AMD 2011 Annual Report Download - page 87

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of business on the business day immediately preceding the maturity date based on the conversion ratio in effect
on the date of conversion. The Class A Notes will 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. The Class B Notes accrue interest at a rate of 11% per annum,
compounded semiannually, and mature ten years from the date of issuance. 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 will 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, 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, was 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 attributable to
its common stockholders per share consisted of its 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
the Company, based on its 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. The Company 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 the Company and its 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,
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