AMD 1996 Annual Report Download - page 246

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16. CONTINGENCIES
LITIGATION
MCDAID V. SANDERS, ET AL.; KOZLOWSKI, ET AL. V. SANDERS, ET AL. The McDaid
complaint was filed November 3, 1995 and the Kozlowski complaint was filed
November 15, 1995. Both actions allege violations of Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, against
the Company and certain individual officers and directors (the Individual
Defendants), and purportedly were filed on behalf of all persons who purchased
or otherwise acquired common stock of the Company during the period April 11,
1995 through September 22, 1995. The complaints seek damages allegedly caused by
alleged materially misleading statements and/or material omissions by the
Company and the Individual Defendants regarding the Company's development of its
AMD-K5, -K6 and -K7 microprocessors, which statements and omissions, the
plaintiffs claim, allegedly operated to inflate artificially the price paid for
the Company's common stock during the period. The complaints seek compensatory
damages in an amount to be proven at trial, fees and costs, and extraordinary
equitable and/or injunctive relief. The court has consolidated both actions into
one. Defendants filed answers in the consolidated action in May, 1996 and
discovery has begun. Based upon information presently known to management, the
Company does not believe that the ultimate resolution of this lawsuit will have
a material adverse effect on the financial condition or results of operations of
the Company.
AMD V. ALTERA CORPORATION. This litigation, which began in 1994, involves
multiple claims and counterclaims for patent infringement relating to the
Company's and Altera Corporation's programmable logic devices. On June 27, 1996,
a jury returned a verdict and found that four of the eight patents-in-suit were
licensed to Altera. The parties have stipulated that the court, not a jury, will
decide which of the remaining AMD patents-in-suit fall within the scope of the
license that the jury found. The court will hear the first of two phases
regarding the remaining patents in April, 1997. Based upon information presently
known to management, the Company does not believe that the ultimate resolution
of this lawsuit will have a material adverse effect on the financial condition
or results of operations of the Company.
ENVIRONMENTAL MATTERS
CLEAN-UP ORDERS. Since 1981, the Company has discovered, investigated and begun
remediation of three sites where releases from underground chemical tanks at its
facilities in Santa Clara County, California adversely affected the ground
water. The chemicals released into the ground water were commonly in use in the
semiconductor industry in the wafer fabrication process prior to 1979. At least
one of the released chemicals (which is no longer used by the Company) has been
identified as a probable carcinogen.
In 1991, the Company received four Final Site Clean-up Requirements Orders from
the California Regional Water Quality Control Board, San Francisco Bay Region
relating to the three sites. One of the orders named the Company as well as TRW
Microwave, Inc. and Philips Semiconductors Corporation. Another of the orders
named the Company as well as National Semiconductor Corporation.
The three sites in Santa Clara County are on the National Priorities List
(Superfund). If the Company fails to satisfy federal compliance requirements or
inadequately performs the compliance measures, the government (a) can bring an
action to enforce compliance, or (b) can undertake the desired response actions
itself and later bring an action to recover its costs, and penalties, which is
up to three times the costs of clean-up activities, if appropriate. With regard
to certain claims related to this matter the statute of limitations has been
tolled.
The Company has computed and recorded the estimated environmental liability in
accordance with applicable accounting rules and has not recorded any potential
insurance recoveries in determining the estimated costs of the cleanup. The
amount of environmental charges to earnings has not been material during the
last three fiscal years. The Company believes that the potential liability, if
any, in excess of amounts already accrued with respect to the foregoing
environmental matters will not have a material adverse effect on the financial
condition or results of operations of the Company.
OTHER MATTERS
The Company is a defendant or plaintiff in various other actions which arose in
the normal course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
financial condition or results of operations of the Company.
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Source: ADVANCED MICRO DEVIC, 10-K, March 20, 1997