AMD 2011 Annual Report Download - page 50

exposed to losses and returns will be the primary beneficiary who should then consolidate the variable interest
entity. We evaluated whether the governance changes described above would, pursuant to the new guidance,
affect our consolidation of GF. We 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 we
believe we only had protective rights relative to the operations of GF, we concluded that the other investor in GF,
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, effective as of December 27, 2009,
we deconsolidated GF, and during fiscal 2010 we accounted for our ownership interest in GF under the equity
method of accounting. For purposes of our application of the equity method of accounting during 2010, we
recorded our share of GF’s results excluding the results of Chartered because GF did not have an equity
ownership interest in Chartered. The terms of the Funding Agreement and the WSA described above were not
affected by the deconsolidation of GF. Following the deconsolidation, GF became our related party.
Funding of GF
Pursuant to each GF funding request from the beginning of 2010 through November 17, 2010, the equity
securities issued by GF consisted of 20% of Class A Preferred Shares and 80% of Class B Preferred Shares. On
November 24, 2010, we, ATIC and GF signed a letter agreement regarding future funding of GF. Pursuant to this
letter agreement, the parties agreed that the securities to be issued in consideration of any future GF funding
would consist solely of GF’s Class A Preferred Shares. In addition, the purchase price per Class A Preferred
Share would be determined by dividing GF’s net tangible assets (derived from its most recent fiscal year-end
audited consolidated balance sheet) by GF’s total number of outstanding preferred shares (assuming the
conversion of any outstanding GF Class A Notes into Class A Preferred Shares and Class B Notes into Class B
Preferred Shares) as of the date of the balance sheet referred to above and multiplying by 1.10. Prior to the letter
agreement, the funding multiple was 0.90.
During 2010, ATIC contributed $930 million of cash to GF in exchange for GF securities consisting of
444,313 Class A Preferred Shares and 617,695 Class B Preferred Shares. We did not participate in the fundings.
As a result, our ownership interest in GF’s Class A Preferred Shares decreased from approximately 83% as of
December 26, 2009 to approximately 62% as of December 25, 2010, and our ownership interest in GF was
approximately 23% on a fully diluted basis. These contributions resulted in an aggregate gain on our ownership
interest dilution of $232 million, which we recorded as part of the equity in net loss of investee line item on our
consolidated statement of operations.
Contribution Agreement, Funding and Accounting in 2011; Amended Shareholders’, Funding and Wafer
Supply Agreements
GLOBALFOUNDRIES Singapore Pte. Ltd. (GFS, formerly Chartered) Contribution in Fiscal 2011
On December 27, 2010, pursuant to the Contribution Agreement, ATIC International Investment Company
LLC, an affiliate of ATIC, contributed all of the outstanding Ordinary Shares of GFS to GF in exchange for
2,808,981 newly issued shares of GF Class A Preferred Shares. The issuance of Class A Preferred Shares to
ATIC International diluted our ownership interest in GF from 23% to 14% on a fully diluted basis and from 34%
to 18% on a voting basis. As the result of this dilution, during the first quarter of 2011 and the year ended
December 31, 2011, we recognized a non-cash gain of approximately $492 million, net of certain transaction
related charges, in Equity income (loss) and dilution gain in investee, net. In connection with our reduced
ownership interest in GF, the number of AMD-designated directors on GF’s board decreased from two to one.
In connection with this contribution, we amended and restated the Shareholders’ Agreement and the
Funding Agreement.
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