Computer Associates 2015 Annual Report Download - page 94

Deferred income taxes reflect the effect 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 from continuing operations were as follows:
AT MARCH 31,
(in millions) 2015 2014
Deferred tax assets:
Modified accrual basis accounting for revenue $ 349 $ 373
Share-based compensation 31 30
Accrued expenses 36 36
Net operating losses 96 131
Intangible assets amortizable for tax purposes 34
Deductible state tax and interest benefits 20 20
Other 69 65
Total deferred tax assets $ 604 $ 659
Valuation allowances (85) (87)
Total deferred tax assets, net of valuation allowance $ 519 $ 572
Deferred tax liabilities:
Purchased software $48$76
Depreciation 36
Other intangible assets 17 34
Internally developed software 93 158
Total deferred tax liabilities $ 161 $ 274
Net deferred tax asset $ 358 $ 298
In management’s judgment, it is more likely than not that the total deferred tax assets, net of valuation allowance, of
approximately $519 million will be realized in the foreseeable future. Realization of the net deferred tax assets is dependent
on the Company’s generation of sufficient future taxable income in the related 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 adjustments in future periods if estimates of future taxable income change.
U.S. federal, state and foreign net operating loss carryforwards (NOLs) totaled approximately $542 million and $672 million
at March 31, 2015 and 2014, respectively. The NOLs will expire as follows: $412 million between 2015 and 2034 and
$130 million may be carried forward indefinitely.
A valuation allowance has been provided for deferred tax assets that are not expected to be realized. The valuation
allowance decreased approximately $2 million at March 31, 2015 and increased approximately $4 million at March 31, 2014.
The decrease in the valuation allowance at March 31, 2015 primarily related to NOL’s and other deferred tax assets in
foreign jurisdictions that in management’s judgment will not be realized, offset by currency translation adjustments. The
increase in the valuation allowance at March 31, 2014 primarily related to amounts of NOLs and other deferred tax assets
in foreign jurisdictions that in management’s judgment will not be realized, offset by changes not affecting income tax
expense such as accounting for acquisitions and uncertain tax positions.
No provision has been made for U.S. federal income taxes on approximately $2,759 million and $2,349 million at March 31,
2015 and 2014, respectively, of unremitted earnings of the Company’s foreign subsidiaries since the Company plans to
permanently reinvest all such earnings outside the United States. It is not practicable to determine the amount of tax
associated with such unremitted earnings.
At March 31, 2015, the gross liability for income taxes associated with uncertain tax positions, including interest and
penalties, was approximately $162 million (of which $3 million was classified as current). In addition, at March 31, 2015, the
Company recorded approximately $16 million of deferred tax assets for future deductions of interest and state income taxes
related to these uncertain tax positions. At March 31, 2014, the gross liability for income taxes associated with uncertain tax
positions, including interest and penalties, was approximately $202 million (of which none was classified as current). In
addition, at March 31, 2014, the Company recorded approximately $17 million of deferred tax assets for future deductions
of interest and state income taxes related to these uncertain tax positions.
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