AMD 2010 Annual Report Download - page 48

China and Japan increased significantly by $561 million and $255 million, respectively, as compared to 2009.
Beginning in the first quarter of 2010, we deconsolidated GF, and began accounting for our investment in GF
under the equity method of accounting. Entering 2011, we announced that we will be applying the cost method of
accounting for our investment in GF, and will no longer recognize any share of GF’s net income or loss in our
consolidated statements of operations.
In 2010, we also made significant progress in improving our balance sheet by reducing our debt and
adjusting our debt maturity schedule. Without taking into account GF’s debt, in the aggregate, we reduced our
debt by approximately $357 million during 2010. Specifically, during 2010, we repurchased $1,016 million in
aggregate principal amount of our outstanding 6.00% Senior Notes due 2015 (6.00% Notes), reducing the
outstanding aggregate principal amount to $780 million, and we issued $500 million of 7.75% Senior Notes due
2020 (7.75% Notes). Our debt and capital lease obligations as of December 25, 2010 were $2.4 billion, which
reflects the debt discount adjustment of $103 million on our 6.00% Notes and 8.125% Senior Notes Due 2017
(8.125% Notes). This amount also includes approximately $229 million related to our accounts receivable
financing arrangement with IBM, which is not a cash obligation and is described in more detail in the “Financial
Condition –Liquidity” section below. Furthermore, GAAP net cash used in operating activities was $412 million.
We also generated non-GAAP adjusted free cash flow, which we describe in more detail in the “Financial
Condition –Liquidity” section, of $355 million. Our cash, cash equivalents and marketable securities as of
December 25, 2010 were $1.8 billion compared to $2.7 billion at December 26, 2009, of which $904 million
represented GF cash and cash equivalents. Without taking into account the GF financial position, our cash, cash
equivalents and marketable securities were essentially flat when compared to 2009.
GLOBALFOUNDRIES
Formation and Accounting in 2009
On March 2, 2009, we consummated the transactions contemplated by the Master Transaction Agreement
among us, ATIC, and WCH, pursuant to which we formed GF. At the closing of these transactions (the Closing),
we contributed certain assets and liabilities to GF, including, among other things, shares of the groups of German
subsidiaries owning our manufacturing facilities, certain manufacturing assets, real property, tangible personal
property, employees, inventories, books and records, a portion of our patent portfolio, intellectual property and
technology, rights under certain material contracts and authorizations necessary for GF to carry on its business.
In exchange we received GF securities consisting of one Class A Ordinary Share, 1,090,950 Class A Preferred
Shares and 700,000 Class B Preferred Shares, and the assumption of certain liabilities by GF. ATIC contributed
$1.4 billion of cash to GF in exchange for GF securities consisting of one Class A Ordinary Share, 218,190
Class A Preferred Shares, 172,760 Class B Preferred Shares, $202 million aggregate principal amount of 4%
Class A Subordinated Convertible Notes (the Class A Notes) and $807 million aggregate principal amount of
11% Class B Subordinated Convertible Notes (the Class B Notes), and transferred $700 million of cash to us in
exchange for the transfer by us of 700,000 GF Class B Preferred Shares.
At the Closing, we also issued to WCH, for an aggregate purchase price of $125 million, 58 million shares
of our common stock and warrants to purchase 35 million shares of our common stock at an exercise price of
$0.01 per share (the Warrants). The Warrants are currently exercisable and expire on March 2, 2019. The shares
issuable under these Warrants have been included in our basic and diluted earnings per share calculation since
the third quarter of 2009 when the Warrants became exercisable.
Under the Master Transaction Agreement, the cash consideration that WCH and ATIC paid and the
securities that they received are as follows:
• Cash paid by WCH to AMD for the purchase of 58 million shares of AMD common stock and
Warrants: $125 million;
• Cash paid by ATIC to GF for the aggregate principal amount of Class A Notes, which are convertible
into 201,810 Class A Preferred Shares: $202 million;
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