AMD 2011 Annual Report Download - page 48

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mature ten years from the date of issuance. However, they automatically convert into Class A Preferred Shares
upon the earlier of (i) an IPO, (ii) certain change of control transactions of GF or (iii) the close of business on the
business day immediately preceding the maturity date.
Class B Subordinated Convertible Notes. GF’s Class B Notes accrue interest at a rate of 11% per annum,
compounded semiannually. Interest on the Class B Notes is payable semiannually in additional Class B Notes.
The Class B Notes are the unsecured obligations of GF and rank subordinated in right of payment to any current
or future senior indebtedness of GF. The Class B Notes are not redeemable by GF without the note holder’s
consent. The Class B Notes are convertible, in whole or in part, in multiples of $1,000, 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 mature
ten years from the date of issuance. However, they automatically convert into GF Class B Preferred Shares upon
the earlier of (i) an IPO, (ii) certain change of control transactions of GF or (iii) the close of business on the
business day immediately preceding the maturity date.
Based on the structure of the transaction and the guidance on accounting for interests in variable interest
entities, during 2009, GF was deemed a variable-interest entity, and we were deemed to be the primary
beneficiary. Therefore, we were 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,
was presented outside of stockholders’ equity in the consolidated balance sheet due to ATIC’s right to put those
securities back to us in the event of a change of control of AMD during the two years following the date of the
Closing. Our net income attributable to common stockholders per share consisted of our consolidated net income,
as adjusted for (i) the portion of GF’s losses attributable to ATIC, which was based on ATIC’s proportional
ownership interest in GF’s Class A Preferred Shares (17% in 2009), and (ii) the non-cash accretion on GF’s Class
B Preferred Shares attributable to us, based on our proportional ownership interest of GF’s Class A Preferred
Shares (83% in 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 WSA), 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, 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. We had the right to designate three directors to the GF Board as of December 26, 2009. If a change
of control of AMD occurs after the Reconciliation Event, ATIC will have the option to purchase in cash any or
all of the GF securities (valued at their fair market value) held by us and our permitted transferees, ATIC can
require us or the other party to the change in control transaction to assume a pro-rata portion of ATIC’s funding
commitment under the Funding Agreement until 2013, and ATIC can require the other party to the change in
control transaction to guarantee all of our obligations under the transaction documents.
Funding Agreement. The Funding Agreement provides for the 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 aggregate amount of equity funding to be provided by the
shareholders in any 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 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. We have the right, but not the obligation, to provide
additional future capital to GF in an amount pro rata to our interest in the fully converted Ordinary Shares of GF.
42