AMD 2010 Annual Report Download - page 39

illegally trading in our stock on the basis of that confidential information. In addition, one former employee has
been charged in connection with ongoing proceedings relating to illegally trading in our stock using certain AMD
confidential information. At this time, we cannot give any assurances as to whether any facts that may
be discovered during the proceedings relating to this matter or other similar matters will be damaging to our
business, results of operations or reputation.
Failures in the global credit markets have impacted and may continue to impact the liquidity of our
auction rate securities.
As of December 25, 2010, the par value of all our auction rate securities, or ARS, was $66 million with an
estimated fair value of $57 million. As of December 25, 2010, our investments in ARS included estimated fair
values of approximately $32 million of student loan ARS and $25 million of municipal and corporate ARS. The
uncertainties in the credit markets have affected all of our ARS and auctions for these securities have failed to
settle on their respective settlement dates. The auctions failed because there was insufficient demand for these
securities. A failed auction does not represent a default by the issuer of the ARS. For each unsuccessful auction,
the interest rate is reset based on a formula set forth in each security, which is generally higher than the current
market unless subject to an interest rate cap. When auctions for these securities fail, the investments may not be
readily convertible to cash until a future auction of these investments is successful, a buyer is found outside of
the auction process, the issuers of the ARS establish a different form of financing to replace these securities or
redeem them, or final payment is due according to contractual maturities (currently, ranging from 2030 to 2050
for our ARS). Although we have had redemptions since the failed auctions began, the liquidity of these
investments continues to be adversely impacted.
We cannot predict with certainty when liquidity in the ARS market will return. If this market illiquidity
continues or worsens, we may be required to record additional impairment charges with respect to these
investments in the future, which could adversely impact our results of operations.
We are subject to a variety of environmental laws that could result in liabilities.
Our operations and properties have in the past and continue to be subject to various United States and
foreign environmental laws and regulations, including those relating to materials used in our products and
manufacturing processes, discharge of pollutants into the environment, the treatment, transport, storage and
disposal of solid and hazardous wastes, and remediation of contamination. These laws and regulations require us
to obtain permits for our operations, including the discharge of air pollutants and wastewater. Although our
management systems are designed to maintain compliance, we cannot assure you that we have been or will be at
all times in complete compliance with such laws, regulations and permits. If we violate or fail to comply with
any of them, a range of consequences could result, including fines, suspension of production, alteration of
manufacturing processes, import/export restrictions, sales limitations, criminal and civil liabilities or other
sanctions. We could also be held liable for any and all consequences arising out of exposure to hazardous
materials used, stored, released, disposed of by us or located at, under or emanating from our facilities or other
environmental or natural resource damage.
Certain environmental laws, including the U.S. Comprehensive, Environmental Response, Compensation
and Liability Act of 1980, or the Superfund Act, impose strict, or under certain circumstances, joint and several
liability on current and previous owners or operators of real property for the cost of removal or remediation of
hazardous substances and impose liability for damages to natural resources. These laws often impose liability
even if the owner or operator did not know of, or was not responsible for, the release of such hazardous
substances. These environmental laws also assess liability on persons who arrange for hazardous substances to be
sent to disposal or treatment facilities when such facilities are found to be contaminated. Such persons can be
responsible for cleanup costs even if they never owned or operated the contaminated facility. We have been
named as a responsible party at three Superfund sites in Sunnyvale, California. Although we have not yet been,
we could be named a potentially responsible party at other Superfund or contaminated sites in the future. In
addition, contamination that has not yet been identified could exist at our other facilities.
31