AMD 2000 Annual Report Download - page 407

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Investments in commercial paper and money market auction rate preferred
stocks of industrial firms and financial institutions are rated A1, P1 or
better, investments in tax-exempt securities including municipal notes and bonds
are rated AA, Aa or better, and investments in repurchase agreements must have
securities of the type and quality listed above as collateral.
Concentrations of credit risk with respect to trade receivables are limited
because a large number of geographically diverse customers make up the Company's
customer base, thus spreading the trade credit risk. The Company controls credit
risk through credit approvals, credit limits and monitoring procedures. The
Company performs in-depth credit evaluations of all new customers and requires
letters of credit, bank guarantees and advance payments, if deemed necessary.
The Company's bad debt expenses have not been material.
The counterparties to the agreements relating to the Company's derivative
instruments consist of a number of major, high credit quality, international
financial institutions. The Company does not believe that there is significant
risk of nonperformance by these counterparties because the Company monitors
their credit ratings, and limits the financial exposure and the amount of
agreements entered into with any one financial institution. While the notional
amounts of financial instruments are often used to express the volume of these
transactions, the potential accounting loss on these transactions if all
counterparties failed to perform is limited to the amounts, if any, by which the
counterparties' obligations under the contracts exceed the Company's obligations
to the counterparties.
6. INCOME TAXES
The provision (benefit) for income taxes consists of:
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(Thousands) 2000 1999 1998
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Current:
U.S. Federal $ 251,849 $ (7,072) $ 1,706
U.S. State and Local 3,599 363 1,772
Foreign National and Local 20,496 14,095 11,505
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Total 275,944 7,386 14,983
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Deferred:
U.S. Federal 25,163 134,050 (89,997)
U.S. State and Local (43,789) 26,178 (16,869)
Foreign National and Local (450) (264) 5
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Total (19,076) 159,964 (106,861)
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Provision (benefit) for income taxes $ 256,868 $ 167,350 $ (91,878)
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Tax benefits resulting from the exercise of nonqualified stock options and the
disqualifying disposition of shares issued under the Company's stock
compensation plans reduced taxes currently payable as shown above by $158.3
million in 2000. Such benefits were credited to capital in excess of par value
in 2000. Tax benefits generated from stock option deductions in 1999 and 1998
did not reduce taxes currently payable in those years due to tax losses, but
were included in the $158.3 million benefit in 2000.
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
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Source: ADVANCED MICRO DEVIC, 10-K405, March 20, 2001