GLOBALFOUNDRIES Inc.

11/05/2024 | Press release | Distributed by Public on 11/05/2024 06:39

Consolidated Financial Statements Form 6 K

GlobalFoundries Inc.
TABLE OF CONTENTS
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GlobalFoundries Inc.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of September 30, 2024 and December 31, 2023
(Unaudited, in millions, except per share amounts)
As of
September 30 2024 December 31 2023
ASSETS
Current assets:
Cash and cash equivalents $ 2,286 $ 2,387
Marketable securities 1,187 1,033
Receivables, prepayments and other assets 1,323 1,420
Inventories 1,802 1,487
Total current assets
6,598 6,327
Non-current assets:
Property, plant and equipment, net 8,950 9,829
Right of use assets 492 335
Goodwill and intangible assets, net 552 391
Marketable securities 860 468
Other non-current financial assets
138 110
Deferred tax assets 197 241
Receivables, prepayments and other assets 318 343
Total non-current assets
11,507 11,717
Total assets
$ 18,105 $ 18,044
LIABILITIES AND EQUITY
Current liabilities:
Trade payables and other current liabilities $ 2,003 $ 2,403
Current portion of deferred income from government grants 86 93
Current portion of lease obligations 93 32
Current portion of long-term debt 541 571
Total current liabilities
2,723 3,099
Non-current liabilities
Non-current portion of long-term debt
1,772 1,801
Non-current portion of deferred income from government grants
242 267
Provisions 207 186
Non-current portion of lease obligations
443 350
Other non-current liabilities
1,136 1,190
Total non-current liabilities
3,800 3,794
Total liabilities
$ 6,523 $ 6,893
Equity:
Share capital
Ordinary shares, $0.02 par value, 552,654,594 and 553,548,190 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
$ 11 $ 11
Additional paid-in capital 23,971 24,027
Accumulated deficit (12,536) (13,001)
Accumulated other comprehensive income 87 67
Equity attributable to the shareholders of GlobalFoundries Inc.
11,533 11,104
Non-controlling interest 49 47
Total equity
11,582 11,151
Total liabilities and equity
$ 18,105 $ 18,044
The accompanying notes are an integral part of these interim condensed consolidated financial statements
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GlobalFoundries Inc
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
for the Three and Nine Months Ended September 30, 2024 and 2023
(Unaudited, in millions, except per share amounts)
Three Months Ended
September 30 		Nine Months Ended
September 30
2024 2023 2024 2023
Net revenue $ 1,739 $ 1,852 $ 4,920 $ 5,538
Cost of revenue 1,325 1,323 3,718 3,962
Gross profit 414 529 1,202 1,576
Research and development expense
130 108 375 323
Selling, general and administrative expense and other
98 143 334 386
Restructuring charges
1 17 6 41
Operating expense
229 268 715 750
Income from operations
185 261 487 826
Finance income (expense) net
15 3 41 4
Other income (expense), net (5) (21) (11) (45)
Income before income taxes
195 243 517 785
Income tax (expense) benefit
(17) 6 (50) (45)
Net income $ 178 $ 249 $ 467 $ 740
Attributable to:
Shareholders of GlobalFoundries Inc.
