AMD 2015 Annual Report Download - page 85

Download and view the complete annual report

Please find page 85 of the 2015 AMD annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

NOTE 4: Equity Interest Purchase Agreement
On October 15, 2015, the Company 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 the Company 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 the Company estimates it 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 the Company’s subsidiaries will own the remaining 15%. The Transaction will result in the JVs
providing assembly, testing, marking, packing and packaging services (ATMP) to the Company. The Company
plans to account for its 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. The Company 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 allocation 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.
NOTE 5: Supplemental Balance Sheet Information
Inventories
December 26,
2015
December 27,
2014
(In millions)
Raw materials ....................................... $ 16 $ 40
Work in process ..................................... 482 431
Finished goods ...................................... 180 214
Total inventories, net ................................. $678 $685
Other current assets
December 26,
2015
December 27,
2014
(In millions)
Assets held-for-sale .................................. $183 $—
Other current assets .................................. 65 48
Total other current assets .............................. $248 $ 48
79