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The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of
income tax expense, consistent with its policy prior to the adoption of FASB Interpretation No. 48, codified as ASC
740-10-25. Interest and penalties related to unrecognized tax benefits increased by $17 million to $135 million for the
calendar year ended December 31, 2014, increased by $17 million to $118 million for the calendar year ended
December 31, 2013, increased by $20 million to $99 million for the fiscal year ended November 30, 2012 and
increased by $2 million to $101 million for the one month ended December 31, 2012. The changes primarily relate to
the revaluation of existing federal and state tax issues.
The Company is subject to examination by the Internal Revenue Service ("IRS") and the tax authorities in various
state and foreign tax jurisdictions. The tax years under examination vary by jurisdiction. The IRS is currently examining
2011 through 2012.
The Company is pursuing an administrative appeal of the IRS’s proposed assessment for the years 1999 through
2005. It is reasonably possible that a settlement of the IRS appeal of the years 1999 through 2005 and certain state
audits may be made within 12 months of the reporting date. In the second quarter of 2014, the IRS issued a Notice of
Proposed Adjustment for the years 2006 through June 30, 2007, which was accepted by the Company, resulting in the
recognition of previously unrecognized tax benefits for those years. At this time, as a result of this settlement, the
Company believes it is reasonably possible that a reduction of unrecognized tax benefits in the range of $90 million to
$335 million could be recognized. The Company is also pursuing an administrative appeal of the IRS’s proposed
assessment for the years 2008 through 2010.
The Company regularly assesses the likelihood of additional assessments or settlements in each of the taxing
jurisdictions resulting from these and subsequent years' examinations. The Company believes that its reserves are
sufficient to cover any tax, penalties and interest that could result from such examinations.
At December 31, 2014, the Company had net operating loss carryforwards of $107 million for foreign purposes
which do not expire.
16. Earnings Per Share
The following table presents the calculation of basic and diluted earnings per share ("EPS") (in millions, except
per share amounts):
For the Calendar Years Ended
December 31, For the Fiscal
Year Ended
November 30,
2012
For the One
Month Ended
December 31,
2012
2014 2013
Numerator:
Net income ........................................................................................ $ 2,323 $ 2,470 $ 2,345 $ 170
Preferred stock dividends ..................................................................... (37) (37) (5) —
Net income available to common stockholders ................................... 2,286 2,433 2,340 170
Income allocated to participating securities ............................................ (16) (19) (22) (2)
Net income allocated to common stockholders ................................... $ 2,270 $ 2,414 $ 2,318 $ 168
Denominator:
Weighted-average shares of common stock outstanding ......................... 462 485 519 498
Effect of dilutive common stock equivalents ............................................ 1 2 1 1
Weighted-average shares of common stock outstanding and common
stock equivalents ........................................................................... 463 487 520 499
Basic earnings per common share ............................................................ $ 4.91 $ 4.97 $ 4.47 $ 0.34
Diluted earnings per common share ......................................................... $ 4.90 $ 4.96 $ 4.46 $ 0.34
Anti-dilutive securities were not material and had no impact on the computation of diluted EPS for any of the
calendar years ended December 31, 2014 and 2013, fiscal year ended November 30, 2012 and one month ended
December 31, 2012.