Computer Associates 2008 Annual Report Download - page 109

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to income tax liabilities is included in income tax expense. The Company had approximately $40 million of accrued
interest expense, net of approximately $23 million in tax benefits as of the date of adoption of FIN 48.
As of March 31, 2008, the nature of the uncertain tax positions expected to be resolved within the next twelve
(12) months relate primarily to various U.S. federal and state income tax audits and are recorded in the “Federal, state
and foreign income taxes payable — current” line in the Consolidated Balance Sheets. The Company’s estimate of
potential changes to its uncertain tax positions within the next twelve months is a reduction of up to approximately
$79 million. Such decrease would be primarily attributable to the outcomes of certain ongoing tax audits and/or the
expiration of certain statutes of limitations. As of March 31, 2008, the liability for income taxes associated with
uncertain tax positions was approximately $280 million (of which approximately $55 million was classified as current)
and the deferred tax assets arising from such uncertain tax positions (from interest and state income tax deductions)
were approximately $42 million.
The table below excludes the impact of interest in summarizing adjustments to unrecognized tax benefits for fiscal year
2008.
Balance, beginning of year $ 238
FIN 48 adoption adjustment to retained earnings (10)
Adjusted balance, beginning of year 228
Additions for tax positions related to the current year 19
Additions for tax positions from prior years 27
Reductions for tax positions from prior years (32)
Settlements with tax authorities (27)
Statute of limitations expiration (4)
Currency translation adjustment —
Balance, end of year $ 211
If the Company recognized all these tax benefits, the net impact on our income tax provision would have been a
decrease of approximately $238 million. Any prospective adjustments to the Company’s reserves for income taxes
relating to prior years will be recorded as an increase or decrease to the Company’s provision for income taxes and
affect the Company’s effective tax rate. In addition, the Company included accrued interest and penalties related to
uncertain tax positions in the Company’s tax provision. The gross amount of interest accrued was approximately
$69 million as of March 31, 2008.
The number of years with open tax audits varies from jurisdiction to jurisdiction. The Company has historically viewed
its material tax jurisdictions as including the U.S., Japan, Germany, Italy and the United Kingdom. The earliest years still
open and subject to ongoing audits or tax proceedings as of the date of adoption of FIN 48 in respect of such
jurisdictions were as follows: (i) United States — 2001; (ii) Japan — 2000; (iii) Germany — 2003; (iv) Italy — 1999; and
(v) the United Kingdom. — 1999.
Note 10 — Stock Plans
Share-based incentive awards are provided to employees under the terms of the Company’s equity 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 awards (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.
RSAs are stock awards issued to employees that are subject to specified restrictions and a risk of forfeiture. The
restrictions typically lapse over a two or three year period. The fair value of the awards is determined and fixed based on
the quoted market value of the Company’s stock on the grant date.
RSUs are stock awards issued to employees that entitle the holder to receive shares of common stock as the awards
vest, typically over a two or three year period. RSUs are not entitled to dividend equivalents. The fair value of the awards
is determined and fixed based on the quoted market value of the Company’s stock on the grant date reduced by the
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