AMD 1997 Annual Report Download - page 91

ADVANCED MICRO DEVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company's share of the above FASL net income differs from the equity in
net income of joint venture reported on the Consolidated Statements of
Operations due to adjustments resulting from the related party relationship
between FASL and the Company which are reflected on the Company's Consolidated
Statements of Operations.
16. CONTINGENCIES
I. LITIGATION
A. 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 25, 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 K5 microprocessor, 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 also allege
that Company statements regarding its K6 and K7 series microprocessors were
materially misleading. 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. The trial is
scheduled to commence on January 11, 1999. 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.
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. In a trial held
in May of 1996, a jury found that at least five of the eight AMD patents-in-
suit were licensed to Altera. As a result of the bench trial held on August 11
and 13, 1997, the Court held that Altera is licensed to the three remaining
AMD patents-in-suit. Seven patents were asserted by Altera in its counterclaim
against the Company. The Court determined that AMD is licensed to five of the
seven patents and two remain in suit. Altera filed a motion to recover
attorneys' fees on November 17, 1997. The Company then filed, and the Court
granted, a motion to stay determination of the attorney's fees motion until
resolution of its appeal. The Company has filed an appeal of the rulings of
the jury and Court determinations that Altera is licensed to each of the
Company's eight patents-in-suit. 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.
II. 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.
F-26
Source: ADVANCED MICRO DEVIC, 10-K405, March 03, 1998