AMD 2012 Annual Report Download - page 52

Funding of GF
During 2010, ATIC contributed $930 million of cash to GF. We did not participate in the funding. These
contributions resulted in an aggregate gain on our ownership interest of $232 million, which we recorded as part
of the equity in net loss of investee line item on our consolidated statement of operations.
Contribution Agreement, Funding and Accounting in 2011
GLOBALFOUNDRIES Singapore Pte. Ltd. (GFS, formerly Chartered) Contribution in 2011
On December 27, 2010, pursuant to the Contribution Agreement, ATIC International Investment Company
LLC, an affiliate of ATIC, contributed all of the outstanding Ordinary Shares of GFS to GF. As the result of
dilution of our ownership in GF, during the first quarter of 2011 and the year ended December 31, 2011, we
recognized a non-cash gain of approximately $492 million, net of certain transaction related charges, in Equity
income (loss) and dilution gain in investee, net.
Following the GFS contribution and governance changes described above, we assessed our ability to
exercise significant influence over GF and considered factors such as our representation on GF’s board of
directors, participation in GF’s policy-making processes, material intra-entity transactions, interchange of
managerial personnel, technological dependency, and the extent of our ownership in relation to ownership by the
other shareholders. Based on the results of our assessment, we concluded that we no longer had the ability to
exercise significant influence over GF. Accordingly, as of the first quarter of 2011, we changed our method of
accounting for our ownership interest in GF from the equity method to the cost method of accounting.
Under the cost method of accounting, we no longer recognized any share of GF’s net income or loss in our
consolidated statement of operations. In addition, we reviewed the carrying value of our investment in GF for
impairment at each reporting period. Impairment indicators, among other factors, include significant
deterioration in GF’s earnings performance or business prospects, significant changes in the market conditions in
which GF operates, and GF’s ability to continue as a going concern.
Impairment of Investment in GF
During the fourth quarter of 2011, we identified indicators of impairment, including revised financial
projections which we received from GF. The fair value of our GF investment was determined by a valuation
analysis of GF’s Class A Preferred Shares, utilizing the revised financial projections. We concluded the decline
in fair value was other than temporary. As a result of the valuation analysis, we recorded a non-cash impairment
charge of approximately $209 million, based on the difference between the carrying value and the fair value of
the investment as of December 31, 2011. As of December 31, 2011, our investment balance in GF after
impairment was $278 million.
Amended Wafer Supply Agreement
On April 2, 2011, we entered into a first amendment to the WSA. The primary effect of the first amendment
was to change the pricing methodology applicable to wafers delivered in 2011 for our microprocessors, including
APU products. The first amendment also modified our existing commitments regarding the production of certain
GPU and chipset products at GF. Pursuant to the first amendment, GF committed to provide us with, and we
committed to purchase, a fixed number of 45nm and 32nm wafers per quarter in 2011. We paid GF a fixed price
for 45nm wafers delivered in 2011. Our price for 32nm wafers varied based on the wafer volumes and
manufacturing yield of such wafers and was based on good die. In addition, we also agreed to pay an additional
quarterly amount to GF during 2012 totaling up to $430 million if GF met specified conditions related to the
continued availability of 32nm capacity as of the beginning of 2012. As part of the second amendment described
below, GF agreed to waive these quarterly payments, and therefore we are no longer required to pay them.
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