AMD 2015 Annual Report Download - page 110

only those CPU and AMD APU products that are commonly referred to as “processors in a box” and for certain
server CPU products. The Company also offered extended limited warranties to certain customers of “tray”
microprocessor products and/or professional graphics products who have written agreements with the Company
and target their computer systems at the commercial and/or embedded markets.
Changes in the Company’s estimated liability for product warranty during the years ended December 26,
2015 and December 27, 2014 are as follows:
December 26,
2015
December 27,
2014
(In millions)
Beginning balance ................................... $19 $17
New warranties issued during the period .................. 28 32
Settlements during the period .......................... (26) (39)
Changes in liability for pre-existing warranties during the
period, including expirations ......................... (6) 9
Ending balance ...................................... $15 $19
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 January 15, 2014, a class action lawsuit captioned Hatamian v. AMD, et al., C.A. No. 3:14-cv-00226
(the “Hatamian Lawsuit”) 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 plaintiffs seek to represent a proposed class of all
persons who purchased or otherwise acquired our 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 its 32nm technology and
“Llano” product, which statements and omissions, the plaintiffs claim, allegedly operated to artificially inflate
the price paid for the Company’s common stock during the period. The complaint seeks unspecified
compensatory damages, attorneys’ fees and costs. On July 7, 2014, the Company filed a motion to dismiss
plaintiffs’ claims. On March 31, 2015, the Court denied the motion to dismiss. On May 14, 2015, the Company
filed its answer to plaintiffs’ corrected amended complaint. The discovery process is ongoing. On September 4,
2015, plaintiffs filed their motion for class certification. A court-ordered mediation held in January 2016 did not
result in a settlement of the lawsuit.
Based upon information presently known to management, the Company believes that the potential liability,
if any, will not have a material adverse effect on its financial condition, cash flows or results of operations.
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