177 249 465 743
Non-controlling interest 1 - 2 (3)
Net income $ 178 $ 249 $ 467 $ 740
Net earnings per share attributable to the equity holders of the Company:
Basic
$ 0.32 $ 0.45 $ 0.84 $ 1.35
Diluted
$ 0.32 $ 0.45 $ 0.83 $ 1.34
Weighted average common shares outstanding:
Basic
552 553 554 552
Diluted
555 556 557 556
The accompanying notes are an integral part of these interim condensed consolidated financial statements
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GlobalFoundries Inc.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
for the Three and Nine Months Ended September 30, 2024 and 2023
(Unaudited, in millions)
Three Months Ended
September 30 		Nine Months Ended
September 30
2024 2023 2024 2023
Net income
Attributable to:
Shareholders of GlobalFoundries Inc. $ 177 $ 249 $ 465 $ 743
Non-controlling interest 1 - 2 (3)
Net income $ 178 $ 249 $ 467 $ 740
Other comprehensive income (loss), net of tax:
Items that may be reclassified subsequently to income:
Share of foreign exchange fluctuation reserve of joint ventures $ 5 $ - $ 1 $ (1)
Effective portion of changes in the fair value of cash flow hedges 28 (24) 8 (37)
Fair value on investments measured at fair value through other comprehensive income 15 - 11 -
Total other comprehensive income (loss) $ 48 $ (24) $ 20 $ (38)
Attributable to:
Shareholders of GlobalFoundries Inc. $ 47 $ (23) $ 20 $ (38)
Non-controlling interest 1 (1) - -
Total other comprehensive income (loss) $ 48 $ (24) $ 20 $ (38)
Total comprehensive income $ 226 $ 225 $ 487 $ 702
Attributable to:
Shareholders of GlobalFoundries Inc. $ 224 $ 226 $ 485 $ 705
Non-controlling interest 2 (1) 2 (3)
Total comprehensive income $ 226 $ 225 $ 487 $ 702
The accompanying notes are an integral part of these interim condensed consolidated financial statements
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GlobalFoundries Inc.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the Nine Months Ended September 30, 2024 and 2023
(Unaudited, in millions)
Common Shares Additional Paid-In Capital Accumulated Deficit Hedging Reserve
Foreign Currency Translation and Investments Reserves
Total
Non-Controlling Interest
Total Equity
Shares Amount
December 31, 2022 548 $ 11 $ 23,831 $ (14,021) $ 103 $ (11) $ 9,913 $ 47 $ 9,960
Proceeds from issuance of equity instruments and other 5 - 49 - - - 49 - 49
Share-based compensation - - 120 - - - 120 - 120
Net income - - - 743 - - 743 (3) 740
Other comprehensive income - - - - (37) $ (1) (38) - (38)
September 30, 2023 553 $ 11 $ 24,000 $ (13,278) $ 66 $ (12) $ 10,787 $ 44 $ 10,831
December 31, 2023 554 $ 11 $ 24,027 $ (13,001) $ 66 $ 1 $ 11,104 $ 47 $ 11,151
Proceeds from issuance of equity instruments and other 3 - 1 - - - 1 - 1
Treasury shares (4) - (200) - - - (200) - (200)
Share-based compensation - - 143 - - - 143 - 143
Net income - - - 465 - - 465 2 467
Other comprehensive income (loss) - - - - 8 12 20 - 20
September 30, 2024 553 $ 11 $ 23,971 $ (12,536) $ 74 $ 13 $ 11,533 $ 49 $ 11,582
The accompanying notes are an integral part of these interim condensed consolidated financial statements
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GlobalFoundries Inc.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the Nine Months Ended September 30, 2024 and 2023
(Unaudited, in millions)
(in millions)
Nine Months Ended
September 30
2024 2023
OPERATING ACTIVITIES
Net income $ 467 $ 740
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 1,094 952
Amortization of intangible assets 96 97
Share-based compensation 143 120
Finance income (152) (105)
Finance expense 111 101
Deferred income taxes, net 66 42
Gain on disposal of property, plant and equipment and other
(63) (27)
Change in assets and liabilities, net of acquisitions:
Receivables, prepayments, other assets and other non-current assets 83 (140)
Inventories (316) (170)
Current and non-current trade and other payables (295) (173)
(528) (483)
Interest received 126 86
Interest paid (78) (77)
Income taxes paid
(17) (5)
Net cash provided by operating activities
$ 1,265 $ 1,441
INVESTING ACTIVITIES
Acquisitions, net of cash acquired
(69) -
Purchases of property, plant and equipment, net (391) (1,499)
Purchase of intangible assets (99) (77)
Proceeds from sale of a business - 238
Purchases of marketable securities
(1,527) (1,121)
Proceeds from sale of marketable securities 54 7
Proceeds from maturities of marketable securities
963 644
Other investing activities 36 21
Net cash used in investing activities
$ (1,033) $ (1,787)
FINANCING ACTIVITIES
Net proceeds from borrowings 29 46
Repayments of debt and lease obligations
(183) (218)
Proceeds from issuance of equity instruments and other
21 47
Purchase of treasury stock
(200) -
Net cash used in financing activities
$ (333) $ (125)
Effect of exchange rate changes on cash and cash equivalents - (1)
Net decrease in cash and cash equivalents $ (101) $ (472)
Cash and cash equivalents at the beginning of the period 2,387 2,352
Cash and cash equivalents at the end of the period $ 2,286 $ 1,880
The accompanying notes are an integral part of these interim condensed consolidated financial statements
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GlobalFoundries Inc.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in millions, except per share amounts or otherwise stated)
Note 1. Corporate Information
Company Operations
GlobalFoundries Inc. ("GlobalFoundries") is an exempted company with limited liability incorporated under the laws of the Cayman Islands. The address of GlobalFoundries' registered office is P.O. Box 309, Ugland House, Grand Cayman, KY1-1104 Cayman Islands.
