AMD 2002 Annual Report Download - page 82

Table of Contents
NOTE 17: Contingencies
I. Environmental Matters
Superfund Clean-Up Orders. The Company is named as a responsible party on Superfund clean-up orders for three sites. Since 1981, the Company has
discovered, investigated and conducted remediation of three sites where hazardous material releases from former underground tanks at facilities in Santa Clara
County, California, adversely affected the groundwater. The chemicals released into the groundwater were commonly used 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 relating to the
three sites. One of the orders named AMD as well as TRW Microwave, Inc. and Philips Semiconductors Corporation. In January 1999, the Company entered into
a settlement agreement with Philips whereby Philips assumed costs allocated to the Company under this order, although the Company is 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. 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 ground water remediation required under that order. AMD remains a responsible party for all purposes under the order and retains
specific responsibilities.
The three sites are on the National Priorities List (Superfund). If the Company fails to satisfy state or federal compliance requirements, or inadequately
performs the compliance measures, the government can (1) bring an action to enforce compliance or (2) undertake the desired response actions itself and later
bring an action to recover its costs and penalties, which may be up to three times the costs of clean-up activities, if appropriate.
To address anticipated future remediation costs under the orders, the Company has computed and accrued an estimated environmental liability of
approximately $3 million in accordance with applicable accounting rules and has not recorded any potential insurance recoveries in determining the estimated
costs of the cleanup. Environmental charges to earnings have not been material in the past three years and the Company believes that the potential future liability,
if any, in excess of amounts already accrued will not have a material adverse effect on the Company’s financial condition or results of operations.
Potentially Responsible Party Designation. In 1998, the U.S. Environmental Protection Agency (EPA) identified the Company as one of hundreds of
Superfund “potentially responsible parties” (PRPs) as a result of the disposal of waste at a regulated landfill in Santa Barbara County, California that was later
abandoned by its owners and designated as a Superfund site by the EPA. The Company has reached a settlement agreement with the EPA, and the public
notification, judicial review and issuance of a consent decree is pending. The Company believes that the 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.
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Source: ADVANCED MICRO DEVIC, 10-K, March 14, 2003