Computer Associates 2009 Annual Report Download - page 103

of March 31, 2009 and 2008, respectively. The NOLs will expire as follows: $457 million between 2009 and 2028 and
$151 million may be carried forward indefinitely.
The valuation allowance decreased approximately $42 million and $13 million at March 31, 2009 and 2008,
respectively. The decrease in the valuation allowance at March 31, 2009 primarily relates to the utilization of NOLs. The
decrease in valuation allowance at March 31, 2008 primarily related to the amount of NOLs in foreign jurisdictions
which, in management’s judgment, were “more likely than not” to be realized.
No provision has been made for U.S. federal income taxes on the balance of unremitted earnings of the Company’s
foreign subsidiaries since the Company plans to permanently reinvest all such earnings outside the U.S. Unremitted
earnings totaled approximately $1,349 million and $1,110 million as of March 31, 2009 and 2008, respectively. It is not
practicable to determine the amount of tax associated with such unremitted earnings.
In 2006, the FASB issued FIN 48, which clarifies the accounting for uncertainty in tax positions. FIN 48 requires that the
Company recognize in its financial statements the impact of a tax position, if that position is more likely than not of
being sustained on audit, based on the technical merits of the position. The Company adopted the provisions of FIN 48
as of the beginning of fiscal year 2008.
A number of years may elapse before a particular uncertain tax position for which the Company has not recorded a
financial statement benefit is audited and finally resolved. The number of years with open tax audits varies depending on
the tax jurisdiction. The Company’s major taxing jurisdictions and the related open tax audits are as follows:
•United States — federal audits have been completed for all taxable years through 2004;
•Germany— audits have been completed for all taxable years through 2003;
•Italy — audits have been completed for all taxable years through 1999;
•Japan— audits have been completed for all taxable years through 2003; and
•United Kingdom — audits have been completed for all taxable years prior to 1999.
While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the
Company believes that its financial statements reflect the probable outcome of known uncertain tax positions. The
Company adjusts these reserves, as well as any related interest or penalties, in light of changing facts and
circumstances. To the extent a settlement differs from the amounts previously reserved, such difference would be
generally recognized as a component of the Company’s annual tax rate in the year of resolution.
As of March 31, 2009, the liability for income taxes associated with uncertain tax positions is approximately
$311 million (of which approximately $9 million is classified as current). In addition, the Company has recorded
approximately $31 million of deferred tax assets for future deductions of interest and state income taxes related to
these uncertain tax positions.
As of March 31, 2009, the total gross amount of reserves for income taxes, reported in other liabilities, is $247 million.
Any prospective adjustments to these reserves will be recorded as an increase or decrease to the Company’s provision
for income taxes and would impact its effective tax rate. In addition, the Company accrues in its income tax provision
interest and any associated penalties related to reserves for income taxes. The gross amount of interest and penalties
accrued, reported in total liabilities, is $64 million as of March 31, 2009, of which a reduction of $5 million is recognized
in fiscal year 2009. The gross amount accrued in such regard was $69 million as of March 31, 2008, of which $4 million
was recognized in fiscal year 2008.
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