GlobalFoundries and its subsidiaries (together referred to as the "Company", "GlobalFoundries", "GF", "we", or "us") is one of the world's leading semiconductor foundries and offers a full range of mainstream wafer fabrication services and technologies. The Company manufactures a broad range of semiconductor devices, including microprocessors, mobile application processors, baseband processors, network processors, radio frequency modems, microcontrollers and power management units.
Note 2. Basis of Presentation, Summary of Material Accounting Policies and Critical Judgements, Estimates and Assumptions
Statement of Compliance -The interim condensed consolidated financial statements ('interim financial statements") have been prepared in accordance with International Accounting Standards ("IAS") 34, Interim Financial Reporting ("IAS 34"), as issued by the International Accounting Standards Board ("IASB"). Certain information and footnote disclosures normally included in the annual audited consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the IASB, have been omitted or condensed. These interim financial statements should be read in conjunction with GlobalFoundries' Annual Report on Form 20-F for the year ended December 31, 2023. The interim financial statements have been prepared on a basis consistent with the accounting policies disclosed in the December 31, 2023 audited consolidated financial statements.
The interim financial statements are unaudited and reflect adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to provide a fair statement of results for the interim periods in accordance with IAS 34 as issued by the IASB.
The interim financial statements were authorized by the Audit, Risk and Compliance Committee of GlobalFoundries' Board of Directors on November 4, 2024, to be issued and subsequent events have been evaluated for their potential effect on the interim financial statements through November 5, 2024.
Summary of Material Accounting Policies and Critical Judgments, Estimates and Assumptions -The summary of material accounting policies and critical judgments, estimates and assumptions adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Company's annual audited consolidated financial statements contained in our Annual Report on Form 20-F for the year ended December 31, 2023.
Change in Presentation -Certain prior period balances in the interim financial statements and accompanying notes have been reclassified to conform to current period presentation. This change is not a change in accounting policy. Such reclassifications had no impact on net income, cash flows or shareholders' equity previously reported.
New and Amended Accounting Pronouncements Adopted - On January 1, 2024, the Company adopted the following amendments, which did not have a material impact on the interim financial statements:
Classification of Liabilities as Current or Non-current (Amendments to IAS 1Presentation of Financial Statements) - The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, including compliance with loan covenants before or at the reporting date. The amendments also require disclosures for liabilities subject to future covenants that an entity must comply with after the reporting period, which help users to understand the risk that those liabilities could become repayable within twelve months after the reporting period.
Lease Liability in a Sales and Leaseback (Amendments to IFRS 16 Leases) - The amendments specify the requirements that the seller-lessee must meet when measuring these lease liability arising in a sale and leaseback transaction, to ensure that the seller-lessee does not recognize any amount of profit or loss that relates to the right of use that it retains.
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GlobalFoundries Inc.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in millions, except per share amounts or otherwise stated)
Supplier Finance Arrangements (Amendments to IAS 7 Statement of Cash Flowsand IFRS 7 Financial Instruments: Disclosures) - The amendments clarify the characteristics of supplier financing arrangements and require additional disclosures of such arrangements, so as to understand the effects of financing arrangements on an entity's liabilities, cash flows and liquidity risk exposure.The transition rules clarify that an entity is not required to provide disclosures in any interim periods in the year of initial application of the amendments.
Recent Accounting Pronouncements Not Adopted:
The Company has not adopted the following new, revised or amended IFRS standards that have been issued by the IASB that are not yet effective:
Classification and Measurement of Financial Instruments (Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures) -The amendments clarify the requirements for the timing of recognition and derecognition of certain financial assets and liabilities, add further guidance for assessing whether a financial asset meets the solely payments of principal and interest criterion and add new disclosures for certain instruments with contractual terms that can change cash flows. The effective date for adoption of these amendments is annual periods beginning on or after January 1, 2026.
IFRS 18 Presentation and Disclosure in Financial Statements("IFRS 18") - This new standard will replace IAS 1 Presentation of Financial Statements.The key concepts in IFRS 18 relate to the structure of the statement of profit or loss, required disclosures in the financial statements for certain management-defined performance measures and enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general.
