AMD 2007 Annual Report Download - page 266

Spansion Inc.
Notes to Consolidated Financial Statements—(Continued)
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 and the balances for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31,
2006 and December 25, 2005 are as follows:
Dec. 31,
2006
Dec. 25,
2005
(In thousands)
Deferred tax assets:
Net operating loss carryovers $ 88,633 $ 73,579
Deferred distributor income 16,489 14,432
Inventory valuation 6,604 13,639
Accrued expenses not currently deductible 11,322 12,676
Pension benefits 6,342 957
Property, plant and equipment 31,929 24,254
Federal and state tax credit carryovers 13,346 1,990
Stock-based compensation 2,850 —
Other 9,855 949
Total deferred tax assets 187,370 142,476
Less: valuation allowance (158,168) (63,920)
29,202 78,556
Deferred tax liabilities:
Property, plant and equipment (8,703) (50,770)
Capitalized interest (4,452) (4,924)
Unrealized gain on investments — (2,552)
Unrealized gain on balance sheet translation (1,096) (3,482)
Other (188) (4,746)
Total deferred tax liabilities (14,439) (66,474)
Net deferred tax assets $ 14,763 $ 12,082
In 2006, the net valuation allowance increased by $94 million primarily due to losses and tax credits generated in the U.S. and the net reversal of certain
deferred tax liabilities from the prior year. In 2005, the net valuation allowance increased by $50 million primarily due to losses incurred in the U.S. and an
increase in reinvestment allowances in Malaysia. In 2004, the net valuation allowance decreased by $6.1 million due to the realization of pension benefits and the
utilization of tax loss carryforwards in China. In all periods discussed above, management concluded that valuation allowances were necessary in certain
jurisdictions due to the Company’s historic net operating losses in those jurisdictions.
As of December 31, 2006, the Company had U.S. federal and state net operating loss carryforwards of approximately $241 million and $17, million
respectively. These net operating losses, if not utilized, expire from 2016 to 2026. The Company had foreign net operating loss carryforwards of approximately
$8 million that will expire in 2010. The Company also had U.S. federal and state tax credit carryovers of $17.2 million which expire from 2023 to 2026. Included
in this amount are California state tax credits of $10.5 million which can be carried forward indefinitely.
If the Company conducts an offering of its common stock, it may experience an “ownership change” as defined in the Internal Revenue Code such that its
ability to utilize its federal net operating loss carryforwards of approximately $241 million as of December 31, 2006 may be limited under certain provisions of
the Internal
Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008