AMD 2010 Annual Report Download - page 77

AMTC and BAC Guarantees
The Advanced Mask Technology Center GmbH & Co. KG (AMTC) and Maskhouse Building
Administration GmbH & Co. KG (BAC) are joint ventures initially formed for the purpose of constructing and
operating an advanced photomask facility in Dresden, Germany. AMTC provides advanced photomasks for use
in manufacturing our microprocessors.
In January 2010, we signed binding agreements to transfer our limited partnership interests in the AMTC
and BAC to GF. On March 31, 2010, our limited partnership interests in AMTC and BAC were effectively
transferred to an affiliate of GF. Concurrent with the transfer, a term loan related to BAC, a revolving credit
facility for the benefit of the AMTC and related documents were amended. Toppan Photomasks Germany GmbH
(Toppan Germany) leased a portion of the BAC facility from the BAC. In connection with the amendments to the
BAC term loan, AMTC assumed all of Toppan Germany’s rental obligations and Toppan Germany and GF
agreed to guarantee AMTC’s payment obligations to the BAC. The remaining portion of the BAC facility is
leased by AMTC through a separate lease agreement. The initial guarantee agreement concerning AMTC’s rental
payments was terminated and replaced with a new AMTC rental contract guarantee. Pursuant to this guarantee,
we, Toppan Germany and GF guarantee AMTC’s rental obligations relating to the remaining portion of the BAC
facility. Our portion of the guarantee corresponds with our exposure under the initial guarantee agreement and is
made on a joint and several basis with GF. Moreover, GF has separately agreed to indemnify us under certain
circumstances if we are called upon to make any payments under the AMTC rental contract guarantee. As of
December 25, 2010, our joint and several guarantee of the rental obligation was $3 million.
In connection with the amendment to the AMTC revolving credit facility, the guarantee agreement was
amended so that we and GF are joint and several guarantors of 50% of AMTC’s outstanding loan balance under
the AMTC revolving credit facility. In the event we are called upon to make any payments under the guarantee
agreement, GF has separately agreed to indemnify us so long as certain conditions are met. As of December 25,
2010, the amount outstanding under this loan was $40 million and our joint and several guarantee obligation was
$20 million.
Discontinued Operations
In 2008, we evaluated the viability of our non-core businesses and determined that our Digital Television
business unit was not directly aligned with our core strategy of computing and graphics market opportunities.
Accordingly, we decided to divest this business unit.
We performed an interim impairment test of goodwill and acquired intangible assets during 2008. We
concluded that the carrying amounts of goodwill and certain acquisition-related intangible assets associated with
the Digital Television business unit were impaired, and we recorded an impairment charge of $473 million.
During the third quarter of 2008, we entered into an agreement with Broadcom Corporation to sell the
Digital Television business unit for $141.5 million. The transaction was completed on October 27, 2008. Based
on the final terms of the sale transaction, we recorded an additional goodwill impairment charge of $135 million.
As a result of the decisions and transactions described above, pursuant to applicable accounting guidance, the
operating results of the Digital Television business unit are presented as discontinued operations in the
consolidated statements of operations for the applicable periods presented. Cash flows from discontinued
operations were not material and were combined with cash flows from continuing operations within the
consolidated statement of cash flows categories.
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