AMD 2011 Annual Report Download - page 92

additional quarterly amount to GF during 2012 totaling up to $430 million if GF meets specified conditions
related to continued availability of 32nm capacity as of the beginning of 2012. Under the current terms of the
WSA, in 2012, the Company will compensate GF on a cost plus basis for projected manufacturing capacity that
the Company has requested for its microprocessors, including APU products. However, the Company is currently
in the process of negotiating a second amendment to the WSA, including the pricing methodology.
The Company currently estimates that it will pay GF approximately $1.5 billion in 2012 for wafer
purchases. These 2012 estimated costs are based in part on the Company’s current expectations regarding GF’s
manufacturing yields and wafer volumes and the successful conclusion of its negotiations with GF and ATIC
related to a second amendment to the WSA, including the pricing methodology. Costs are also impacted by
variations in yields and several other factors including its current expectations regarding demand for its products.
In addition, the Company estimates that additional purchase obligations in connection with research and
development related to GF wafer production will be approximately $71 million in 2012. The Company is not
currently able to meaningfully quantify or estimate its purchase obligations to GF beyond 2012, but it expects
that its future purchases from GF will continue to be material.
GF continues to be a related party of the Company. The Company’s total expenses related to GF’s wafer
manufacturing were $904 million and $1.2 billion in 2011 and 2010, respectively, The Company’s total expenses
related to GF’s research and development activities were $79 million and $114 million for 2011 and 2010,
respectively. In addition, during the first quarter of 2011, the Company incurred a charge of $24 million related
to a payment to GF, primarily for certain manufacturing assets of GF, which did not benefit the Company.
NOTE 4: Noncontrolling Interest
Leipziger Messe and Fab 36 Beteiligungs GmbH, the original unaffiliated limited partners of AMD Fab 36
KG, made considerable contributions to AMD Fab 36 KG, the entity formed to operate the Company’s former
fabrication facility, Fab 36 (which the Company transferred to GF in 2009, as described in Note 3). Leipziger
Messe and Fab 36 Beteiligungs’ contributions to AMD Fab 36 KG, pursuant to the terms set forth in the
partnership agreements entered into in 2004, were recorded in the Company’s financial statements as a
noncontrolling interest, based on their fair value. The contributions were not mandatorily redeemable, but rather
were subject to redemption outside of the control of the Company. Each accounting period, the Company
increased the carrying value of this noncontrolling interest toward the ultimate redemption value of these
contributions by the guaranteed rate of return of between 11% and 13%. In 2009, the Company redeemed the
remaining unaffiliated limited partnership interest held by Leipziger Messe for $173 million.
The Company also recorded the contributions made by ATIC in connection with the formation of GF as a
noncontrolling interest. The table below reflects the changes in noncontrolling interest.
(In millions)
Balance at December 27, 2008 ....................................... $ 169
Income attributable to limited partner ................................. 4
Redemption of unaffiliated limited partnership interest, Leipziger Messe ..... (173)
ATIC Contribution
Class A Preferred Shares ....................................... 218
Class B Preferred Shares ....................................... 873
GF net loss attributed to noncontrolling interest ......................... (87)
Class B preferred share accretion ..................................... 72
Balance at December 26, 2009 ....................................... 1,076
Deconsolidation of GF ............................................. (1,076)
Balance at December 25, 2010 ....................................... $ —
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