AMD 2005 Annual Report Download - page 101

Table of Contents
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 balances for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of
December 25, 2005 and December 26, 2004 are as follows:
2005 2004
(In thousands)
Deferred tax assets:
Net operating loss carryovers $ 189,033 $ 359,352
Deferred distributor income 73,477 45,097
Inventory valuation 5,191 66,638
Accrued expenses not currently deductible 141,582 140,641
Investments 22,850 27,920
Federal and state tax credit carryovers 335,984 301,721
Other 117,938 99,135
Total deferred tax assets 886,055 1,040,504
Less: valuation allowance (741,119) (693,619)
144,936 346,885
Deferred tax liabilities:
Property, plant and equipment (1,123) (189,665)
Capitalized interest (21,059) (14,333)
Investment in Spansion (16,643) —
Unrealized gain on investments — (10,570)
Unrealized gain on balance sheet translation (52,800) (90,009)
Other (46,791) (52,599)
Total deferred tax liabilities (138,416) (357,176)
Net deferred tax assets (liabilities) $ 6,520 $ (10,291)
As of December 25, 2005 and December 26, 2004, non-current deferred tax assets of approximately $7 million and $6 million, respectively, were included
in Other Assets on the Company’s condensed consolidated balance sheets. The change in net deferred taxes will not equal the deferred portion of the current
year’s provision as a result of minority interest.
As of December 25, 2005, all of the Company’s U.S. deferred tax assets, net of deferred tax liabilities, are subject to a full valuation allowance, which was
initially established in the fourth quarter of 2002. The realization of these assets is dependent on substantial future taxable income which, at December 25, 2005,
in management’s estimate, is not more likely than not to be achieved. In 2005, the net valuation allowance increased by $48 million primarily as a result of
continuing to provide valuation allowance for start-up losses at the Company’s new manufacturing operation in Germany. In 2004, the net valuation allowance
decreased by $37 million primarily due to the utilization of net operating loss carryforwards. In 2003, the valuation allowance for deferred tax assets increased by
$164 million to continue providing a valuation allowance against all of the Company’s net deferred tax assets in the United States. Approximately $118 million
and $62 million of the valuation allowance for deferred tax assets as of December 25, 2005 and December 26, 2004, respectively, is for the stock option
deduction arising from activity under the Company’s stock option plans, the benefits of which will increase capital in excess of par value when realized.
As of December 25, 2005, the Company had federal and state net operating loss carryforwards of approximately $67 million and $90 million, respectively.
The Company also had foreign loss carryforwards of approximately $428 million. The Company also had federal and state tax credit carry-forwards of
approximately $274 million and $95 million, respectively. The net operating loss and tax credit carry-forwards subject to expiration will expire at various dates
beginning in 2006 through 2025, if not utilized.
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Source: ADVANCED MICRO DEVIC, 10-K, February 27, 2006