AMD 2006 Annual Report Download - page 287

Spansion Inc.
Notes to Consolidated Financial Statements—(Continued)
The following tables present the significant related party transactions and account balances between the Company and Fujitsu (See Note 9 for separate
disclosure of debt obligations to related parties):
Year Ended
Dec. 31, 2006
Year Ended
Dec. 25, 2005
Year Ended
Dec. 26, 2004
(in thousands)
Net sales to Fujitsu $ 932,623 $ 888,655 $ 1,051,194
Cost of sales
Royalties to Fujitsu $ 6,228 $ 13,760 $ 18,080
Other purchases of goods and services from Fujitsu and rental expense to Fujitsu 117,999 69,219 66,525
Subcontract manufacturing purchases from Fujitsu 15,041 35,150 74,800
Commercial die purchases from Fujitsu 51,054 94,327 141,117
Service fees to Fujitsu:
Cost of sales $ 2,269 $ 3,271 $ 3,662
Research and development 2,453 6,501 18,449
Marketing, general and administrative 4,220 10,339 11,382
Service fees to Fujitsu $ 8,942 $ 20,111 $ 33,493
Cost of employees seconded from Fujitsu:
Cost of sales $ 27 $ 742 $ 1,333
Research and development 61 4,280 8,241
Marketing, general and administrative 95 2,135 3,774
Cost of employees seconded from Fujitsu $ 183 $ 7,157 $ 13,348
Dec. 31, 2006 Dec. 25, 2005
(in thousands)
Trade accounts receivable from Fujitsu $ 190,328 $ 199,224
Other receivables from Fujitsu $ — $ 217
Accounts payable to Fujitsu $ 13,046 $ 25,957
Royalties payable to Fujitsu $ 3,130 $ 6,384
Accrued liabilities to Fujitsu $ 4,970 $ —
The Company licenses certain intellectual property from AMD and Fujitsu in exchange for the payment of royalties to both AMD and Fujitsu. These
royalty expenses are recognized in cost of sales. The Company is required to pay AMD and Fujitsu semi-annual royalties based on net sales (minus the costs of
commercial die). The royalty as a percentage of sales will decline to zero over a specified time. The term of the agreement expires in 2013.
Fujitsu provides test and assembly services to the Company on a contract basis. Also, the Company purchases commercial die from Fujitsu, which are
packaged together with the Company’s Flash memory devices.
Fujitsu seconded certain employees to the Company until the second quarter of fiscal 2006. The Company paid these employees directly. AMD also
seconded certain employees to the Company until the fourth quarter of fiscal 2005. The Company reimbursed AMD for the costs of these employees.
On September 28, 2006, Spansion Japan Limited, or Spansion Japan, the Company’s wholly-owned subsidiary, entered into an asset purchase agreement
with Fujitsu, pursuant to which Spansion Japan will sell two wafer fabrication facilities located in Aizu-Wakamatsu, Japan, which the Company refers to as the
JV1/JV2
Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007