Citrix 2013 Annual Report Download - page 94

CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-30
The Company does not expect to remit earnings from its foreign subsidiaries. Undistributed earnings of the Company’s
foreign subsidiaries amounted to approximately $1,238.0 million at December 31, 2013. Those earnings are considered to be
permanently reinvested and, accordingly, no U.S. federal and state income taxes have been provided thereon. Upon distribution
of those earnings in the form of dividends or otherwise, the Company could be subject to both U.S. income taxes (subject to an
adjustment for foreign tax credits) and withholding taxes payable to various foreign countries. The Company maintains certain
strategic management and operational activities in overseas subsidiaries and its foreign earnings are taxed at rates that are
generally lower than in the United States.
At December 31, 2013, the Company had $220.0 million of remaining net operating loss carry forwards in the United
States from acquisitions. The utilization of these net operating loss carry forwards are limited in any one year pursuant to
Internal Revenue Code Section 382 and begin to expire in 2019. At December 31, 2013, the Company had $52.0 million of
remaining net operating loss carry forwards in foreign jurisdictions that do not expire.
At December 31, 2013, the Company had research and development tax credit carry forwards of approximately $55.6
million that begin to expire in 2024.
A reconciliation of the Company’s effective tax rate to the statutory federal rate is as follows:
Year Ended December 31,
2013 2012 2011
Federal statutory taxes 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefit 1.2 1.9 1.7
Foreign operations (14.8)(10.2)(14.5)
Permanent differences (1.1)(2.0) 1.2
Tax credits (10.9)(4.7)(7.1)
Stock option compensation 0.4 0.1 0.1
Change in accruals for uncertain tax positions 3.3 (5.3) 1.4
Other (0.6)(0.7)(0.4)
12.5% 14.1% 17.4%
The Company’s effective tax rate generally differs from the U.S. federal statutory rate of 35% due primarily to lower tax
rates on earnings generated by the Company’s foreign operations that are taxed primarily in Switzerland. The Company has not
provided for U.S. taxes for those earnings because it plans to reinvest all of those earnings indefinitely outside the United
States. It was not practicable to determine the amount of unrecognized deferred tax liability for temporary differences related to
investments in foreign subsidiaries.
The Company and certain of its subsidiaries are subject to U.S. federal income taxes, as well as income taxes of multiple
state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-
U.S. income tax examinations by tax authorities for years prior to 2009.
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2013
and 2012 is as follows (in thousands):
Balance at January 1, 2012 $ 79,199
Additions based on tax positions related to the current year 2,459
Additions for tax positions of prior years 9,558
Reductions related to the expiration of statutes of limitations (33,594)
Settlements (13,718)
Balance at December 31, 2012 43,904
Additions based on tax positions related to the current year 13,694
Additions for tax positions of prior years 10,611
Reductions related to the expiration of statutes of limitations (2,116)
Settlements (2,301)
Balance at December 31, 2013 $ 63,792