AMD 2010 Annual Report Download - page 110

A reconciliation of the gross unrecognized tax benefits is as follows:
December 25,
2010
December 26,
2009
December 27,
2008
(In millions)
Balance at beginning of year .................................. $166 $180 $149
Increases for tax positions taken in prior years .................... — 11 54
Decreases for tax positions taken in prior years ................... (8) (18) (25)
Increases for tax positions taken in the current year ................ 7 6 7
Decreases for tax positions taken in the current year ............... — — —
Decreases for settlements with taxing authorities .................. (119) (8) —
Decreases for lapsing of the statute of limitations ................. (4) (5) (5)
Balance at end of year ....................................... $ 42 $166 $180
The amount of unrecognized tax benefits that would impact the effective tax rate was $8 million, $11
million and $31 million as of December 25, 2010, December 26, 2009, and December 27, 2008, respectively. As
of December 25, 2010, the Company had accrued interest and penalties related to unrecognized tax benefits of
$10 million and $1 million, 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 a reduction of interest expense of $6 million and a decrease of $4 million of penalty
expense in its consolidated statement of operations in 2010. 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. During the
12 months beginning December 26, 2010, the Company expects to reduce its unrecognized tax benefits by
approximately $5 million 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 resolutions and/or closure of open audits are highly uncertain.
As of December 25, 2010, the Canada Revenue Agency, or CRA, has completed its audit of ATI for the
years 2000 through 2004 and issued its final Notice of Assessment. During the second quarter of 2010, the U.S.
Internal Revenue Service completed its audit of the U.S. Federal income tax returns for the years ending 2004
through 2006 inclusive. As of December 25, 2010 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 $6 million of current
and long-term deferred tax assets, previously under a valuation allowance with $6 million of liabilities for
unrecognized tax benefits as of December 25, 2010.
102