AMD 2010 Annual Report Download - page 52

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. Based on our fully diluted ownership interest in GF,
we had the right to designate two directors to the GF Board of Directors as of December 25, 2010.
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 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
believe we only had protective rights relative to the operations of GF, we concluded that the other investor in GF,
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, effective as of December 27, 2009,
we deconsolidated GF and started accounting for our ownership interest in GF under the equity method of
accounting. For purposes of our application of the equity method of accounting during 2010, we recorded our
share of GF’s results, excluding the results of Chartered because GF did not have an equity ownership interest in
Chartered. The terms of the Funding Agreement and the Wafer Supply Agreement described above were not
affected by the deconsolidation of GF. Following the deconsolidation, GF became our related party. Our
expenses related to GF’s wafer manufacturing were $1.2 billion and related to GF’s research and development
activities were $114 million for the year ended December 25, 2010.
Funding of GF
Pursuant to each GF funding request from the beginning of 2010 through November 17, 2010, the equity
securities issued by GF consisted of 20% of Class A Preferred Shares and 80% of Class B Preferred Shares. On
November 24, 2010, we, ATIC and GF signed a letter agreement regarding fundings of GF. Pursuant to this letter
agreement, the parties agreed that the securities to be issued in consideration of any future GF funding would
consist solely of GF’s Class A Preferred Shares. In addition, the purchase price per Class A Preferred Share
would be determined by dividing GF’s net tangible assets (derived from its most recent fiscal year-end audited
consolidated balance sheet) by GF’s total number of outstanding preferred shares (assuming the conversion of
any outstanding GF Class A Notes into Class A Preferred Shares and Class B Notes into Class B Preferred
Shares) as of the date of the balance sheet referred to above and multiplying by 1.10. Prior to the letter
agreement, the funding multiple was 0.90.
During 2010, ATIC contributed $930 million of cash to GF in exchange for GF securities consisting of
444,313 Class A Preferred Shares and 617,695 Class B Preferred Shares. We did not participate in the fundings.
As a result, our ownership interest in GF’s Class A Preferred Shares decreased from approximately 83% as of
December 26, 2009 to approximately 62% as of December 25, 2010, and our ownership interest in GF, on a fully
converted to Ordinary Shares basis, was approximately 23%. These contributions resulted in an aggregate gain
on issuance of new GF shares of $232 million, which we recorded as part of the equity in net loss of investee line
item on our consolidated statement of operations.
GLOBALFOUNDRIES Singapore Pte. Ltd. (formerly Chartered) Contribution in Fiscal 2011
On December 27, 2010, ATIC International Investment Company LLC, an affiliate of ATIC, contributed all
of the outstanding Ordinary Shares of GLOBALFOUNDRIES Singapore Pte. Ltd., a private limited company
organized in Singapore (formerly Chartered), to GF in exchange for 2,808,981 newly issued Class A Preferred
Shares. As a result, we amended and restated the Shareholders’ Agreement and the Funding Agreement. Subject
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