•IFRS 18 introduces new requirements for presentation within the statement of profit or loss, including specified totals and subtotals. Entities are required to classify all income and expenses within the statement of profit or loss into one of five categories: operating, investing, financing, income taxes and discontinued operations, whereof the first three are new.
•IFRS 18 also requires disclosure of newly defined management-defined performance measures, subtotals of income and expenses, and includes new requirements for aggregation and disaggregation of financial information based on the identified 'roles' of the primary financial statements and the notes to the financial statements.
•In addition, narrow-scope amendments have been made to IAS 7 Statement of Cash Flows,which include changing the starting point for determining cash flows from operations under the indirect method, from 'profit or loss' to 'operating profit or loss' and removing the optionality around classification of cash flows from dividends and interest. In addition, there are consequential amendments to several other standards.
The effective date for adoption of this standard is annual periods beginning on or after January 1, 2027, and earlier adoption is permitted. Retrospective application is required.
Annual Improvements to IFRS Accounting Standards - Volume 11 - These narrow-scope amendments relate to clarifications, simplifications, corrections or changes to improve consistency in the following IFRS statements: IFRS 7 Financial Instruments: Disclosures, IFRS 9 Financial Instruments, IFRS 10 Consolidated Financial Instrumentsand IAS 7 Statement of Cash Flows. The effective date for adoption of these amendments is annual periods beginning on or after January 1, 2026.
As of the date the accompanying financial statements were authorized for issue, the Company continues to evaluate the impact of the aforementioned standards on its financial position and performance and related applicable periods.
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GlobalFoundries Inc.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in millions, except per share amounts or otherwise stated)
Note 3. Net Revenue
The following table presents the Company's revenue disaggregated based on revenue source, timing of revenue recognition and end markets that we serve, for the three and nine month periods ended September 30, 2024 and 2023. The Company believes these categories best depict the nature and timing of revenue:
Three Months Ended
September 30 		Nine Months Ended
September 30
2024 2023 2024 2023
Type of goods and services:
Wafer revenue(1)(2)
$ 1,565 $ 1,646 $ 4,421 $ 4,903
Non wafer revenue(1)(2)
174 206 499 635
Total $ 1,739 $ 1,852 $ 4,920 $ 5,538
Timing of revenue recognition:
Revenue recognized over time $ 127 $ 117 $ 384 $ 332
Revenue recognized at a point in time 1,612 1,735 4,536 5,206
Total $ 1,739 $ 1,852 $ 4,920 $ 5,538
End Markets:
Smart Mobile Devices $ 868 $ 779 $ 2,310 $ 2,258
Communications Infrastructure & Datacenter 133 156 407 719
Home and Industrial IoT 308 408 912 1,198
Automotive 256 303 792 728
Non wafer revenue and other
174 206 499 635
Total
$ 1,739 $ 1,852 $ 4,920 $ 5,538
(1) Beginning in 2024, access fees and other have been reclassified from wafer revenue to non wafer revenue. Prior period amounts have been recast to conform to the current presentation.
(2) Beginning in the fourth quarter 2023, underutilization charges have been included in wafer revenue. Prior period amounts have been recast to conform to the current presentation.
Note 4. Income taxes
For tax reporting purposes, the Company consolidates its entities under GlobalFoundries Inc., a Cayman Islands entity. As a Cayman Islands entity, the Company's domestic statutory income tax rate is 0.0%. The difference between the Company's domestic statutory income tax rate and its effective income tax rate reflected in income tax benefit or income tax expense is primarily due to the effect of tax rates and permanent differences in other jurisdictions in which the Company operates.
The effective tax rate for the three months ended September 30, 2024 and 2023 was 8.7% and (2.5)%, respectively. The increase was primarily the result of a U.S. withholding tax reclassification from income tax in the third quarter 2023 and higher income tax expense related to the U.S. corporate alternative minimum tax.
The effective tax rate for the nine months ended September 30, 2024 and 2023 was 9.7% and 5.7%, respectively. The increase was primarily the result of higher income tax expense related to the U.S. corporate alternative minimum tax.
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GlobalFoundries Inc.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in millions except per share amounts or otherwise stated)
Note 5. Earnings Per Share
Basic earnings per share ("EPS") is based upon the weighted average number of common shares outstanding during the period. Diluted earnings per share is based upon the weighted average number of common shares outstanding during the period assuming the issuance of common shares for all potentially dilutive common shares outstanding.
