AMD 2006 Annual Report Download - page 122

Table of Contents
The table below displays reconciliation between statutory federal income taxes and the total provision (benefit) for income taxes.
Tax Rate
(In millions except
for percentages)
2006
Statutory federal income tax expense $ (50) (35.0)%
State taxes, net of federal benefit 1 0.7%
Foreign income at other than U.S. rates (19) (13.3)%
Benefit for foreign operating losses and deductions utilized (58) (40.6)%
Valuation allowance 149 104.2%
$ 23 16.0%
2005
Statutory federal income tax expense $ 55 35.0%
State taxes, net of federal benefit 1 0.5%
Foreign income at other than U.S. rates (15) (9.4)%
Foreign losses not benefited 84 53.0%
Benefit for net operating losses utilized (132) (83.3)%
$ (7) (4.2)%
2004
Statutory federal income tax expense $ 34 35.0%
State taxes, net of federal benefit — — %
Foreign income at other than U.S. rates (21) (21.3)%
Foreign losses not benefited 22 22.9%
Valuation allowance (38) (39.5)
Tax on repatriated dividends 9 8.9%
$ 6 6.0%
The Company has made no provision for U.S. income taxes on approximately $334 million of cumulative undistributed earnings of certain foreign
subsidiaries through December 31, 2006 because it is the Company’s intention to permanently reinvest such earnings. If such earnings were distributed, the
Company would incur additional income taxes of approximately $101 million (after an adjustment for foreign tax credits). These additional income taxes may
not result in income tax expense or a cash payment to the Internal Revenue Service, but may result in the utilization of deferred tax assets that are currently
subject to a valuation allowance.
The Company’s operations in Singapore and China currently operate under tax holidays, which will expire in whole or in part at various dates through
2014. Certain of the tax holidays may be extended if specific conditions are met. The net impact of these tax holidays was to decrease the Company’s net loss by
approximately $3.7 million in fiscal year 2006 (less than $0.01 per share, diluted), to increase net income by approximately $1.2 million in fiscal year 2005 (less
than $0.01 per share, diluted) and to increase net income by approximately $3.7 million in fiscal year 2004 (approximately $0.01 per share, diluted).
The Canadian Revenue Agency, or CRA, is auditing ATI for the years 1999 - 2004 with respect to transactions between ATI and its subsidiaries. The audit
is still in process. The U.S. Internal Revenue Service is not currently auditing AMD. AMD and its subsidiaries have several foreign, foreign provincial, and U.S.
state audits in process at any one point in time. Necessary tax reserves exist at year-end for the above examinations.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007