AMD 1997 Annual Report Download - page 81

ADVANCED MICRO DEVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Tax benefits resulting from the exercise of nonqualified stock options and
the disqualifying disposition of shares acquired under the Company's incentive
stock option and stock purchase plans reduced taxes currently payable as shown
above by approximately $2 million and $15 million in 1996 and 1995,
respectively. Such benefits were credited to capital in excess of par value
when realized. Tax benefits generated in 1997 did not reduce taxes currently
payable.
In accordance with Statement of Financial Accounting Standards No. 109 (SFAS
109), "Accounting for Income Taxes," deferred income taxes reflect the net tax
effects of tax carryovers and temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Significant components of the Company's
deferred tax assets and liabilities as of December 28, 1997 and December 29,
1996, are as follows:
1997 1996
--------- ---------
(THOUSANDS)
Deferred tax assets:
Net operating loss carryovers........................ $ 99,424 $ 50,225
Deferred distributor income.......................... 36,898 45,594
Inventory reserves................................... 30,085 30,145
Accrued expenses not currently deductible............ 26,345 17,297
Federal and state tax credit carryovers.............. 74,535 57,959
Other................................................ 60,927 61,957
--------- ---------
Total deferred tax assets.......................... 328,214 263,177
Less: valuation allowance............................ (44,221) (22,062)
--------- ---------
Net deferred tax assets............................ 283,993 241,115
Deferred tax liabilities:
Depreciation......................................... (175,177) (154,217)
Other................................................ (44,502) (41,150)
--------- ---------
Total deferred tax liabilities..................... (219,679) (195,367)
--------- ---------
Net deferred tax assets................................ $ 64,314 $ 45,748
========= =========
Realization of the Company's net deferred tax assets is dependent on future
taxable income. The Company believes that it is more likely than not that such
assets will be realized, however, ultimate realization could be negatively
impacted by market conditions and other variables not known or anticipated at
this time.
The valuation allowance for deferred tax assets includes $18 million
attributable to stock option deductions, the benefit of which will be credited
to equity when realized.
Pretax income from foreign operations was approximately $10 million in 1997,
$33 million in 1996 and $61 million in 1995.
A portion of the net operating loss carryovers are subject to limitation.
Availability of $21 million of tax effected net operating loss carryovers
generally occurs ratably from 1999 through 2001. The federal and state tax
credit and net operating loss carryovers expire beginning in the year 2003
through 2012.
F-16
Source: ADVANCED MICRO DEVIC, 10-K405, March 03, 1998