Oracle 2009 Annual Report Download - page 129

Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2010
The components of our deferred tax liabilities and assets were as follows:
May 31,
(in millions) 2010 2009
Deferred tax liabilities:
Unrealized gain on stock $ (130) $ (130)
Unremitted earnings of foreign subsidiaries (100) (117)
Acquired intangible assets (1,748) (1,831)
Depreciation and amortization (24) —
Other — (1)
Total deferred tax liabilities $ (2,002) $ (2,079)
Deferred tax assets:
Accruals and allowances $ 629 $ 492
Employee compensation and benefits 649 401
Differences in timing of revenue recognition 67 141
Depreciation and amortization — 219
Tax credit and net operating loss carryforwards 2,916 1,201
Other 250 44
Total deferred tax assets $ 4,511 $ 2,498
Valuation allowance $ (649) $ (137)
Net deferred tax assets $ 1,860 $ 282
Recorded as:
Current deferred tax assets $ 1,159 $ 661
Non-current deferred tax assets (in other assets) 1,267 145
Current deferred tax liabilities (in other current liabilities) (142) (44)
Non-current deferred tax liabilities (424) (480)
Net deferred tax assets $ 1,860 $ 282
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, 2010, 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
$13.0 billion and $4.7 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 $3.6 billion and $1.5 billion, respectively.
Our net deferred tax assets increased from $282 million as of May 31, 2009 to $1.9 billion as of May 31, 2010, primarily as a result of our acquisition of Sun. We
believe it is more likely than not that the net deferred tax assets will be realized in the foreseeable future. Realization of our net deferred tax assets is dependent
upon our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences, net
operating loss carryforwards, and tax credit carryforwards. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if
estimates of future taxable income change.
The valuation allowance was $649 million at May 31, 2010 and $137 million at May 31, 2009. The net increase is primarily attributable to deferred taxes of Sun,
principally state and foreign attributes. Substantially all of the
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Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research℠