AMD 2008 Annual Report Download - page 147

Sales to external customers are based on the customer’s billing location. Long-lived assets are those assets
used in each geographic area.
The Company markets and sells its products primarily to a broad base of customers including third-party
distributors, OEMs, ODMs, add-in-board manufacturers, system integrators, retail stores and e-commerce
retailers.
In 2007 and 2008, the Company had one customer that accounted for more than 10 percent of the
Company’s consolidated net revenues. Net sales to this customer for both periods were approximately $1.2
billion, or 21 percent of consolidated net revenues and were primarily attributable to the Computing Solutions
segment.
In 2006, the Company had two customers that accounted for more than 10 percent of the Company’s
consolidated net revenues. Net sales to these customers were approximately $1.3 billion and $568 million, or 23
percent and 10 percent, respectively, of consolidated net revenues and were primarily attributable to the
Computing Solutions segment.
NOTE 11: Stock-Based Incentive Compensation Plans
The Company’s stock-based incentive programs are intended to attract, retain and motivate highly qualified
employees. On April 29, 2004, the Company’s stockholders approved the 2004 Equity Incentive Plan (the 2004
Plan). Equity awards are made from the 2004 Plan. Under the 2004 Plan, stock options cannot be exercised until
they become vested. Generally, stock options vest and become exercisable over a three- to four-year period from
the date of grant. Stock options expire at the times established by the Company’s Compensation Committee of
the Board of Directors, but not later than ten years after the grant date. In addition, unvested shares that are
released from or reacquired by the Company from outstanding awards under the 2004 Plan become available for
grant under the 2004 Plan and may be reissued as new awards. The Company also has stock options outstanding
under previous equity compensation plans that were in effect before April 29, 2004. Reserved shares that were
available for grant under these prior equity compensation plans were consolidated into the 2004 Plan.
Under the 2004 Plan, the Company can grant fair market value awards or full value awards. Fair market
value awards are awards granted at or above the fair market value of the Company’s common stock on the date
of grant. Full value awards are awards granted at less than the fair market value of the Company’s common stock
on the date of grant. Awards can consist of (i) stock options and stock appreciation rights granted at the fair
market value of the Company’s common stock on the date of grant and (ii) restricted stock or restricted stock
units, as full value awards. Following is a description of the material terms of the awards that may be granted
under the 2004 Plan:
Stock Options. A stock option is the right to purchase shares of AMD’s common stock at a fixed exercise
price for a fixed period of time. Under the 2004 Plan, nonstatutory and incentive stock options may be granted.
The exercise price of the shares subject to each nonstatutory stock option and incentive stock option cannot be
less than 100 percent of the fair market value of the Company’s common stock on the date of the grant. The
exercise price of each option granted under the 2004 Plan must be paid in full at the time of the exercise.
Stock Appreciation Rights. Awards of stock appreciation rights may be granted pursuant to the 2004 Plan.
Stock appreciation rights may be granted to employees and consultants. No stock appreciation right may be
granted at less than fair market value of the Company’s common stock on the date of grant or have a term of over
ten years from the date of grant. Upon exercising a stock appreciation right, the holder of such right is entitled to
receive payment from AMD in an amount determined by multiplying (i) the difference between the closing price
of a share of the Company’s common stock on the date of exercise and the exercise price by (ii) the number of
shares with respect to which the stock appreciation right is exercised. AMD’s obligation arising upon the
exercise of a stock appreciation right may be paid in shares or in cash, or any combination thereof.
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