Computer Associates 2010 Annual Report Download - page 89

Deferred income taxes reflect the effect of temporary differences between the carrying amounts of assets and liabilities
recognized for financial reporting purposes and the amounts recognized for tax purposes. The tax effects of the temporary
differences are as follows:
(IN MILLIONS) 2010 2009
MARCH 31,
Deferred tax assets:
Modified accrual basis accounting $ 461 $ 445
Share-based compensation 76 84
Accrued expenses 76 73
Net operating losses 153 179
Purchased intangibles amortizable for tax purposes 17 24
Depreciation —20
Deductible state tax and interest benefits 37 31
Purchased software —13
Other 66 33
Total deferred tax assets 886 902
Valuation allowances (74) (76)
Total deferred tax assets, net of valuation allowances 812 826
Deferred tax liabilities:
Purchased software 34 —
Depreciation 1—
Other intangible assets 75 86
Capitalized development costs 172 135
Total deferred tax liabilities 282 221
Net deferred tax asset $ 530 $ 605
In management’s judgment, it is more likely than not that the total deferred tax assets, net of valuation allowance, of
approximately $812 million will be realized as reductions to future taxable income or by utilizing available tax planning
strategies. Worldwide net operating loss carryforwards (NOLs) totaled approximately $562 million and $608 million as of
March 31, 2010 and 2009, respectively. The NOLs will expire as follows: $421 million between 2011 and 2029 and
$141 million may be carried forward indefinitely.
The valuation allowance decreased approximately $2 million and $42 million at March 31, 2010 and 2009, respectively. The
decrease in the valuation allowance at March 31, 2010 and at March 31, 2009 primarily relates to the likelihood of utilization
of NOLs.
No provision has been made for U.S. federal income taxes on approximately $1,067 million and $958 million as of March 31,
2010 and 2009, respectively, of unremitted earnings of the Company’s foreign subsidiaries since the Company plans to
permanently reinvest all such earnings outside the U.S. It is not practicable to determine the amount of tax associated with
such unremitted earnings.
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 effectively settled for all taxable years through 2006;
•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 through 2005.
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