms
and conditions under which ATIC is obligated to provide such funding. Pursuant to the Funding Agreement,
ATIC has committed to additional equity funding of a minimum of $3.6 billion and up to $6.0 billion to be
provided in phases over five years from the Closing. The Company has the right, but not the obligation, to
provide additional future capital to GF in an amount pro rata to its interest in the fully converted ordinary shares
of GF.
At each equity funding, the equity securities to be issued by GF will consist of 20% of Class A Preferred
Shares and 80% of Class B Preferred Shares. Rather than issuing Preferred Shares, GF may, in certain
circumstances, issue additional Class A Notes and Class B Notes to ATIC in those same proportions in
connection with future funding. The aggregate amount of equity funding to be provided by the shareholders in
any fiscal year depends on the time period of such funding and the amounts set forth in the five-year capital plan
of GF. In addition, GF is required to obtain specified third-party debt in any given fiscal year, as set forth in its
five-year capital plan. To the extent that GF obtains more than the specified amount of third-party debt, ATIC is
able to reduce its funding commitment accordingly. To the extent that GF is not able to obtain the full amount of
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