AMD 2008 Annual Report Download - page 60

For accounting purposes, we 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).
Based on the structure of the transaction, pursuant to the guidance in FIN 46R, The Foundry Company is a
variable-interest entity, and we are deemed to be the primary beneficiary and are, 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 us 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 FASB
Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements—An Amendment of ARB
No. 51, which we 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 on
our consolidated balance sheet due to the right that ATIC has to put those securities back to us in the event of a
change of control of AMD during the two years following the closing of the transactions. Our 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 us, based on our proportional ownership interest of The Foundry
Company’s Class A Preferred Shares.
Under the Master Transaction Agreement, the cash consideration that WCH and ATIC will pay and the
securities that they will receive are as follows:
• Cash to be paid by WCH to us for the purchase of 58 million shares of our common stock and warrants
to purchase 35 million shares of our common stock: estimated to be $124 million, assuming a $2.15 per
share price (which was the average of the closing prices per share of our common stock on the NYSE
during the 20 trading days immediately prior to and including December 12, 2008);
• Cash to be paid by ATIC to The Foundry Company for 4% Class A Convertible Subordinated Notes of
The Foundry Company, convertible into 201,810 Class A Preferred Shares: $202 million;
• Cash to be paid by ATIC to The Foundry Company for 11% Class B Convertible Subordinated Notes of
The Foundry Company, convertible into 807,240 Class B Preferred Shares: $807 million;
• Cash to be paid by ATIC to The Foundry Company for 218,190 Class A Preferred Shares of The
Foundry Company: $218 million;
• Cash to be paid by ATIC for 872,760 Class B Preferred Shares of The Foundry Company: $873 million,
which includes $700 million paid to us for 700,000 Class B Preferred Shares of The Foundry Company.
The Class B Preferred Shares are, by their terms, deemed to accrete in value at a rate of 12% per year,
compounded semiannually. This accreted value will be taken into account upon certain distributions to
the holders or upon conversion of the Class B Preferred Shares.
Upon closing of the transactions contemplated by the Master Transaction Agreement, AMD and ATIC will
hold 1,090,950, or 83.3%, and 218,190, or 16.7%, respectively, of The Foundry Company Class A Preferred
Shares and ATIC will own 100% of the Class B Preferred Shares and the Convertible Notes.
Beginning with the first fiscal quarter of 2009, we will have a separate reportable segment for The Foundry
Company in our financial statement disclosures.
ATI Acquisition
On October 25, 2006, we completed the acquisition of all of the outstanding shares of ATI Technologies, a
publicly held company headquartered in Markham, Ontario, Canada (the Acquisition) for a combination of cash
and shares of our common stock. ATI was engaged in the design, manufacture and sale of innovative
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