AMD 1999 Annual Report Download - page 173

Note 15: Contingencies
I. Litigation
Ellis Investment Co., Ltd., et al v. AMD, et al. Between March 10, 1999 and
April 22, 1999, AMD and certain individual officers of AMD were named as
defendants in a number of lawsuits that have been consolidated under Ellis
Investment Co., Ltd., et al v. Advanced Micro Devices, Inc., et al. The class
action complaints allege various violations of Section 10(b) of the Exchange Act
and Rule 10b-5 promulgated thereunder. Most of the complaints purportedly were
filed on behalf of all persons, other than the defendants, who purchased or
otherwise acquired common stock of AMD during the period from October 6, 1998 to
March 8, 1999. Two of the complaints allege a class period from July 13, 1998 to
March 9, 1999. All of the complaints allege that materially misleading
statements and/or material omissions were made by AMD and certain individual
officers of AMD concerning design and production problems relating to high-speed
versions of the AMD-K6-2 and AMD-K6-III microprocessors. 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 on the
Company's financial condition.
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 our
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 the Company no longer uses) 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 us as well as TRW
Microwave, Inc. and Philips Semiconductors Corporation. In January 1999, the
Company entered into a settlement agreement with Philips whereby Philips will
assume costs allocated to us under this order, although the Company would be
responsible for these costs in the event that Philips does not fulfill its
obligations under the settlement agreement. Another of the orders named AMD 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 (1) can bring an
action to enforce compliance or (2) 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. The statute
of limitations has been tolled on the claims of landowners adjacent to the Santa
Clara County Superfund sites for causes of action such as negligence, nuisance
and trespass.
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 any of
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 Company's
financial condition or results of operations.
The Company received a notice dated October 14, 1998 from the Environmental
Protection Agency (EPA) indicating that the EPA has determined AMD to be a
potentially responsible party that arranged for disposal of hazardous substances
at a site located in Santa Barbara County, California. The Company is currently
in settlement discussions with the EPA and believes that any settlement will not
have a material adverse effect on the Company's financial condition or results
of operations.
III. 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
Company's financial condition or results of operations.
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Source: ADVANCED MICRO DEVIC, 10-K405, March 21, 2000