Crucial 2013 Annual Report Download - page 99

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98
The changes in valuation allowance of $1,693 million and $315 million in 2013 and 2012, respectively, are primarily due
to uncertainties of realizing certain U.S. and foreign net operating losses and certain tax credit carryforwards. Elpida represents
$1,292 million of the change in the valuation allowance during 2013.
Provision has been made for deferred taxes on undistributed earnings of non-U.S. subsidiaries to the extent that dividend
payments from such companies are expected to result in additional tax liability. Remaining undistributed earnings of
$1.8 billion as of August 29, 2013 have been indefinitely reinvested; therefore, no provision has been made for taxes due upon
remittance of these earnings. Determination of the amount of unrecognized deferred tax liability on these unremitted earnings
is not practicable.
Below is a reconciliation of the beginning and ending amount of unrecognized tax benefits:
For the year ended 2013 2012 2011
Beginning unrecognized tax benefits $ 77 $ 121 $ 88
Settlements with tax authorities (8)(29)(2)
Decreases related to tax positions from prior years — (14)(3)
Foreign currency translation increases (decreases) to tax positions 4 (9) 6
Increases related to tax positions taken during current year 4 6 28
Increases related to tax positions from prior years — 2 4
Unrecognized tax benefits acquired in current year 1 — —
Ending unrecognized tax benefits $ 78 $ 77 $ 121
Included in the unrecognized tax benefits balance as of August 29, 2013, August 30, 2012 and September 1, 2011 were
$63 million, $66 million and $113 million, respectively, of unrecognized income tax benefits, which if recognized, would affect
our effective tax rate. We recognize interest and penalties related to income tax matters within income tax expense. As of
August 29, 2013, August 30, 2012 and September 1, 2011, accrued interest and penalties related to uncertain tax positions was
$16 million, $12 million and $16 million, respectively.
We are unable to reasonably estimate possible increases or decreases in uncertain tax positions that may occur within the
next 12 months due to the uncertainty of the timing of the resolution and/or closure on audits. However, we do not anticipate
any such change would be significant.
We currently operate in several tax jurisdictions where we have arrangements that allow us to compute our tax provision at
rates below the local statutory rates that expire in whole or in part at various dates through 2026. These arrangements
benefitted our tax provision in 2013, 2012 and 2011 by $141 million ($0.13 per diluted share), $52 million ($0.05 per diluted
share) and $72 million ($0.07 per diluted share), respectively.
We and our subsidiaries file income tax returns with the U.S. federal government, various U.S. states and various foreign
jurisdictions throughout the world. Our federal and state tax returns remain open to examination for 2009 through 2013. In
addition, tax years open to examination in multiple foreign taxing jurisdictions range from 2005 to 2013. We are currently
under examination in various taxing jurisdictions in which we conduct business operations. We believe that adequate amounts
of taxes and related interest and penalties have been provided for, and any adjustments as a result of the examinations are not
expected to materially adversely affect our business, results of operations or financial condition.