AMD 2012 Annual Report Download - page 102

A reconciliation of the gross unrecognized tax benefits is as follows:
2012 2011 2010
(In millions)
Balance at beginning of year ...................................... $ 69 $ 42 $166
Increases for tax positions taken in prior years ........................ 3 28 —
Decreases for tax positions taken in prior years ....................... (4) (4) (8)
Increases for tax positions taken in the current year .................... 3 8 7
Decreases for settlements with taxing authorities ...................... (15) (5) (119)
Decreases for lapsing of the statute of limitations ...................... — — (4)
Balance at end of year ........................................... $ 56 $ 69 $ 42
The amount of unrecognized tax benefits that would impact the effective tax rate was $2 million, $4 million,
and $8 million as of December 29, 2012, December 31, 2011 and December 25, 2010, respectively. The
Company had accrued interest related to unrecognized tax benefits of $2 million as of December 29, 2012 and
December 31, 2011 and $10 million as of December 25, 2010. The Company had no accrued penalties related to
unrecognized tax benefits as of December 29, 2012 and December 31, 2011 and $1 million of accrued penalties
as of December 25, 2010. The Company recognizes potential accrued interest and penalties to unrecognized tax
benefits as interest expense and income tax expense, respectively.
The Company had no charge related to interest expense or penalty expense in its consolidated statement of
operations in 2012. The Company recorded a reduction of interest expense of $2 million and a decrease of
$1 million of penalty expense in its consolidated statement of operations in 2011. 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. During the 12 months beginning December 30, 2012, the Company does not
expect to reduce its unrecognized tax benefits. 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, had completed its audit of ATI for the
years 2000 through 2004 and issued its final Notice of Assessment. The CRA is currently auditing international
transactions for the years 2005 through 2010. 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 31, 2011 the German tax authorities completed their audit of AMD’s former German
subsidiaries for the tax years 2001 through 2004. The Company was notified that the German tax authorities will
begin an audit in 2013. 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. The Company has not recognized any
current or long-term deferred tax assets under a valuation allowance as a result of the application of uncertainty
in income taxes in ASC 740 for unrecognized tax benefits as of December 29, 2012.
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