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AMD's Acquisition of ATI Is Complete

AMD pronounces the completion of its approximately $5.4 billion acquisition of ATI. Combining the complementary strengths of the two technology leaders, the new AMD opens for business as a processing powerhouse committed to driving innovation, choice and growth in the technology industry. With approximately 15.000 employees, the company merges AMD's technology leadership in microprocessors together with ATI's experience in graphics, chipsets and consumer electronics.

Transaction Details
Under the terms of the transaction, AMD acquired all of the outstanding common shares of ATI for a combination of approximately $4.3 billion in cash and 58 million shares of AMD common stock, based on the number of shares of ATI common stock outstanding on October 24, 2006. All outstanding options and restricted stock units (RSUs) of ATI were assumed. The value of the ATI acquisition of approximately $5.4 billion is based upon the closing stock price of AMD common stock on October 24, 2006 of $20.32 per share and excludes the value of assumed equity awards.

AMD financed the cash portion of the transaction with a combination of cash and new debt. AMD obtained a $2.5 billion term loan from Morgan Stanley Senior Funding, Inc., which, together with combined existing cash, cash equivalents, and marketable securities balances of approximately $1.8 billion, provided full funding for the transaction.

AMD announced the final pro-ration applicable to ATI common shares in the acquisition. The total consideration to be paid for each common share, based on the Parent Closing Stock Price (as defined in the Plan of Arrangement, as amended), is approximately $21.36. The final election results indicate that pro-ration is as follows:
- ATI shareholders who elected to receive cash will be entitled to receive, for each common share for which a valid cash election was made, approximately US $18.59 in cash plus approximately 0.1245 of a share of AMD common stock;
- ATI shareholders who elected to receive stock will be entitled to receive, for each common share for which a valid stock election was made, 0.9596 of a share of AMD common stock;
- ATI shareholders who did not make a valid election will be entitled to receive, for each share for which no valid election was made, 0.9596 of a share of AMD common stock.

Pro-ration was necessary because the cash consideration elected to be received exceeded the amount of cash available in the acquisition. Any fractional shares will be paid in cash.

Customers should benefit from AMD's and ATI's combined platform development and technical support teams, which will be co-located in Taipei and Shanghai. Combined with the existing Austin and Toronto locations, these sites offer research and development and support to provide customers with a complete solution for optimized platform development.

AMD plans to deliver a range of integrated platforms in 2007 to serve key markets, including: commercial clients; mobile computing; and gaming and media computing. PC users will benefit from innovations intended to extend battery life on the next-generation AMD Turion 64 mobile technology-based platform and enhancements to the AMD LIVE. digital media PC platform that will enable users to get more from their favorite photos, music, and movies. AMD believes that these integrated platform innovations will bring customers improved system stability, better time-to-market, increased performance and energy-efficiency and overall, an enhanced user experience.

AMD also sees an opportunity to deliver processing solutions to the growing consumer electronics market. The company intends to leverage ATI's strength in the consumer market by pursuing new opportunities to invest in the consumer electronics and high-end discrete graphics markets. With leading technology and customer relationships, AMD is positioned to address digital convergence by leveraging critical IP to create new innovations and devices that facilitate end-to-end content delivery and connectivity to improve end-user experiences.

AMD plans to create a new class of x86 processor that integrates the central processing unit (CPU) and graphics processing unit (GPU) at the silicon level with a broad set of design initiatives collectively codenamed "Fusion." AMD intends to design Fusion processors to provide step-function increases in performance-per-watt relative to today's CPU-only architectures, and to provide the best customer experience in a world increasingly reliant upon 3D graphics, digital media and high-performance computing.

With Fusion processors, AMD will continue to promote an open platform and encourage companies throughout the ecosystem to create innovative new co-processing solutions aimed at further optimizing specific workloads. AMD-powered Fusion platforms will continue to fully support high-end discrete graphics, physics accelerators, and other PCI Express-based solutions to meet the ever-increasing needs of the most demanding enthusiast end-users.

Fusion processors are expected in late 2008/early 2009, and the company expects to use them within all of the company's priority computing categories, including laptops, desktops, workstations and servers, as well as in consumer electronics and solutions tailored for the unique needs of emerging markets.



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