AMD 2010 Annual Report Download - page 96

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Equity Method
In applying the equity method of accounting for 2010, the equity in net loss of investee primarily consists of
the Company’s proportionate share of GF’s losses for the period based on the Company’s ownership percentage
of GF’s Class A Preferred Shares, the Company’s portion of the non-cash accretion on GF’s Class B Preferred
Shares, the elimination of intercompany profit, reflecting the mark-up on inventory that remains on the
Company’s consolidated balance sheet at the end of the period, the amortization of basis differences identified
from the purchase price allocation process based on the fair value of GF upon deconsolidation, and, to the extent
applicable, the gain or loss on dilution of the Company’s ownership interest as a result of capital infusions into
GF by ATIC.
GF consolidated Chartered in 2010 because it was deemed to be the primary beneficiary of Chartered
(GLOBALFOUNDRIES Singapore Pte. Ltd. or GFS). For the purposes of the Company’s application of the
equity method of accounting, the Company recorded its share of the GF results excluding the results of Chartered
because GF did not have an equity ownership interest in Chartered in 2010.
As of December 25, 2010, the Company’s investment in GF is reflected as a liability in the consolidated
balance sheet with a balance of $7 million. This amount primarily reflects the accumulated loss that the Company
has recognized in excess of the value of its investment in GF since the Company began accounting for GF under
the equity method of accounting. Based on the current structure of the Company’s Wafer Supply Agreement, its
guarantee of certain GF indebtedness, its ownership interest in GF and governance relationship with GF, the
Company concluded that it was required to continue to record its share of the equity loss in excess of the carrying
amount of its investment balance throughout 2010.
NOTE 4: Noncontrolling Interest
Leipziger Messe and Fab 36 Beteiligungs GmbH, the original unaffiliated limited partners of AMD Fab 36
KG, made considerable contributions to AMD Fab 36 KG, the entity formed to operate the Company’s former
fabrication facility, Fab 36 (subsequently transferred to GF as described in Note 3). Leipziger Messe and Fab 36
Beteiligungs’ contributions to AMD Fab 36 KG, pursuant to the terms set forth in the partnership agreements
entered into in 2004, were recorded in the Company’s financial statements as noncontrolling interest, based on
their fair value. The contributions were not mandatorily redeemable, but rather were subject to redemption
outside of the control of the Company. Each accounting period, the Company increased the carrying value of this
noncontrolling interest toward its ultimate redemption value of these contributions by the guaranteed rate of
return of between 11% and 13%. In 2008, the Company redeemed the remaining unaffiliated limited partnership
interest held by Fab 36 Beteiligungs GmbH for $95 million. In 2009, the Company redeemed the remaining
unaffiliated limited partnership interest held by Leipziger Messe for $173 million.
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