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Related-Party And Other Transactions
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6 Months Ended |
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Dec. 31, 2011
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| Related-Party And Other Transactions [Abstract] | |
| Related-Party And Other Transactions | Note 10. Related-party and Other Transactions Ablecom Technology Inc. — Ablecom, a Taiwan corporation, together with one of its subsidiaries, Compuware (collectively "Ablecom"), is one of the Company's major contract manufacturers. Ablecom's ownership of Compuware is below 50% but Compuware remains a related party as Ablecom still has significant influence over the operations. Ablecom's chief executive officer, Steve Liang, is the brother of Charles Liang, the Company's President, Chief Executive Officer and Chairman of the Board of Directors, and owns approximately 1.1% of the Company's common stock. Charles Liang and his wife, also an officer of the Company, collectively own approximately 10.5% of Ablecom, while Steve Liang and other family members owned approximately 35.9% of Ablecom at December 31, 2011 and June 30, 2011. The Company has product design and manufacturing services agreements ("product design and manufacturing agreements") and a distribution agreement ("distribution agreement") with Ablecom. Under the product design and manufacturing agreements, the Company outsources a portion of its design activities and a significant part of its manufacturing of components such as server chassis to Ablecom. Ablecom agrees to design products according to the Company's specifications. Additionally, Ablecom agrees to build the tools needed to manufacture the products. Under the product design and manufacturing agreements, the Company commits to purchase a minimum quantity over a set period. The purchase price of the products manufactured by Ablecom is negotiated on a purchase order by purchase order basis at each purchase date. However, a fixed charge is added to the price of each unit purchased until the agreed minimum number of units is purchased. In August 2007, the Company entered into a new product development, manufacturing and service agreement with Ablecom. Under the new agreement, the Company has agreed to pay for the cost of blade server tooling and engineering services and will pay for those items when the work has been completed. In this case no fixed charge is added to future purchases for reimbursement of tooling costs. In September 2009, the Company entered into a similar product development agreement with Ablecom. Under this agreement, the Company has agreed to pay for the cost of chassis and related product tooling and engineering services and will pay for those items when the work has been completed. In this case no fixed charge is added to future purchases for reimbursement of tooling costs. Under the distribution agreement, Ablecom purchases server products from the Company for distribution in Taiwan. The Company believes that the pricing and terms under the distribution agreement are similar to the pricing and terms of distribution arrangements the Company has with similar, third party distributors. Ablecom's net sales to the Company and its net sales of the Company's products to others comprise a substantial majority of Ablecom's net sales. The Company purchased products from Ablecom totaling $38,340,000 and $75,733,000 and sold products to Ablecom totaling $2,643,000 and $5,478,000 for the three and six months ended December 31, 2011, respectively. The Company purchased products from Ablecom totaling $46,319,000 and $82,737,000 and sold products to Ablecom totaling $2,525,000 and $4,658,000 for the three and six months ended December 31, 2010, respectively. Amounts owed to the Company by Ablecom as of December 31, 2011 and June 30, 2011 were $315,000 and $527,000, respectively. Amounts owed to Ablecom by the Company as of December 31, 2011 and June 30, 2011 were $32,552,000 and $34,210,000, respectively. For the three and six months ended December 31, 2011, the Company paid Ablecom the majority of invoiced dollars between 40 and 88 days of invoice. For the three and six months ended December 31, 2011, the Company paid $1,760,000 and $2,735,000, respectively, in tooling assets and miscellaneous costs to Ablecom. For the three and six months ended December 31, 2010, the Company paid $1,418,000 and $2,209,000, respectively, in tooling assets and miscellaneous costs to Ablecom.
The Company's exposure to loss as a result of its involvement with Ablecom is limited to (a) potential losses on its purchase orders in the event of an unforeseen decline in the market price and/or demand of the Company's products such that the Company incurs a loss on the sale or cannot sell the products and (b) potential losses on outstanding accounts receivable from Ablecom in the event of an unforeseen deterioration in the financial condition of Ablecom such that Ablecom defaults on its payable to the Company. Outstanding purchase orders with Ablecom were $51,963,000 and $38,326,000 at December 31, 2011 and June 30, 2011, respectively, representing the maximum exposure to loss relating to (a) above. The Company does not have any direct or indirect guarantees of losses of Ablecom. |