AMD 2007 Annual Report Download - page 250

Spansion Inc.
Notes to Consolidated Financial Statements—(Continued)
issuance under this plan. As of December 31, 2006, no shares have been issued under this plan and the Company has not determined whether it will issue shares
under this plan in the future. The 2005 Employee Stock Purchase Plan, if implemented, will be administered by the Compensation Committee.
5. Related Party Transactions
Prior to the second quarter of fiscal 2006, the Company relied on AMD and Fujitsu as sole distributors of its products. In the second quarter of fiscal 2006,
the Company began selling its products directly to the customers previously served by AMD. The Company receives services from AMD and Fujitsu, including
among others, certain information technology, facilities, logistics, legal, tax, finance, human resources and environmental health and safety services. Since its
IPO, the Company has taken on some of these functions and the Company decreased the use of these services. The charges for these services are negotiated
annually between the Company and AMD and Fujitsu based on the Company’s expected requirements and the estimated future costs of the services to be
provided. AMD has the right to review the proposed services to be provided by Fujitsu, and Fujitsu has the right to review the proposed services to be provided
by AMD. The service charges are billed monthly on net 45 days terms.
The following tables present significant related party transactions and account balances between the Company and AMD (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 AMD(1) $ 336,172 $ 1,114,150 $ 1,211,033
Cost of sales:
Royalties to AMD $ 6,228 $ 13,760 $ 18,080
Service fees to AMD:
Cost of sales $ 3,276 $ 21,397 $ 21,915
Research and development 11,591 21,213 27,614
Marketing, general and administrative 19,981 50,229 56,697
Service fees to AMD(2) $ 34,848 $ 92,839 $ 106,226
Cost of employees seconded from AMD:
Marketing, general and administrative $ — $ 1,199 $ 1,524
Dec. 31, 2006 Dec. 25, 2005
(in thousands)
Trade accounts receivable from AMD, net of allowance for doubtful accounts $ 3,400 $ 205,351
Other receivables from AMD $ 2,325 $ 13,850
Accounts payable to AMD $ 1,513 $ 97,844
Royalties payable to AMD $ 3,130 $ 6,384
Accrued liabilities to AMD $ 43 $ 17,434
(1) In the second quarter of fiscal 2006, the Company began selling its products directly to the customers previously served by AMD.
(2) Service fees to AMD are net of reimbursements from AMD for services provided to AMD by the Company.
Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008