Cisco 2013 Annual Report Download - page 126

The components of the deferred tax assets and liabilities are as follows (in millions):
July 27, 2013 July 28, 2012
ASSETS
Allowance for doubtful accounts and returns ............................................ $ 390 $ 433
Sales-type and direct-financing leases .................................................. 167 162
Inventory write-downs and capitalization ............................................... 216 127
Investment provisions .............................................................. 214 261
IPR&D, goodwill, and purchased intangible assets ....................................... 123 119
Deferred revenue .................................................................. 1,624 1,618
Credits and net operating loss carryforwards ............................................ 681 721
Share-based compensation expense .................................................... 783 1,059
Accrued compensation .............................................................. 486 481
Other ........................................................................... 560 583
Gross deferred tax assets ........................................................ 5,244 5,564
Valuation allowance ........................................................... (98) (60)
Total deferred tax assets ........................................................ 5,146 5,504
LIABILITIES
Purchased intangible assets .......................................................... (1,101) (809)
Depreciation ...................................................................... (169) (131)
Unrealized gains on investments ...................................................... (211) (222)
Other ........................................................................... (23) (34)
Total deferred tax liabilities ...................................................... (1,504) (1,196)
Total net deferred tax assets ................................................. $ 3,642 $ 4,308
As of July 27, 2013, the Company’s federal, state, and foreign net operating loss carryforwards for income tax purposes were
$259 million, $1.0 billion, and $357 million, respectively. A significant amount of the federal net operating loss carryforwards
relates to acquisitions and, as a result, is limited in the amount that can be recognized in any one year. If not utilized, the
federal net operating loss will begin to expire in fiscal 2018, and the foreign and state net operating loss carryforwards will
begin to expire in fiscal 2014. The Company has provided a valuation allowance of $79 million for deferred tax assets related
to foreign net operating losses that are not expected to be realized.
As of July 27, 2013, the Company’s federal, state, and foreign tax credit carryforwards for income tax purposes were
approximately $7 million, $640 million, and $13 million, respectively. The federal and foreign tax credit carryforwards will
begin to expire in fiscal 2014 and 2027, respectively. The majority of state tax credits can be carried forward indefinitely;
however, the Company has provided a valuation allowance of $19 million for deferred tax assets related to state tax credits
that are not expected to be realized.
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