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Notes to Consolidated Financial Statements
Although timing of the resolution of audits is highly uncertain, the Company does not believe it is reasonably possible that the
total amount of unrecognized tax benefits as of July 31, 2010 will materially change in the next 12 months.
(c) Deferred Tax Assets and Liabilities
The following table presents the breakdown between current and noncurrent net deferred tax assets (in millions):
July 31, 2010 July 25, 2009
Deferred tax assets—current $ 2,126 $ 2,320
Deferred tax liabilities—current (87) (12)
Deferred tax assets—noncurrent 2,079 2,122
Deferred tax liabilities—noncurrent (276) (57)
Total net deferred tax assets $ 3,842 $ 4,373
The components of the deferred tax assets and liabilities are as follows (in millions):
July 31, 2010 July 25, 2009
ASSETS
Allowance for doubtful accounts and returns $ 248 $ 300
Sales-type and direct-financing leases 224 226
Inventory write-downs and capitalization 176 238
Investment provisions 329 333
IPR&D, goodwill, and purchased intangible assets 191 222
Deferred revenue 1,752 1,475
Credits and net operating loss carryforwards 752 817
Share-based compensation expense 970 809
Accrued compensation 339 405
Other 517 600
Gross deferred tax assets 5,498 5,425
Valuation allowance (76) (66)
Total deferred tax assets 5,422 5,359
LIABILITIES
Purchased intangible assets (1,224) (639)
Depreciation (120) (288)
Unrealized gains on investments (185) (12)
Other (51) (47)
Total deferred tax liabilities (1,580) (986)
Total net deferred tax assets $ 3,842 $ 4,373
As of July 31, 2010, the Company’s federal, state, and foreign net operating loss carryforwards for income tax purposes were $325
million, $1.6 billion, and $252 million, respectively. If not utilized, the federal net operating loss carryforwards will begin to expire in
fiscal 2019, the state net operating loss carryforwards will begin to expire in fiscal 2011, and the foreign net operating loss
carryforwards will begin to expire in fiscal 2012. As of July 31, 2010, the Company’s federal and state tax credit carryforwards for
income tax purposes were approximately $8 million and $584 million, respectively. If not utilized, the federal and state tax credit
carryforwards will begin to expire in fiscal 2011.
15. Segment Information and Major Customers
The Company designs, manufactures, and sells Internet Protocol (IP)-based networking and other products related to the
communications and IT industry and provides services associated with these products and their use. Cisco products include
routers, switches, advanced technologies, and other products. These products, primarily integrated by Cisco IOS Software, link
geographically dispersed local-area networks (LANs), metropolitan-area networks (MANs) and wide-area networks (WANs).
74 Cisco Systems, Inc.