AMD 2009 Annual Report Download - page 114

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A reconciliation of the gross unrecognized tax benefits is as follows:
(millions)
Balance at December 28, 2008 ......................................... $180
Increases for tax positions taken in prior years ............................ 11
Decreases for tax positions taken in prior years ............................ (18)
Increases for tax positions taken in the current year ........................ 6
Decreases for tax positions taken in the current year ........................ —
Decreases for settlements with taxing authorities .......................... (8)
Decreases for lapsing of the statute of limitations .......................... (5)
Balance at December 26, 2009 ......................................... $166
Balance at December 29, 2007 ......................................... $149
Increases for tax positions taken in prior years ............................ 54
Decreases for tax positions taken in prior years ............................ (25)
Increases for tax positions taken in the current year ........................ 7
Decreases for tax positions taken in the current year ........................ —
Decreases for settlements with taxing authorities .......................... —
Decreases for lapsing of the statute of limitations .......................... (5)
Balance at December 27, 2008 ......................................... $180
The amount of unrecognized tax benefits that would impact the effective tax rate was $11 million and $31
million as of December 26, 2009 and December 27, 2008, respectively. The Company recognizes potential
accrued interest and penalties related to unrecognized tax benefits as interest expense and income tax expense,
respectively. As of December 26, 2009, the Company had accrued interest and penalties related to unrecognized
tax benefits of $16 million and $5 million, respectively. As of December 27, 2008, the Company had accrued
interest and penalties related to unrecognized tax benefits of $14 million and $26 million, respectively.
The Company recorded net interest expense of $2 million and a decrease of $24 million of penalty expense
in its consolidated statement of operations in 2009. The Company recorded net interest expense of $5 million in
its consolidated statement of operations in 2008. The Company recorded a decrease of $10 million net penalty
expense in its consolidated statement of operations and a reduction of $6 million of penalties was offset to
goodwill in 2008. The reduction of penalties that were offset to goodwill was related to the expiration of the
statutes of limitations in certain foreign jurisdictions. The Company recorded net interest expense of $3 million
in its consolidated statement of operations and a reduction of $15 million of interest was offset to goodwill in
2007. The Company recorded $2 million net penalty expense in its operating statement and a reduction of
$4 million of penalties was offset to goodwill in 2007.
During the 12 months beginning December 27, 2009, the Company expects to reduce its unrecognized tax
benefits by approximately $96 million ($9 million net of deferred tax gross up) as a result of the expiration of
certain statutes of limitation and audit resolutions. The Company does not believe it is reasonably possible that
other unrecognized tax benefits will materially change in the next 12 months. However, the resolution and/or
closure on open audits is highly uncertain.
As of December 26, 2009, the Canada Revenue Agency, or CRA, has completed its audit of ATI for the
years 2000 through 2004 but had not yet issued its final Notice of Assessment. The U.S. Internal Revenue
Service is auditing AMD’s tax years 2004 through 2006. As of December 26, 2009 the German tax authorities
are auditing AMD’s German subsidiaries for the tax years 2001 through 2004. AMD and its subsidiaries have
several foreign, foreign provincial, and U.S. state audits in process at any one point in time. The Company has
provided for uncertain tax positions that require a liability under the adopted method to account for uncertainty in
income taxes. As a result of the application of uncertainty in income taxes in ASC 740, the Company has
recognized $102 million of current and long-term deferred tax assets, previously under a valuation allowance
with $102 million of liabilities for unrecognized tax benefits as of December 26, 2009.
106