AMD 2010 Annual Report Download - page 118

Samsung. Pursuant to this agreement, all claims between the parties were dismissed with prejudice and Samsung
agreed to pay the Company $283 million less any withholding taxes not to exceed a maximum rate of 16.5%. The
Company received the first payment of $119 million (which represents $143 million less withholding taxes) in
December 2010. The remaining amount of $117 million (which represents $140 million less withholding taxes)
will be paid in two equal installments by May 31, 2011 and by November 30, 2011. In addition, pursuant to the
settlement agreement, Samsung granted to the Company, and the Company granted to Samsung, non-exclusive,
royalty-free licenses to all patents and patent applications for ten years after the effective date of the Agreement
to make, have made, use, sell, offer to sell, import and otherwise dispose of certain semiconductor- and
electronic-related products anywhere in the world.
This settlement encompasses all patent litigation and disputes between the parties and the Company does
not have any future obligations that it is required to perform in order to earn this settlement payment.
Accordingly, the Company recognized the entire settlement amount in its 2010 operating results.
Intel Settlement
On November 12, 2009, Intel Corporation and the Company entered into an agreement to end all
outstanding legal disputes between the Company and Intel including antitrust litigation and patent cross license
disputes. Under the terms of the agreement:
• The Company and Intel agreed to a new 5-year patent cross license agreement that gives the Company
broad rights and the freedom to operate a business utilizing multiple foundries;
• Intel and the Company gave up any claims of breach from the previous license agreement;
• Intel paid the Company $1.25 billion;
• Intel agreed to abide by a set of business practice provisions going forward;
• the Company dropped all pending litigation, including a case in U.S. District Court in Delaware and two
cases pending in Japan; and
• the Company withdrew all of its regulatory complaints worldwide.
This settlement satisfies all past antitrust litigation and disputes between the Company and Intel and there
are no future obligations that the Company would need to perform to earn this settlement payment. That is, the
patent cross license agreement represents fully paid up licenses by both the Company and Intel for which no
future payment or delivery is required. Accordingly, the Company recognized the entire settlement amount in its
2009 operating results.
NOTE 12: Supplemental Statement of Operations Information
Gain on sale of 200 millimeter equipment and the license of related process technology
During 2008, in conjunction with the conversion of Fab 30, the Company’s former manufacturing facility in
Dresden, Germany from 200 millimeter to 300 millimeter fabrication, the Company sold certain 200 millimeter
manufacturing equipment and licensed certain process technology to a third party. The Company evaluated this
multiple-element arrangement and determined that each component was considered a separate unit of accounting.
In addition, the transaction consideration was allocated to each unit based on their relative fair values.
Based on the evaluation, the Company recognized a gain of approximately $167 million on the equipment
sale, and a $191 million gain on the license of process technology. The difference between the $167 million gain
recognized in the transaction described above and the $193 million gain shown in the consolidated statement of
operations for 2008 represents gains recognized on sales of 200 millimeter equipment to other third parties.
110