The following table sets forth the computation of basic and diluted earnings per share:
Three Months Ended
September 30 		Nine Months Ended
September 30
2024 2023 2024 2023
Net income attributable to equity shareholders of the Company $ 177 $ 249 $ 465 $ 743
Weighted average shares outstanding:
Basic
552 553 554 552
Diluted
555 556 557 556
Total basic and diluted EPS attributable to equity shareholders:
Basic
$ 0.32 $ 0.45 $ 0.84 $ 1.35
Diluted
$ 0.32 $ 0.45 $ 0.83 $ 1.34
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GlobalFoundries Inc.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in millions except per share amounts or otherwise stated)
Note 6. Property, Plant and Equipment
Land and
Land
Improvements
Building and
Leasehold
Improvements
Equipment Computer
Construction
in Progress
Total
Cost
As of December 31, 2023
$ 92 $ 7,635 $ 24,277 $ 448 $ 1,512 $ 33,964
Additions
- 4 29 3 123 159
Transfers from construction in progress - 101 1,259 7 (1,367) -
Disposals - - (175) - (4) (179)
Effect of exchange rate changes - 1 6 - - 7
As of September 30, 2024
$ 92 $ 7,741 $ 25,396 $ 458 $ 264 $ 33,951
Net book value as of September 30, 2024
$ 63 $ 3,330 $ 5,265 $ 35 $ 257 $ 8,950
Accumulated Depreciation and Impairment
As of December 31, 2023
$ 28 $ 4,205 $ 19,486 $ 409 $ 7 $ 24,135
Additions 1 206 817 14 - 1,038
Disposals - - (175) - - (175)
Effect of exchange rate changes - - 3 - - 3
As of September 30, 2024
$ 29 $ 4,411 $ 20,131 $ 423 $ 7 $ 25,001
For the three months ended September 30, 2024 and 2023, depreciation expense of property, plant and equipment was $342 million and $319 million, respectively. For the nine months ended September 30, 2024 and 2023, depreciation expense of property, plant and equipment was $1,038 million and $907 million, respectively.
Note 7. Restructuring
The Company incurred $1 million and $17 million of restructuring charges during the three months ended September 30, 2024 and 2023, respectively. The Company incurred $6 million and $41 million of restructuring charges during the nine months ended September 30, 2024 and 2023, respectively. These costs are included in restructuring expenses in the Company's consolidated statements of operations and unpaid amounts are included in provisions within current liabilities on the consolidated statements of financial position.
The changes to the restructuring provisions recorded on the consolidated statements of financial position as of September 30, 2024 are summarized as follows:
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GlobalFoundries Inc.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in millions except per share amounts or otherwise stated)
2024
Beginning balance as of December 31, 2023
$ 31
Provision 6
Amounts paid (31)
Ending balance as of September 30, 2024
$ 6
Note 8. Receivables, Prepayments and Other Assets
September 30 2024 December 31 2023
Current:
Trade receivables, other than related parties
$ 706 $ 1,002
Other receivables 445 255
Unbilled accounts receivable(1)
46 33
Receivables from government grants 58 66
Receivables from related parties 11 12
Other current financial assets 57 52
Total $ 1,323 $ 1,420
Non-current:
Advances to suppliers $ 189 $ 213
Receivables from government grants
98 106
Other 31 24
Total $ 318 $ 343
(1) Unbilled accounts receivable represents amounts recognized on revenue contracts less associated advances and progress billings. These amounts will be billed in accordance with the agreed-upon contractual terms or rendering services.
