Computer Associates 2010 Annual Report Download - page 90

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 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, 2010, the liability for income taxes associated with uncertain tax positions, including interest and penalties,
is approximately $401 million (of which approximately $3 million is classified as current). In addition, the Company has
recorded approximately $37 million of deferred tax assets for future deductions of interest and state income taxes related to
these uncertain tax positions.
As of March 31, 2010, the total gross amount of reserves for income taxes, reported in other liabilities, is $326 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 affect its effective tax rate. The gross amount of interest and penalties accrued, reported in total liabilities
was approximately $75 million, $64 million and $69 million for the fiscal years ending March 31, 2010, 2009 and 2008,
respectively. The amount of interest and penalties recognized was approximately $9 million, $5 million and $4 million for the
fiscal years ending March 31, 2010, 2009 and 2008, respectively.
A roll-forward of the Company’s uncertain tax positions for all federal, state and foreign tax jurisdictions is as follows:
(IN MILLIONS) 2010 2009
MARCH 31,
Balance, beginning of year $ 247 $ 211
Additions for tax positions related to the current year 68 26
Additions for tax positions from prior years 24 82
Reductions for tax positions from prior years (1) (4)
Settlement payments (16) (54)
Statute of limitations expiration (1) (4)
Translation and other 5(10)
Balance, end of year $ 326 $ 247
Note 11 — stock plans
Share-based incentive awards are provided to employees under the terms of the Company’s equity incentive compensation plans
(the Plans). The Plans are administered by the Compensation and Human Resources Committee of the Board of Directors (the
Committee). Awards under the Plans may include at-the-money stock options, premium-priced stock options, restricted stock
(RSAs), restricted stock units (RSUs), performance share units (PSUs) or any combination thereof. The non-employee members of
the Company’s Board of Directors receive deferred stock units under separate director compensation plans. The Company
typically settles awards under employee and non-employee director compensation plans with stock held in treasury.
All Plans, with the exception of acquired companies’ stock plans, have been approved by the Company’s shareholders.
Currently, the Company grants annual performance cash incentive bonuses, long-term performance bonuses, both qualified
and non-statutory stock options, RSAs, RSUs and other equity-based awards under the 2007 Incentive Plan and long-term
performance bonuses under the 2002 Incentive Plan, as amended and restated. These plans are collectively referred to in the
following discussion as “the Incentive Plans.” Under the Incentive Plans the awards can be granted to select employees and
consultants up to approximately 45 million and 30 million shares of common stock under the Company’s 2002 and 2007
Incentive Plans, respectively. Under the 2007 Incentive Plan no more than 10 million incentive stock options may be granted.
The Plans will continue until the earlier of (i) termination by the Board or (ii) the date on which all of the shares available for
issuance under the plan have been issued and restrictions on issued shares have lapsed. Equity vesting periods are generally
two to three years for all of the Plans. Generally, options expire 10 years from the date of grant unless otherwise terminated.
Deferred shares for director fees to the non-employee directors are granted under the 2003 Compensation Plan for Non-
Employee Directors, as amended.
In the fiscal year ended March 31, 2010, the tax benefit from share-based incentive awards provided to employees that was
recorded for book purposes exceeded that which was currently deductible for tax purposes by $23 million. The tax effect of
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