AMD 1995 Annual Report Download - page 250

notes
TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 16 CONTINGENCIES
I. Litigations
A. Class action lawsuits. On November 3 and 15, 1995, two class action lawsuits
were filed, purportedly on behalf of purchasers of the company's stock from
April 11, 1995, to September 25, 1995, alleging that the company and various of
its officers and directors violated sections of the Securities Exchange Act of
1934 Rule 10b-5 promulgated thereunder by issuing allegedly false and misleading
statements concerning the development and production of the AMD-K5
microprocessor. The complaints seek damages in an unspecified amount. Based upon
information presently known to management, the company does not believe that the
ultimate resolution of these lawsuits will have a material adverse effect upon
the financial condition or results of operations of the company.
B. 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. 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 upon the
financial condition or results of operations of the company.
C. Thorn EMI North America, Inc. v. AMD. This litigation was filed in 1995 and
alleges that AMD is infringing a patent owned by Thorn EMI North America, Inc.
relating to the processes used by AMD to manufacture microprocessors. 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 upon the
financial condition or results of operations of the company.
II. SEC Investigation
The Securities and Exchange Commission (SEC) began an informal investigation of
the company in 1993 concerning the company's disclosures relating to the
development of microcode for one of its Am486 products. The company has been
cooperating fully with the SEC.
III. 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 groundwater.
The chemicals released into the groundwater 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 (RWQCB) 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 clean-
up. 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.
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Source: ADVANCED MICRO DEVIC, 10-K405, March 21, 1996