Cisco 2012 Annual Report Download - page 136

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audits for returns covering tax years through fiscal 2000 and state and local income tax audits for returns
covering tax years through fiscal 1997.
During fiscal 2010, the Ninth Circuit withdrew its prior holding and reaffirmed the 2005 U.S. Tax Court ruling in
Xilinx, Inc. v. Commissioner. As a result of this final decision in fiscal 2010, the Company decreased the amount
of gross unrecognized tax benefits by approximately $220 million and decreased the amount of accrued interest
by $218 million.
The Company regularly engages in discussions and negotiations with tax authorities regarding tax matters in
various jurisdictions. The Company believes it is reasonably possible that certain federal, foreign, and state tax
matters may be concluded in the next 12 months. Specific positions that may be resolved include issues involving
transfer pricing and various other matters. The Company estimates that the unrecognized tax benefits at July 28,
2012 could be reduced by approximately $1.1 billion 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 28, 2012 July 30, 2011
Deferred tax assets—current .............................................. $2,294 $2,410
Deferred tax liabilities—current ........................................... (123) (131)
Deferred tax assets—noncurrent ........................................... 2,270 1,864
Deferred tax liabilities—noncurrent ........................................ (133) (264)
Total net deferred tax assets ........................................... $4,308 $3,879
The components of the deferred tax assets and liabilities are as follows (in millions):
July 28, 2012 July 30, 2011
ASSETS
Allowance for doubtful accounts and returns ................................. $ 433 $ 413
Sales-type and direct-financing leases ....................................... 162 178
Inventory write-downs and capitalization .................................... 127 160
Investment provisions ................................................... 261 226
IPR&D, goodwill, and purchased intangible assets ............................. 119 106
Deferred revenue ....................................................... 1,618 1,634
Credits and net operating loss carryforwards .................................. 721 713
Share-based compensation expense ......................................... 1,059 1,084
Accrued compensation ................................................... 481 507
Other ................................................................. 583 590
Gross deferred tax assets ............................................. 5,564 5,611
Valuation allowance ................................................. (60) (82)
Total deferred tax assets .............................................. 5,504 5,529
LIABILITIES
Purchased intangible assets ............................................... (809) (997)
Depreciation ........................................................... (131) (298)
Unrealized gains on investments ........................................... (222) (265)
Other ................................................................. (34) (90)
Total deferred tax liabilities ........................................... (1,196) (1,650)
Total net deferred tax assets ....................................... $ 4,308 $ 3,879
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