The following table summarizes the activity in the Company's unbilled accounts receivable for the nine months ended September 30, 2024 and for the twelve months ended December 31, 2023, respectively:
September 30 2024 December 31 2023
Balance, beginning of period $ 33 $ 24
Revenue recognized during the period 89 101
Amounts invoiced (76) (92)
Balance, end of period $ 46 $ 33
Note 9. Inventories
September 30 2024 December 31 2023
Work in progress $ 1,199 $ 1,005
Raw materials and supplies 747 625
Inventory reserves (144) (143)
Total $ 1,802 $ 1,487
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GlobalFoundries Inc.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in millions except per share amounts or otherwise stated)
The following table presents the movement in the inventory reserves for the nine months ended September 30, 2024 and for the twelve months ended December 31, 2023, respectively:
September 30 2024 December 31 2023
Beginning balance $ 143 $ 115
Additions
127 104
Written-off and scrapped (36) (31)
Elimination of reserves upon sale of inventory (90) (45)
Ending balance $ 144 $ 143
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GlobalFoundries Inc.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in millions except per share amounts or otherwise stated)
Note 10. Leases
The Company has various lease agreements for certain of its offices, facilities and equipment, with a weighted average remaining lease term of 12.3 years and weighted average discount rate of 4.4% as of September 30, 2024. Leases may include one or more options to renew. Renewal terms are not included in the determination of the lease term unless the renewals are deemed to be reasonably certain at the time of lease commencement. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. All leases were measured under a single criterion with the exception of those with terms not exceeding 12 months and low-value leases.
The following table outlines the carrying amounts of right-of-use assets:
September 30 2024 December 31 2023
Land and improvements $ 64 $ 31
Building and leasehold improvements 428 304
Total $ 492 $ 335
The following table summarizes the depreciation of right-of-use assets:
Three Months Ended
September 30 		Nine Months Ended
September 30
2024 2023 2024 2023
Land and improvements $ 1 $ 2 $ 3 $ 4
Building and leasehold improvements 20 12 53 41
Total $ 21 $ 14 $ 56 $ 45
For the three months ended September 30, 2024 and 2023, the additions to right-of-use assets were $3 million and $8 million, respectively. For the nine months ended September 30, 2024 and 2023, the additions to right-of-use assets were $214 million and $62 million, respectively.
For the three months ended September 30, 2024 and 2023, interest expense was $5 million and $5 million, respectively. For the nine months ended September 30, 2024 and 2023, interest expense was $20 million and $16 million, respectively.
For the three months ended September 30, 2024 and 2023, cash outflow for leases was $18 million and $20 million, respectively. For the nine months ended September 30, 2024 and 2023, cash outflow for leases was $42 million and $57 million, respectively.
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GlobalFoundries Inc.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in millions except share amounts and otherwise stated)
Note 11. Long Term Debt
The following table outlines the terms and carrying amounts of the Company's debt:
Description Currency Nominal Interest Rate
Year
of Maturity
September 30 2024 December 31 2023
(in millions)
2019 EUR Dresden Equipment Financing EUR
EURIBOR+ 1.75%
2026 373 368
USD Term Loan A USD
SOFR+ 2.90%
2025 63 64
Various EUR, USD Various 2024-2026 105 139
Current total $ 541 $ 571
USD Term Loan A USD
SOFR+ 2.90%
2025 554 586
2019 EUR Dresden Equipment Financing EUR
EURIBOR+ 1.75%
2026 23 30
2021 SGD EDB Loan SGD 1.40% 2041 1,030 987
Various EUR, USD Various 2024-2027 165 198
Non-current total
$ 1,772 $ 1,801
Total $ 2,313 $ 2,372
The following table summarizes unutilized credit facilities available to the Company to maintain liquidity necessary to fund operations:
September 30 2024 December 31 2023
Revolving Credit Facility $ 1,012 $ 1,012
Uncommitted Credit Facilities
106 46
Total $ 1,118 $ 1,058
Note 12. Related Party Disclosures
The total amounts of $11 million and $12 million due from related parties as of September 30, 2024 and December 31, 2023, respectively, have been included in receivables, prepayments and other assets (see Note 8). The $11 million and $10 million due to related parties as of September 30, 2024 and December 31, 2023, respectively, have been included in trade and other payables.
Related party balances disclosed in the interim financial statements relate to Mubadala Technology Investment Company and Silicon Manufacturing Partners Pte Ltd. ("SMP"). SMP is a joint venture with LSI Technology (Singapore) Pte. Ltd. The Company holds a 49% interest in SMP and manages all aspects of its manufacturing operations.
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GlobalFoundries Inc.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in millions except for per share amount and otherwise stated)
The following table presents the related party transactions included in the interim condensed consolidated statements of operations:
Three Months Ended
September 30 		Nine Months Ended
September 30
2024 2023 2024 2023
Purchases from: *
SMP $ 11 $ 16 $ 36 $ 39
Other transactions with:
SMP (reimbursement of expenses and contribution of tools) $ 13 $ 23 $ 40 $ 46
Mubadala Technology (reimbursement of expenses) 2 - 6 -
$ 15 $ 23 $ 46 $ 46
* Purchases from SMP were primarily comprised of wafers.
