Oracle 2008 Annual Report Download - page 118

Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2009
The components of the deferred tax assets and liabilities consist of the following:
May 31,
(in millions) 2009 2008
Deferred tax liabilities:
Unrealized gain on stock $ (130) $ (130)
Unremitted earnings of foreign subsidiaries (117) (110)
Acquired intangible assets (1,831) (2,143)
Other (1) (49)
Total deferred tax liabilities $ (2,079) $ (2,432)
Deferred tax assets:
Accruals and allowances $ 492 $ 436
Employee compensation and benefits 401 435
Differences in timing of revenue recognition 141 176
Depreciation and amortization 219 206
Tax credit and net operating loss carryforwards 1,201 1,315
Other 44 —
Total deferred tax assets $ 2,498 $ 2,568
Valuation allowance $ (137) $ (190)
Net deferred tax asset (liability) $ 282 $ (54)
Recorded as:
Current deferred tax assets $ 661 $ 853
Non-current deferred tax assets (in other assets) 145 360
Current deferred tax liabilities (in other current liabilities) (44) (49)
Non-current deferred tax liabilities (480) (1,218)
Net deferred tax asset (liability) $ 282 $ (54)
We provide for United States income taxes on the undistributed earnings and the other outside basis
temporary differences of foreign subsidiaries unless they are considered indefinitely reinvested outside the
United States. At May 31, 2009, the amount of temporary differences related to undistributed earnings and
other outside basis temporary differences of investments in foreign subsidiaries upon which United States
income taxes have not been provided was approximately $8.9 billion and $4.8 billion, respectively. If these
undistributed earnings were repatriated to the United States, or if the other outside basis differences were
recognized in a taxable transaction, they would generate foreign tax credits that would reduce the federal tax
liability associated with the foreign dividend or the otherwise taxable transaction. Assuming a full utilization
of the foreign tax credits, the potential deferred tax liability associated with these temporary differences of
undistributed earnings and other outside basis temporary differences would be approximately $2.3 billion and
$1.5 billion, respectively.
The valuation allowance was $137 million at May 31, 2009 and $190 million at May 31, 2008. The net
decrease is primarily attributable to the expiration of attributes of acquired entities, principally state attributes.
Substantially all of the valuation allowance relates to tax assets established in purchase accounting. Any
subsequent reduction of that portion of the valuation allowance and the recognition of the associated tax
benefits will be recorded to our provision for income taxes upon our adoption of Statement 141(R) in fiscal
2010.
At May 31, 2009, we had federal net operating loss carryforwards of approximately $1.2 billion. These losses
expire in various years between fiscal 2012 and fiscal 2028, and are subject to limitations on their utilization.
We have state
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Source: ORACLE CORP, 10-K, June 29, 2009 Powered by Morningstar® Document Research℠