AMD 2008 Annual Report Download - page 158

The carrying value of the assets of discontinued operations was $759 million as of December 29, 2007.
Included in this balance is goodwill and acquired intangible assets in the amounts of $743 million. Assets of
discontinued operations only include the assets related to the Digital Television business unit acquired by
Broadcom. Cash flows from discontinued operations were not material and were combined with cash flows from
continuing operations within the consolidated statement of cash flows categories.
NOTE 18: Proposed Manufacturing Joint Venture
On October 6, 2008 the Company entered into a Master Transaction Agreement, which was further amended
on December 5, 2008, with ATIC to form a manufacturing joint venture, The Foundry Company. The Company
intends to contribute certain manufacturing-related assets and liabilities to The Foundry Company in exchange
for securities of The Foundry Company consisting of one Class A Ordinary Share, Class A Preferred Shares and
Class B Preferred Shares, and ATIC intends to contribute cash to The Foundry Company and pay cash to the
Company in exchange for securities of The Foundry Company consisting of one Class A Ordinary Share, Class A
Preferred Shares, Class B Preferred Shares and the Convertible Notes.
Although ATIC’s Convertible Notes will not be convertible immediately upon consummation of the
transactions contemplated by the Master Transaction Agreement, on an as converted to ordinary shares basis, the
Company will own 34.2 percent of The Foundry Company and hold a 50 percent voting interest in The Foundry
Company while ATIC will own 65.8 percent of The Foundry Company and hold a 50 percent voting interest in
The Foundry Company.
Pursuant to the Master Transaction Agreement, the Company intends to issue to WCH 58 million shares of
the Company’s common stock and warrants to purchase 35 million shares of the Company’s common stock at an
exercise price of $0.01 per share for an aggregate purchase price of 58,000,000 multiplied by the lesser of (i) the
average of the closing prices of the Company’s common stock on the NYSE for the 20 trading days immediately
prior to and including December 12, 2008 or (ii) the average of the closing prices of the Company’s common
stock on the NYSE for the 20 trading days immediately prior to the closing date of the transactions contemplated
by the Master Transaction Agreement. The warrants will be exercisable after the earlier of (i) public ground-
breaking of a proposed Foundry Company manufacturing facility in up-state New York and (ii) 24 months from
the date of issuance, and the warrants will have a ten year term.
For accounting purposes, the Company will consolidate the accounts of The Foundry Company as required
by FASB Interpretation No. 46R, Consolidation of Variable Interest Entities, An Interpretation of ARB No. 51.
(FIN 46R) Beginning with the first fiscal quarter of 2009, the Company will have a separate reportable segment
for The Foundry Company in the Company’s financial statement disclosures. Based on the structure of the
transaction, pursuant to the guidance in FIN 46R, The Foundry Company is a variable-interest entity, and the
Company is deemed to be the primary beneficiary and is, therefore, required to consolidate the accounts of The
Foundry Company. Upon the closing of the transaction, the accounts of The Foundry Company will include
(i) the assets and liabilities contributed by the Company to The Foundry Company, recorded at their historical
costs, in exchange for certain securities of The Foundry Company and (ii) the cash contributed by ATIC to The
Foundry Company in exchange for certain securities of The Foundry Company. Upon consolidation,
intercompany transactions and profits will be eliminated. Pursuant to the requirements of SFAS 160, which the
Company will be required to apply as of the beginning of fiscal 2009, ATIC’s non-controlling interest,
represented by its equity interests in The Foundry Company, will be presented outside of stockholders’ equity in
the Company’s consolidated balance sheet due to the right that ATIC has 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 of the
transactions. The Company’s net income (loss) per common share will consist of its consolidated net income
(loss), as adjusted for (i) the portion of The Foundry Company’s earnings or losses attributable to ATIC, which
will be based on ATIC’s proportional ownership interest in The Foundry Company’s Class A Preferred Shares,
and (ii) the non-cash accretion of Class B Preferred Shares attributable to the Company, based on the Company’s
proportional ownership interest of The Foundry Company’s Class A Preferred Shares.
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