AMD 2015 Annual Report Download - page 50

Fifth Amendment to Wafer Supply Agreement. On April 16, 2015, we entered into a fifth amendment to the
WSA. The primary effect of the fifth amendment was to establish volume purchase commitments and fixed
pricing for the 2015 calendar year as well as to modify certain other terms of the WSA applicable to wafers for
some of our microprocessor unit, graphics processor unit and semi-custom products to be delivered by GF to us
during the 2015 calendar year.
As of December 26, 2015, certain wafer deliveries under the fifth amendment to the WSA have been
delayed until fiscal 2016. As of December 26, 2015, purchase obligations for fiscal 2016 were approximately
$248 million, of which approximately $185 million, consisting of wafers and research and development
activities, were received by December 31, 2015.
We generally negotiate our purchase commitments with GF on an annual basis and as such we cannot
meaningfully quantify or estimate our future purchase obligations to GF. We are currently in the process of
negotiating a sixth amendment to the WSA, and we expect that our future purchases from GF will continue to be
material.
Our total purchases from GF related to wafer manufacturing and research and development activities were
approximately $0.9 billion for 2015 and approximately $1 billion for each 2014 and 2013, respectively.
Equity Interest Purchase Agreement
On October 15, 2015, we entered into an Equity Interest Purchase Agreement (the Equity Interest Purchase
Agreement) with Nantong Fujitsu Microelectronics Co., Ltd., a Chinese joint stock company (JV Party), under
which we will sell to JV Party a majority of the equity interests in AMD Technologies (China) Co. Ltd., a
wholly-foreign owned enterprise incorporated as a limited liability company (the Chinese Target Company), and
Advanced Micro Devices Export Sdn. Bhd., a Malaysian limited liability company (the Malaysian Target
Company and, together with the Chinese Target Company, the Target Companies), thereby forming two joint
ventures (collectively, the JVs) with JV Party in a transaction valued at approximately $436 million (the
Transaction). The JV Party will acquire 85% of the equity interests in each JV for approximately $371 million
and we estimate we will receive approximately $320 million cash, net of taxes and other customary expenses.
After closing, JV Party’s affiliates will own 85% of the equity interests in each JV while certain of our
subsidiaries will own the remaining 15%. The Transaction will result in the JVs providing assembly, testing,
marking, packing and packaging services (ATMP) to us. We plan to account for our investment in the JVs under
the equity method of accounting.
The Equity Interest Purchase Agreement also has related agreements including: (i) with respect to the
Malaysian Target Company, a Shareholders’ Agreement, and with respect to the Chinese Target Company, a
Joint Venture Contract governing the joint venture relationships from and after the Closing, (ii) an IP License
Agreement, (iii) a Manufacturing Services Agreement, (iv) a Transition Services Agreement, and (v) a
Trademark License Agreement.
The transaction is expected to close in the first half of 2016, pending all regulatory and other approvals.
As a result of the decision to form the above JVs, the balance sheet as of December 26, 2015, reflects held-
for-sale accounting of the ATMP assets and liabilities which requires reclassification of such financial amounts
to current assets and current liabilities. We reclassified $183 million to other current assets and $79 million to
other current liabilities. Asset balances reclassified into other current assets primarily consist of property, plant,
and equipment of $110 million, goodwill of $42 million and inventory of $15 million. Liability balances
reclassified into other current liabilities primarily consist of accounts payable of $70 million. The balances
included in the final gain/(loss) calculation, at closing, are likely to be different due to normal operational
activities occurring through the closing date.
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