AMD 2008 Annual Report Download - page 130

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 27, 2008
and December 29, 2007 are as follows:
2008 2007
(In millions)
Deferred tax assets:
Net operating loss carryovers ............................. $ 841 $ 836
Deferred distributor income .............................. 35 57
Inventory valuation ..................................... 142 64
Accrued expenses not currently deductible .................. 160 134
Acquired intangibles .................................... 431 338
Tax deductible goodwill ................................. 675 337
Investments ........................................... 83 66
Federal and state tax credit carryovers ...................... 246 229
Foreign capitalized research and development costs ........... 134 185
Foreign research and development ITC credits ............... 201 217
Discount of convertible notes ............................. 527 0
Other ................................................ 237 175
Total deferred tax assets ............................. 3,712 2,638
Less: valuation allowance ................................ (3,427) (2,286)
285 352
Deferred tax liabilities:
Property, plant and equipment ............................ (181) (17)
Capitalized interest ..................................... (23) (15)
Acquired intangibles .................................... (8) (30)
Unrealized translation gain ............................... (28) (166)
Other ................................................ (21) (48)
Total deferred tax liabilities .......................... (261) (276)
Net deferred tax assets (liabilities) ............................. $ 24 $ 76
As of December 27, 2008 and December 29, 2007, non-current deferred tax assets of approximately $92
million and $27 million, respectively, were included in the caption “Other assets” on the Company’s
consolidated balance sheet. As of December 27, 2008, non-current deferred tax assets on the balance sheet
include $5 million of prepaid tax. As of December 29, 2007, current deferred tax liabilities of approximately
$8 million were included in the caption “Accrued liabilities” on the Company’s consolidated balance sheet.
As of December 27, 2008, substantially all of the Company’s U.S. and foreign deferred tax assets other than
German deferred tax assets, net of deferred tax liabilities, are subject to a full valuation allowance. The
realization of these assets is dependent on substantial future taxable income which, at December 27, 2008, in
management’s estimate, is not more likely than not to be achieved. In 2008, the net valuation allowance
increased by $1.1 billion primarily to provide valuation allowance for deferred tax assets related to tax deductible
goodwill, intangibles and discount of convertible notes . In 2007 the net valuation allowance increased by $1.2
billion primarily to provide valuation allowance for current year operating losses in the U.S. and Canada.
As of December 27, 2008 and December 29, 2007, the Company had $251 million and $247 million,
respectively, of deferred tax assets subject to a valuation allowance that related to excess stock option deductions,
which are not presented in the deferred tax asset balances since they have not met the realization criteria of SFAS
123R. As of December 27, 2008, $10 million of deferred tax assets subject to valuation allowance relate to a
deductible discount for tax only associated with the Company’s convertible notes. The tax benefit from these
deductions will increase additional paid in capital when realized.
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