Financial Statement Analysis of AMD

Summary

AMD (Advanced Micro Devices) is an American Semi conductor company which deals in computer chips and other computer elated technology. AMD 2011 financial results have showed that it implements share based compensation plans at different levels. Employee contribution also exists and both company and employees are contributing to it. Deferred taxes in terms of assets and liabilities have increased. Company is saving taxes by carryforward of Net operating losses.

Table of contents

Introduction5

1.Deferred Tax Assets and Liabilities5

1.1 Amount of deferred tax assets or deferred tax liabilities5

1.2 Reasons for rise in Deferred Taxes5

1.3 Information in the notes about deferred taxes6

1.4 Deferred Tax Asset6

1.5 Deferred Tax Liability7

2.Temporary and Permanent Differences7

2.1 Temporary differences in taxes7

2.2 Examples of Temporary and Permanent Differences8

2.2.1 Temporary Differences8

2.2.2 Permanent Differences9

3.Carryforward and Carryback9

3.1 Provision of Tax in Income Statement9

3.2 Information in footnotes10

3.3 Company position10

3.4 Guidelines for carryforward and carryback10

4.Defined Contribution Plan11

4.1 Amount for the plan11

4.2 Key elements of the plan explained in foot notes11

4.3 Difference between defined benefit and defined contribution plan12

5.Earnings per Share and Dilutive Securities12

5.1 EPS 201112

5.2 Dilutive securities12

5.3 Types of dilutive securities13

6. Share based Compensation14

6.1 Share bases compensation programs offered by AMD14

6.2 Compensation expense14

6.3 Types of Share based Compensation15

7. Cash flow Statement Method15

7.1 Method of Cash flow presentation15

7.2 Difference between Direct and Indirect Method15

8. Investing and Financing Activities16

8.1 Investing and financing activities of AMD16

8.2 Examples of investing and financing activities16

9. Non-Cash Transactions16

9.2 Non cash transactions on cash flow of AMD16

9.3 The Examples of non cash charges17

Financial Statement Analysis of AMD

Introduction

The importance of this subject is immense due to the in-depth understanding it provides regarding the financial statement analysis. This subject deals with all the components of the financial statements.

In this research paper, analysis have been carried out on deferred taxes, shared compensation benefits, cash flow statements and its selected components, permanent and temporary differences which arise due to difference in accounting and taxation valuation and defined contribution plan. AMD (Advanced Micro Devices) is a technology company which produces advanced computer chips. It operates at various locations across the globe. It is an American Multinational company.

Deferred Tax Assets and Liabilities

1.1 Amount of deferred tax assets or deferred tax liabilities

Deferred Tax Assets (2011) $3041 Million (2010) $3248 Million

Deferred Tax liabilities: (2011) $49 Million (2010) $12 Million

1.2 Reasons for rise in Deferred Taxes

Deferred tax rises over the period of time because they are mainly recorded for the future years. Similarly they keep on piling up as balances until and unless they are not written-down, received or paid

1.3 Information in the notes about deferred taxes

In the notes it has been mentioned that company's US and foreign deferred tax assets after deducting deferred tax liabilities were subjected to valuation allowance. These assets will be realized, depending on the future taxable income a company might earn. According to the managements estimate, the desired level of income can be achieved. The valuation allowance decrease in 2011 by $245 million is mainly due to decrease in deferred tax assets which are linked utilization of net operating ...