Note 13. Commitments and Contingencies
Commitments- The Company enters into several purchase agreements and supplementary agreements with its third-party manufacturers and suppliers for future deliveries of equipment and components. In addition, the Company enters into intellectual property and licensing agreements with third parties. The total future payments under these agreements amounted to $591 million and $1.1 billion, as of September 30, 2024 and December 31, 2023, respectively. Unconditional purchase commitments of $368 million are due within the next 12 months.
Additionally, the Company obtained letters of credit to primarily guarantee payments for utility suppliers and foreign statutory payroll related charges. The Company has obtained letters of credit of $30 million and $23 million as of September 30, 2024 and December 31, 2023, respectively, and has drawn down bank guarantees of $4 million and $54 million as of September 30, 2024 and December 31, 2023, respectively.
Contingencies- From time to time, the Company is a party to claims that arise in the normal course of business. These claims include allegations of infringement of intellectual property rights of others as well as other claims of liability. In addition, the Company, on a case by case basis, includes intellectual property indemnification provisions in the terms of sale and technology licenses with third parties. The Company is also subject to various taxes in the different jurisdictions in which it operates. These include property, goods and services, and other non-income taxes. The Company accrues costs associated with these matters when they become probable and reasonably estimable. The Company does not believe it is probable that losses associated with these matters beyond those already recognized will be incurred in amounts that would be material to the interim financial statements.
On April 28, 2021, IBM sent the Company a letter alleging for the first time that it did not fulfill its obligations under the contracts entered into with IBM in 2014 and 2015 associated with the acquisition of IBM's Microelectronics division. IBM asserted that the Company engaged in fraudulent misrepresentations during the underlying negotiations, and claimed the Company owed them $2.5 billionin damages and restitution. On June 7, 2021, the Company filed a complaint with the New York State Supreme Court (the "Court") seeking a declaratory judgment that the Company did not breach the relevant contracts. IBM subsequently filed its complaint with the Court on June 8, 2021. On September 14, 2021, the Court granted the Company's motion to dismiss IBM's claims of fraud, unjust enrichment and breach of the implied covenant of good faith and fair dealing. IBM appealed the dismissal of its fraud claim, and on April 7, 2022, the New York Appellate Division reversed the Court's decision. Discovery and dispositive motion practice have been completed and the trial is scheduled to commence on February 3, 2025. The Company believes, based on discussions with legal counsel, that it has meritorious defenses against IBM's claims and intends to vigorously defend against them.
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GlobalFoundries Inc.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in millions except for per share amount and otherwise stated)
Note 14. Fair Value Measurements
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
•Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
•Level 2: Inputs other than quoted prices in active markets in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for similar assets or liabilities that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.
•Level 3: Unobservable inputs for which little or no market data exists, therefore requiring management judgment to develop the Company's own models with estimates and assumptions.
Cash Equivalents- Cash equivalents include investments in government obligation-based money market funds, other money market instruments and interest-bearing deposits with initial or remaining terms of three months or less. The fair value of cash equivalents approximates its carrying value due to the short-term nature of these instruments.
Marketable Securities- Marketable securities utilizing Level 1 and Level 2 inputs include U.S. Treasury Securities, U.S. Government Sponsored Enterprises, floating rate securities, money market mutual funds, corporate debt instruments and other Notes, bonds or debt securities issued by non-U.S. sovereign or multilateral entities, as these securities all have quoted prices in active markets.
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GlobalFoundries Inc.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in millions except for per share amount and otherwise stated)
The following table presents the Company's assets and liabilities measured at fair value on a recurring basis:
Quoted Prices Identical Assets/ Liabilities Significant Other Inputs Significant Unobservable Inputs
Total (Level 1) (Level 2) (Level 3)
December 31, 2023
Assets:
Cash equivalents(1)
$ 1,897 $ 1,626 $ 271 $ -
Investments in equity instruments(2)
$ 19 $ - $ - $ 19
Derivatives(3)
$ 132 $ - $ 132 $ -
Investments in marketable securities(4)
$ 1,501 $ 1,189 $ 312 $ -
Liabilities:
Derivatives(3)
$ 56 $ - $ 56 $ -
September 30, 2024
Assets:
Cash equivalents(1)
$ 1,578 $ 1,578 $ - $ -
Investments in equity instruments(2)
$ 25 $ - $ - $ 25
Derivatives(3)
$ 166 $ - $ 166 $ -
Investments in marketable securities(4)
$ 2,047 $ 577 $ 1,470 $ -
Liabilities:
Derivatives(3)
$ 42 $ - $ 42 $ -
(1)Included in cash and cash equivalents on the Company's interim condensed consolidated statements of financial position.
