AMD 2015 Annual Report Download - page 95

The table below displays reconciliation between statutory federal income taxes and the total provision
(benefit) for income taxes.
2015 2014 2013
(In millions)
Statutory federal income tax benefit at 35% rate .............. $(226) $(139) $(26)
State taxes, net of federal benefit .......................... 1 1 1
Foreign (income) expense at other than U.S. rates ............. 9 1 15
U.S. valuation allowance generated ........................ 232 144 22
Credit monetization ..................................... (2) (2) (3)
Provision for income taxes ............................... $ 14 $ 5 $ 9
The Company has made no provision for U.S. income taxes on approximately $307 million of cumulative
undistributed earnings of certain foreign subsidiaries through December 26, 2015 because it is the Company’s
intention to indefinitely reinvest such earnings. If such earnings were distributed, the Company would incur
additional income taxes of approximately $107 million (after an adjustment for foreign tax credits). These
additional income taxes may not result in income tax expense or a cash payment to the Internal Revenue Service,
but may result in the utilization of deferred tax assets that are currently subject to a valuation allowance.
The Company partially recognized undistributed earnings within certain subsidiaries in China of $56 million
through December 26, 2015 because the announcement in October 2015 of an agreement to sell 85% of the
ownership interest in the subsidiary operating a factory in Suzhou causes the Company to modify its judgment
that associated undistributed earnings of that subsidiary’s holding company in China will remain indefinitely
reinvested. A future distribution of these earnings will give rise to an associated future withholding tax of $6
million. This is recognized as an income tax expense within the 2015 income tax provision. The same event
results in the Chinese holding company recognizing the future benefit of tax losses available to offset taxable
gains when the deal closes. The future benefit of those losses is $7 million and is a reduction in the 2015 income
tax provision. The net effect of this event in the 2015 income tax provision is a reduction of $1 million.
The Company’s operations in Malaysia currently operate under a tax holiday, which will expire in 2018.
This tax holiday may be extended if specific conditions are met. The net impact of the tax holiday did not
decrease the Company’s net loss in 2015 because the Company’s operations in Malaysia operated at a net loss.
The net impact of tax holidays decreased the Company’s net loss by $2 million in 2014, less than $.01 per share,
diluted, and decreased the Company’s net loss by $1 million in 2013, less than $.01 per share, diluted.
A reconciliation of the gross unrecognized tax benefits is as follows:
2015 2014 2013
(In millions)
Balance at beginning of year ................................ $28 $ 52 $56
Increases for tax positions taken in prior years .................. 11 1 1
Decreases for tax positions taken in prior years .................. (1) — (2)
Increases for tax positions taken in the current year .............. 2 2 4
Decreases for settlements with taxing authorities ................ (2) (27) (7)
Balance at end of year ..................................... $38 $ 28 $52
The amount of unrecognized tax benefits that would impact the effective tax rate was $4 million, $3 million
and $3 million as of December 26, 2015, December 27, 2014 and December 28, 2013, respectively. The
Company had no or immaterial amounts of accrued interest and no accrued penalties related to unrecognized tax
benefits as of December 26, 2015, December 27, 2014 and December 28, 2013. The Company recognizes the
accrued interest and penalties to unrecognized tax benefits as interest expense and income tax expense,
respectively.
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