AMD 2001 Annual Report Download - page 261

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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. In December 2001, AMD entered into a
settlement agreement with National pursuant to which National will take the lead
for a period of time on certain groundwater remediation required under that
order, but AMD remains a responsible party for all purposes under the order and
retains specific responsibilities.
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.
II. 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.
NOTE 17: SUBSEQUENT EVENTS (UNAUDITED)
Issuance of Senior Convertible Debt
On January 29, 2002, the Company announced the closing of a private offering of
$500 million aggregate principal amount of its 4 3/4% Convertible Senior
Debentures (the Debentures) due 2022 issued pursuant to Rule 144A and Regulation
S. The Company intends to use the net proceeds generated from the offering for
capital expenditures, working capital and general corporate purposes.
The Debentures bear interest at a rate of 4 3/4% per annum. The interest rate
will be reset on each of August 1, 2008, August 1, 2011 and August 1, 2016 to a
rate per annum equal to the interest rate payable 120 days prior to such date on
5-year U.S. Treasury Notes, plus 43 basis points. The reset rate will not be
less than 4 3/4% and will not exceed 6 3/4%. The Debentures are initially
convertible into the Company's common stock at a conversion price of $23.38 per
share. At this conversion price, each $1,000 principal amount of the Debentures
will be convertible into approximately 43 shares of the Company's common stock.
The Debentures will be redeemable at specified prices declining to 100% of the
principal amount plus accrued and unpaid interest at the Company's option
beginning on February 5, 2005, provided that the Company may not redeem the
Debentures prior to February 1, 2006 unless the last reported sale price of the
Company's common stock is at least 130% of the then effective conversion price
for at least 20 trading days within a period of 30 consecutive trading days
ending within five trading days of the date of the redemption notice.
Holders of the Debentures will have the ability to require the Company to
repurchase the Debentures, in whole or in part, on February 1, 2009, February 1,
2012 and February 1, 2017. The holders of the Debentures will also have the
ability to require the company to repurchase the Debentures in the event that
the Company undergoes specified fundamental changes, including a
Source: ADVANCED MICRO DEVIC, 10-K, March 07, 2002