AMD 1994 Annual Report Download - page 420

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Restricted stock award plan. The company established the 1987 restricted
stock award plan under which up to two million shares of common stock may be
issued to employees, subject to terms and conditions determined at the
discretion of the Board of Directors. The company entered into agreements to
issue 180,000 and 19,000 shares in 1994 and 1992, respectively. To date,
agreements covering 210,212 shares have been canceled without issuance and
1,142,964 shares have been issued pursuant to prior agreements. At December 25,
1994, agreements covering 322,000 shares were outstanding under the plan and
535,036 shares remained available for future awards. Outstanding awards vest
under varying terms within five years.
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13. COMMITMENTS
The company leases certain of its facilities under agreements which expire at
various dates through 2001. The company also leases certain of its
manufacturing and office equipment for terms ranging from three to six years.
Rent expense was $31.9 million, $31.9 million and $29.4 million in 1994, 1993
and 1992, respectively.
For each of the next five years and beyond, noncancelable long-term
operating leases obligations and commitments to purchase manufacturing supplies
and services are as follows:
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Operating Purchase
(Thousands) Leases Commitments
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1995 $22,296 $ 6,641
1996 19,187 6,549
1997 15,586 6,649
1998 12,752 6,489
1999 11,559 6,068
Beyond 1999 10,856 25,197
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The operating lease of the company's corporate sales and marketing facility
expires in December 1995. The company has the option of extending the lease
agreement or purchasing the building for $40 million. The company may also
consider alternative financing arrangements.
At December 25, 1994, the company had commitments of approximately $230
million for the construction or acquisition of additional property, plant, and
equipment. As of December 25, 1994, the company also had commitments to make
cash investments in FASL amounting to approximately $20 million in 1995.
14. CONTINGENCIES
I. AMD/Intel Litigations.
On January 11, 1995, the company and Intel Corporation reached an agreement to
settle all previously outstanding legal disputes between the two companies. The
major terms of the settlement are: (1) AMD will have a fully paid-up,
nonexclusive, world-wide, royalty-free, perpetual license to copy and distribute
the microcode and control code in the Intel287(TM), Intel386(TM) and
Intel486(TM) microprocessor product families. (2) AMD agreed that it has no
right to copy any other Intel microcode including the Pentium(TM) Processor, the
P6 microcode and the 486 ICE (in-circuit emulation) microcode. (3) The companies
agreed to negotiate a new patent cross-license agreement to become effective
January 1, 1996. (4) AMD agreed to pay Intel $58 million in settlement of claims
for past damages related to AMD's distribution of Am486 microprocessors
containing Intel's 486 ICE microcode. As ordered in a 1992 arbitration between
the companies, Intel will pay AMD approximately $18 million in damages (which
includes interest) awarded by the arbitrator for breach of contract and will not
contest certain rights granted AMD in the arbitration. The company recorded both
the ICE case damages and the arbitration award in 1994. (5) Intel and AMD will
drop all cases against each other, including appeals, currently pending in the
courts. (6) AMD will have the right to use foundries for Am486 products
containing Intel microcode for up to 20 percent of annual total unit shipments
of Am486 microprocessors. (7) AMD and its customers will receive a license for
Intel's "Crawford `338" patent, covering memory management. (8) The two
companies agreed not to initiate legal action against one another for any
activity occurring prior to January 6, 1995.
II. Shareholders and Securities Class Actions.
During 1994, the company reached an agreement to settle the securities class
action lawsuits and stockholder's derivative action. The net cost of the
settlements was approximately $33 million.
III. SEC Investigation.
Source: ADVANCED MICRO DEVIC, 10-K, March 07, 1995