(2) Included in current and non-current receivables, prepayments and other assets on the Company's interim condensed consolidated statements of financial position.
(3)Consists of foreign currency forward contracts, interest rate swaps, cross currency swaps and commodity hedges. Included in other current and non-current financial assets and other current and non-current liabilities on the Company's interim condensed consolidated statements of financial position.
(4)Included in current and non-current marketable securities on the Company's interim condensed consolidated statements of financial position.
During the nine months ended September 30, 2024 and the year ended December 31, 2023, there were no transfers between Level 1, Level 2 or Level 3 fair value measurements.
Assets Measured and Recorded at Fair Value on a Non-Recurring Basis
Certain assets and liabilities, such as equity method investments, intangible assets and property, plant and equipment, and other non-financial assets are recorded at fair value only if an impairment or observable price adjustment is recognized in the current period.
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GlobalFoundries Inc.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in millions except for per share amount and otherwise stated)
Financial Instruments Not Recorded at Fair Value on a Recurring Basis
Financial instruments not recorded at fair value on a recurring basis include grants receivable, loans receivable, lease obligations and the Company's current and non-current portion of long-term debt.
The carrying amounts and fair values of the Company's financial instruments not recorded at fair value on a recurring basis are presented in the following table:
September 30, 2024 December 31, 2023
Financial Liabilities Carrying Amount Fair Value Carrying Amount Fair Value
Other long-term debt 2,313 2,256 2,372 2,319
Total $ 2,313 $ 2,256 $ 2,372 $ 2,319
Estimated fair values of long-term debt are based on quoted prices for similar liabilities for which significant inputs are observable and represent a Level 2 valuation. The fair values are estimated based on the type of debt and their maturities. The Company estimates the fair value using market interest rates of debts with similar maturities.
Note 15. Share-Based Compensation
We measure and recognize compensation expense related to share-based transactions, including employee, consultant, and non-employee director share option awards, in our consolidated financial statements based on fair value. The fair value of each award is estimated on the date of grant using the Black-Scholes option pricing model for options, and the Monte Carlo simulation model for the performance share units and a share price at the grant date for the restricted share units. The Black-Scholes model and Monte Carlo model both require management to make certain assumptions of future expectations based on historical and current data. The assumptions include the expected term of the awards, expected volatility, dividend yield and risk-free interest rate. The expected term represents the amount of time that awards granted are expected to be outstanding, based on forecasted exercise behavior. The option pricing model requires the input of highly subjective assumptions, including the estimated fair value of the Company's stock, expected term of the awards, expected volatility of the price of the Company's shares, risk free interest rate and the expected dividend yield of ordinary shares. The assumptions used to determine the fair value of the option awards represent management's best estimates. These estimates involve inherent uncertainties and the application of management's judgment. The Company estimates the expected forfeiture for options utilizing historical data, and only recognizes expense when a defined liquidity event (change in control or IPO) is deemed probable on the number of awards that are expected to vest. After applying a forfeiture estimate during each reporting period for when they are probable of vesting, the Company recognizes expense on a graded attribution basis for each tranche of the award over the period from the grant date to the later of the one-year anniversary of estimated time following a liquidity event or the legal vesting dates.
The Company offers an Employee Stock Purchase Plan which provides eligible employees with an opportunity to purchase our ordinary shares through payroll deductions of up to 10% of their eligible compensation. A participant may purchase a maximum of 2,500 ordinary shares during the purchase period. Amounts deducted and accumulated by the participant are used to purchase ordinary shares at the end of each six-month period, with the Company matching 20% of each employee's contributions on an after-tax basis.
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GlobalFoundries Inc.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 16. Equity
On May 22, 2024, the Company announced a share repurchase of 3.9 million ordinary shares from Mubadala Technology Investment Company ("MTIC"), a majority shareholder, at the price of $50.75 per share, for an aggregate purchase amount of $200 million. We completed the share repurchase on May 28, 2024.
On May 28, 2024, our Board of Directors resolved to cancel the 3.9 million shares.
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