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
-10-
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:
-11-
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
-12-
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
-13-
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.
-14-
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.
-15-
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 billion in 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.
-16-
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.
-17-
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.
-18-
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.
-19-
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.