AMD 2010 Annual Report Download - page 55

tax assets that we estimate will not ultimately be recoverable. We consider past performance, future expected
taxable income and prudent and feasible tax planning strategies in determining the need for a valuation
allowance.
In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of
complex tax rules and the potential for future adjustment of our uncertain tax positions by the Internal Revenue
Service or other taxing jurisdiction. If our estimates of these taxes are greater or less than actual results, an
additional tax benefit or charge will result. We recognize potential accrued interest and penalties related to
unrecognized tax benefits as interest expense and income tax expense, respectively.
Results of Operations
We intend the discussion of our financial condition and results of operations that follows to provide
information that will assist you in understanding our financial statements, the changes in certain key items in
those financial statements from year to year, the primary factors that resulted in those changes and how certain
accounting principles, policies and estimates affect our financial statements.
We review and assess operating performance using segment net revenues and operating income (loss)
before interest, other income (expense), net, equity in net loss of investee and income taxes. These performance
measures include the allocation of expenses to the operating segments based on management’s judgment.
In the first quarter of 2008, we reviewed and addressed operating performance using the following
reportable segments:
• the Computing Solutions segment, which included microprocessors, chipsets and embedded processors
and related revenue;
• the Graphics segment, which included graphics, video and multimedia products and related revenue; and
• the Consumer Electronics segment, which included products used in handheld devices, digital
televisions and other consumer electronics products, as well as revenue from royalties received in
connection with sales of game console systems that incorporate our graphics technology.
In the second quarter of 2008, we decided to divest our Handheld and Digital Television business units,
which were previously part of the Consumer Electronics segment. As a result, we classified these business units
as discontinued operations in our financial statements and began reviewing and assessing operating performance
using the following reportable segments:
• the Computing Solutions segment, which included microprocessors, chipsets and embedded processors
and related revenue; and
• the Graphics segment, which included graphics, video and multimedia products and related revenue as
well as revenue received in connection with the development and sale of game console systems that
incorporate our graphics technology.
In the fourth quarter of 2008, we determined that, based on ongoing negotiations related to the divestiture of
the Handheld business unit, the discontinued operations classification criteria for this business unit were no
longer met. As a result, we classified the results of the Handheld business unit back into continuing operations.
In the first quarter of 2009, as a result of the formation of GF, we began reviewing and assessing operating
performance using the following reportable segments:
• the Computing Solutions segment, which included microprocessors, chipsets and embedded processors
and related revenue;
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