Summary
Advanced Micro Devices, Inc. (AMD) has filed an 8-K report detailing significant changes related to its investment in GLOBALFOUNDRIES Inc. (GF). The report announces the contribution of GLOBALFOUNDRIES Singapore Pte. Ltd. (GFS) to GF by ATIC International Investment Company LLC in exchange for GF Class A Preferred Shares. This transaction alters AMD's relationship with GF and its accounting treatment for the investment. Key implications for investors include a shift in AMD's ownership percentage of GF to approximately 14% on a fully converted basis. Crucially, AMD will begin accounting for its GF investment under the cost method from the first fiscal quarter of 2011, ceasing to recognize its share of GF's net income or loss. This change will also likely result in a non-cash gain recognition in the first quarter of 2011 due to equity dilution, the exact amount of which is yet to be determined.
Key Highlights
- 1ATIC International contributed GFS to GLOBALFOUNDRIES Inc. (GF) in exchange for GF Class A Preferred Shares.
- 2AMD entered into amended and restated Shareholders' and Funding Agreements with ATIC and GF.
- 3AMD's ownership in GF is now approximately 14% on a fully converted basis.
- 4AMD will change its accounting method for the GF investment to the cost method, effective Q1 2011.
- 5AMD will no longer recognize its share of GF's net income or loss in its statements of operations.
- 6AMD expects to recognize a non-cash gain in Q1 2011 related to the dilution of its equity interest in GF.
- 7AMD's right to designate a representative on GF's board will continue for at least two years even if ownership falls below 10%.