AMD 2009 Annual Report Download - page 11

Funding Agreement. The Funding Agreement provides for the future funding of GF and governs the
terms and conditions under which ATIC is obligated to provide such funding. Pursuant to the Funding
Agreement, ATIC committed to additional equity funding of a minimum of $3.6 billion and up to $6.0 billion to
be provided in phases over a five year period commencing from the Closing. We have the right, but not the
obligation, to provide additional future capital to GF in an amount pro rata to our interest in the fully converted
ordinary shares of GF. To the extent we choose not to participate in an equity financing of GF, ATIC is obligated
to purchase our share of GF securities, subject to ATIC’s funding commitments under the Funding Agreement.
ATIC’s obligations to provide funding are subject to certain conditions including the accuracy of GF
representations and warranties in the Funding Agreement, the absence of a material adverse effect on GF or
AMD and the absence of a material breach or default by GF or AMD under the provisions of any transaction
document. There are additional funding conditions for each of the phases which are set forth in more detail in the
Funding Agreement. In July 2009, pursuant to a funding request from GF in accordance with the Funding
Agreement, ATIC contributed $260 million of cash to GF in exchange for GF securities. We declined to
participate in the funding. As of December 26, 2009, on a fully converted basis, we owned approximately 31.6
percent of GF and ATIC owned approximately 68.4 percent.
Wafer Supply Agreement. The Wafer Supply Agreement governs the terms by which we purchase
products manufactured by GF. For more information about the Wafer Supply Agreement, please see page 15.
Recent Developments
On December 18, 2009, ATIC International Investment Company, or ATIC II, an affiliate of ATIC,
acquired Chartered Semiconductor Manufacturing Ltd. On December 28, 2009, with our consent, ATIC II,
Chartered and GF entered into a Management and Operating Agreement, or MOA, which provides for the joint
management and operation of GF and Chartered, thereby allowing GF and Chartered to share costs, take
advantage of operating synergies and market wafer fabrications services on a collective basis. In order to allow
for the signing of the MOA on December 28, 2009 prior to obtaining any required regulatory approvals we
agreed to irrevocably waive rights under the Shareholders Agreement with respect to certain matters that require
unanimous GF board approval. Additionally, if any such matters come before the GF board, we agreed that our
designated GF directors will vote in the same manner as the majority of ATIC-designated GF board members
voting on any such matters. As a result of waiving such approval rights, as of December 28, 2009, for financial
reporting purposes we no longer shared control with ATIC over GF.
In June 2009, the FASB issued an amendment to improve financial reporting by enterprises involved with
variable interest entities. This new guidance became effective for us beginning the first day of fiscal 2010. Under
the new guidance, the investor who is deemed to both (i) have the power to direct the activities of the variable
interest entity that most significantly impact the variable interest entity’s economic performance and (ii) be
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
now only have protective rights relative to the operations of GF, we concluded that 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, beginning fiscal 2010, we will deconsolidate GF and account for GF
under the equity method of accounting. We will continue applying the equity method of accounting until we are
deemed to no longer have the ability to significantly influence the operations of GF.
Additional Information
We were incorporated under the laws of Delaware on May 1, 1969 and became a publicly held company in
1972. Since 1979 our common stock has been listed on the New York Stock Exchange under the symbol
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