AMD 1998 Annual Report Download - page 95

APPENDIX D
AMD/MOTOROLA ALLIANCE - COST EQUALIZATION
1.0 COST EQUALIZATION
1.1. SCOPE. This appendix defines the methods, procedures and
reporting requirements as related to Project cost sharing between the two
parties.
1.2. ADMINISTRATION. The Steering Committee will appoint a Program
Management Team, for each Project, that is accountable for Project planning,
budgeting, reporting, and administration.
1.3. CALENDAR. Each party's fiscal calendar, although different from
each other, closely resembles the Gregorian calendar quarters and year. The
differences in time between each party's fiscal calendar is deemed immaterial
and, consequently, each party will use their own fiscal calendar in the Cost
Equalization determination to accommodate each party's financial activity close
and reporting schedules. In the event that either party's fiscal calendar
quarter ends in excess of 15 days of the same Gregorian quarter, the parties
will meet and mutually agree to a new time schedule for Cost Equalization
determination, reporting, and payment. Prior to the beginning of each calendar
year, the parties will exchange fiscal calendars for the coming year.
1.4. APPROVED PROJECTS. The parties agree no Project will be
considered in the Cost Equalization determination without prior approval of a
Statement of Work by the Executive Board of Directors, except as described below
for 1998. The parties agree any change to a Project plan scope or duration or
budget variance over the course of a fiscal year in excess of 110% must be
approved by the Executive Board of Directors. For quarterly Cost Equalization
determination, no party will be able to claim development costs for any Project
in any quarter in excess of 120% of the budgeted development costs for that
Project in that quarter unless it is determined that the projected costs do not
exceed the 110% threshold requiring Executive Board of Directors approval.
1.5. COST EQUALIZATION DETERMINATION, TIMING, AND PAYMENT TERMS.
1.5.1. FOR 1998. Cost Equalization calculations will be determined by
each party for 4Q98 (approximating the period October 1, 1998 through December
31, 1998) according to each party's fiscal calendar.
Each party's allowable costs associated with 1998 Projects will be
estimated and reported to the other party by December 3, 1998 for fiscal 4Q98.
This date is established to accommodate each party's financial reporting for
fiscal year-end 1998. 4Q98 actual costs will be determined according to the Cost
Equalization determination timelines established for 1999 and subsequent years
in section 1.5.2 below and payment of the difference between 4Q98 actual costs
and 4Q98 estimated costs will occur according to this schedule.
The determination, estimation, and reporting of allowable costs by both
parties will be dependent on Statements of Work for the Projects. These
Statements of Work will be
Source: ADVANCED MICRO DEVIC, 10-K, March 29, 1999