AMD 2008 Annual Report Download - page 129

has recorded a liability for these contracts on the Company’s consolidated balance sheet based on their settlement
values as if they were settled and the Company will monitor the situation to determine what further accounting
for these expired contracts is appropriate. In addition, the Company’s contracts with Lehman Brothers that have
not yet expired, are all in a loss position. Therefore the Company’s counterparty risk is minimal.
The Company is largely dependent on one supplier for its silicon-on-insulator (SOI) wafers that the
Company uses to manufacture its microprocessor products. The Company is also dependent on key chemicals
from a limited number of suppliers and relies on a limited number of foreign companies to supply the majority of
certain types of integrated circuit packages for the Company’s microprocessor products. Similarly, certain
non-proprietary materials or components such as memory, PCBs, substrates and capacitors used in the
manufacture of the Company’s graphics products are currently available from only a limited number of sources
and are often subject to rapid changes in price and availability. Interruption of supply or increased demand in the
industry could cause shortages and price increases in various essential materials. The credit market crisis and
other macro-economic challenges currently affecting the global economy may impact the Company’s key
suppliers who may reduce their output and become insolvent which may adversely impact the Company’s ability
to procure key materials. If the Company is unable to procure certain of these materials, the Company may have
to reduce its manufacturing operations. Such a reduction has in the past and could in the future have a material
adverse effect on the Company.
NOTE 7: Income Taxes
The provision (benefit) for income taxes consists of:
2008 2007 2006
(In millions)
Current:
U.S. Federal ........................................................... $ (6) $— $ 1
U.S. State and Local .................................................... 1 — 1
Foreign National and Local ............................................... (4) 42 23
Total ............................................................ $ (9) $ 42 $ 25
Deferred:
U.S. Federal ...........................................................$0$(11) $ 15
U.S. State and Local .................................................... — — —
Foreign National and Local ............................................... 77 (4) (17)
Total ............................................................ $ 77 $(15) $ (2)
Provision for income taxes ................................................... $ 68 $ 27 $ 23
Pre-tax loss from foreign operations was $1.5 billion in 2008, $1.1 billion in 2007 and $365 million in 2006.
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