AMD 2014 Annual Report Download - page 109

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Changes in the Company’s estimated liability for product warranty during the years ended December 27,
2014 and December 28, 2013 are as follows:
December 27,
2014
December 28,
2013
(In millions)
Beginning balance ................................... $17 $16
New warranties issued during the period .................. 32 27
Settlements during the period .......................... (39) (25)
Changes in liability for pre-existing warranties during the
period, including expirations ......................... 9 (1)
Ending balance ...................................... $19 $17
In addition to product warranties, the Company, from time to time in its normal course of business,
indemnifies other parties, with whom it enters into contractual relationships, including customers, lessors and
parties to other transactions with the Company, with respect to certain matters. In these limited matters, the
Company has agreed to hold certain third parties harmless against specific types of claims or losses, such as
those arising from a breach of representations or covenants, third-party claims that the Company’s products when
used for their intended purpose(s) and under specific conditions infringe the intellectual property rights of a third
party, or other specified claims made against the indemnified party. It is not possible to determine the maximum
potential amount of liability under these indemnification obligations due to the unique facts and circumstances
that are likely to be involved in each particular claim and indemnification provision. Historically, payments made
by the Company under these obligations have not been material.
NOTE 16: Contingencies
Securities Class Action
On March 20, 2014, a purported shareholder derivative lawsuit captioned Wessels v. Read, et al., Case
No. 1:14-cv-262486 was filed against the Company (as a nominal defendant only) and certain of its directors and
officers in the Santa Clara County Superior Court of the State of California. The complaint purports to assert
claims against the Company and certain individual directors and officers for breach of fiduciary duty, waste of
corporate assets and unjust enrichment. The complaint seeks damages allegedly caused by alleged materially
misleading statements and/or material omissions by the Company and the individual directors and officers
regarding the Company’s 32nm technology and “Llano” product, which statements and omissions, the plaintiffs
claim, allegedly operated to inflate artificially the price paid for the Company’s common stock during the
period. Based upon information presently known to the Company’s management, the Company believes that the
potential liability, if any, will not have a material adverse effect on the Company’s financial condition, cash
flows or results of operations.
On January 15, 2014, a class action lawsuit captioned Hatamian v. AMD, et al., C.A. No. 3:14-cv-00226
was filed against the Company in the United States District Court for the Northern District of California. The
complaint purports to assert claims against the Company and certain individual officers for alleged violations of
Section 10(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Rule 10b-5 of the
Exchange Act. The plaintiff seeks to represent a proposed class of all persons who purchased or otherwise
acquired the Company’s common stock during the period April 4, 2011 through October 18, 2012. The complaint
seeks damages allegedly caused by alleged materially misleading statements and/or material omissions by the
Company and the individual officers regarding our 32nm technology and “Llano” product, 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 complaint seeks unspecified compensatory damages, attorneys’ fees and costs.
Based upon information presently known to the Company’s management, the Company believes that the
potential liability, if any, will not have a material adverse effect on the Company’s financial condition, cash
flows or results of operations.
103