Computer Associates 2012 Annual Report Download - page 97

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A roll-forward of the Company’s uncertain tax positions for all U.S. federal, state and foreign tax jurisdictions is as follows:
AT MARCH 31,
(in millions) 2012 2011
Balance, beginning of year $ 522 $ 415
Additions for tax positions related to the current year 26 52
Additions for tax positions from prior years 21 127
Reductions for tax positions from prior years (17) (33)
Settlement payments (19) (32)
Statute of limitations expiration (6) (8)
Translation and other (4) 1
Balance, end of year $ 523 $ 522
The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $410 million and $400 million at
March 31, 2012 and 2011, respectively. The gross amount of interest and penalties accrued, reported in “Total liabilities,” was
approximately $118 million, $98 million and $82 million for fiscal years 2012, 2011 and 2010, respectively. The amount of interest
and penalties recognized was approximately $20 million, $16 million and $12 million for fiscal years 2012, 2011 and 2010,
respectively.
A number of years may elapse before a particular uncertain tax position for which the Company has not recorded a financial
statement benefit is audited and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction.
The Company is subject to tax audits in the following major taxing jurisdictions:
•United States — federal tax years are open for years 2005 and forward;
•Germany — tax years are open for years 2007 and forward;
•Italy — tax years are open for years 2008 and forward;
•Japan— tax years are open for years 2007 and forward; and
•United Kingdom — tax years are open for years 2010 and forward.
In April 2011, the U.S. Internal Revenue Service (IRS) completed its examination of the Company’s federal income tax returns for
the tax years ended March 31, 2005, 2006 and 2007 and issued a report of its findings in connection with the examination. The
Company disagrees with certain proposed adjustments in the report and is vigorously disputing these matters through the IRS
appellate process. While the Company believes that it has recorded reserves sufficient to cover exposures related to these issues, such
that the ultimate disposition of this matter will not have a material adverse effect on the Company’s consolidated financial position or
results of operations, the resolution of this matter involves uncertainties and the ultimate resolution could differ from the amounts
recorded. The IRS is also examining the Company’s federal income tax returns for the tax years ended March 31, 2008, 2009 and
2010.
While it is difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes that its
financial statements reflect the probable outcome of uncertain tax positions. The Company may adjust these reserves, as well as any
related interest or penalties, in light of changing facts and circumstances including the settlement of income tax audits and the
expiration of statutes of limitations. To the extent a settlement differs from the amounts previously reserved, that difference would be
generally recognized as a component of income tax expense in the period of resolution. The Company does not believe it is
reasonably possible that the amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months, as
the Company does not believe the appeals process will be concluded within the next 12 months.
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