Computer Associates 2006 Annual Report Download - page 152
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Note 8 — Income Taxes (Continued)
The tax expense (benefit) from continuing operations is reconciled to the tax expense (benefit) from continuing
operations computed at the federal statutory rate as follows:
2006 2005 2004
Year Ended March 31,
(restated) (restated)
(in millions)
Tax expense (benefit) at U.S. federal statutory rate ................ $42 $12 $(40)
Increase in tax expense resulting from:
Nondeductible portion of class action settlement and litigation
charge ............................................. — 3 10
Federal tax cost of repatriation under the American Jobs Creation
Act................................................ — 55 —
U.S. share-based compensation ............................. 6 — 6
Effect of international operations, including foreign export benefit
and nondeductible share-based compensation ................. (84) (72) (27)
Tax credits ............................................ (51) — —
Foreign export benefit refund .............................. — (26) —
State taxes, net of federal tax benefit ......................... 1 5 (5)
Valuation allowance ..................................... 21 15 22
Other, net ............................................. 30 15 8
$(35) $ 7 $(26)
Deferred income taxes reflect the impact 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:
2006 2005
Year Ended
March 31,
(restated)
(In millions)
Deferred tax assets:
Modified accrual basis accounting . . . ............................... $120 $ —
Acquisition accruals ............................................ 13 12
Share-based compensation ........................................ 105 138
Restitution fund/class action settlement .............................. 1 51
Accrued expenses .............................................. 85 59
Net operating losses ............................................ 286 147
Valuation allowance............................................. (154) (102)
Purchased intangibles amortizable for tax purposes...................... 62 69
Depreciation .................................................. 28 22
Other ....................................................... 56 40
Total deferred tax assets ........................................... 602 436
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