AMD 1993 Annual Report Download - page 385

15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 Cleanup Requirements Orders
from the California Regional Water Quality Control Board, San Francisco Bay
Region ("RWQCB") relating to the three sites. The orders named the company, as
well as TRW Microwave, Inc., and Philips Semiconductors, (formerly Signetics
Company) in various combinations and degrees of responsibility.
The company has not yet determined to what extent the costs of any related
remedial actions will be covered by insurance. The three sites 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, plus penalties - which are up to three times the costs of clean-up
activities - if appropriate. Certain class actions related to this matter have
been settled or the statute of limitations has been tolled. It is expected that
the foregoing environmental matters or any related litigation will not have a
material adverse effect on the financial condition or results of operations of
the company.
SHAREHOLDERS AND SECURITIES CLASS ACTIONS
In Re Advanced Micro Devices Securities Litigation. In September 1993 five
class actions were filed, purportedly on behalf of purchasers of the company's
stock, alleging that the company and various of its officers and directors
violated sections of the Securities and Exchange Act of 1934 and Rule 10b-5
promulgated thereunder, by issuing allegedly false and misleading statements
concerning the circumstances surrounding the company's development of microcode
for one of its Am486 microprocessor products. The complaints also alleged that
the company's conduct constituted fraud and negligent misrepresentation.
The five cases were consolidated and an amended class action complaint was
filed containing the allegations described above and an additional allegation
that the company made false and misleading statements about its revenues and
earnings during the third quarter of its 1993 fiscal year. The amended
complaint seeks damages in an unspecified amount. The company believes that the
ultimate outcome of this litigation will not have a material adverse effect
upon the financial condition or trends in results of operations of the company.
George A. Bilunka, et al. v. Sanders, et al. In September 1993, an AMD
shareholder, George A. Bilunka, purported to commence an action derivatively on
the company's behalf against all of the company's directors and certain of the
company's officers. The company is named as a nominal defendant. This purported
derivative action essentially alleges that the individual defendants breached
their fiduciary duties to the company by causing or permitting the company to
make allegedly false and misleading statements about the development of
microcode for one of the company's Am486 microprocessor products. Damages are
sought against the individual defendants in an unspecified amount. The company
believes that the ultimate outcome of this litigation will not have a material
adverse effect upon the financial condition or trends in results of operations
of the company.
SEC Investigation. The Securities and Exchange Commission (SEC) has notified
the company that it is conducting an informal investigation of the company
concerning the company's disclosures relating to the development of microcode
for one of its Am486 products. The company is cooperating fully with the SEC.
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 overall trends in the results of operations of the
company.
13. DISCLOSURES ABOUT FAIR VALUE OF
FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:
Cash and Cash Equivalents
The carrying amount approximates fair value.
Temporary Cash Investments
The carrying amount approximates fair value because of the short maturity of
these instruments.
Short-Term Debt
The carrying values of these variable-rate borrowings approximate fair values
due to their short-term nature.
Long-Term Debt
The company has a 9.88 percent, $2.6 million mortgage with principal and
interest payable in monthly installments through April 2007. The fair value for
this mortgage loan is estimated using discounted cash flow analysis based on an
estimated interest rate of 9 percent for similar types of borrowing
Source: ADVANCED MICRO DEVIC, 10-K, March 07, 1994