EMC 2009 Annual Report Download - page 71

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The components of the current and noncurrent deferred tax assets and liabilities are as follows (table in thousands):
December 31, 2009
December 31, 2008
(As Adjusted)
Deferred
Tax
Asset
Deferred
Tax
Liability
Deferred
Tax
Asset
Deferred
Tax
Liability
Current:
Accounts and notes receivable $ 77,052 $ — $ 53,627 $ —
Inventory 62,840 — 52,150 —
Accrued expenses 253,803 — 213,245 —
Deferred revenue 170,479 — 158,079 —
Total current 564,174 — 477,101 —
Noncurrent:
Property, plant and equipment, net — (129,381) — (76,129)
Intangible and other assets, net — (504,140) — (345,116)
Equity — (199,490) — (206,086)
Deferred revenue — (29,045) 10,759 —
Other noncurrent liabilities — (56,827) — (60,572)
Credit carryforwards 30,481 — 55,614 —
Net operating losses 139,092 — 147,809 —
Other comprehensive loss 62,747 — 99,927 —
Total noncurrent 232,320 (918,883) 314,109 (687,903)
Gross deferred tax assets and liabilities 796,494 (918,883) 791,210 (687,903)
Valuation allowance (21,815) — (15,993) —
Total deferred tax assets and liabilities $ 774,679 $ (918,883) $ 775,217 $ (687,903)
We have gross federal and foreign net operating loss carryforwards of $270.4 million and $66.9 million, respectively. Portions of these carryforwards
are subject to annual limitations, including Section 382 of the Internal Revenue Code of 1986 ("Code"), as amended, for U.S. tax purposes and similar
provisions under other countries' tax laws. Certain of these net operating losses will begin to expire in 2012, while others have an unlimited carryforward
period.
We have federal and state credit carryforwards of $23.2 million and $7.3 million, respectively. Portions of these carryforwards are subject to annual
limitations, including Section 382 of the Code, as amended, for U.S. tax purposes and similar provisions under other countries' tax laws. Certain of these
credits will begin to expire in 2010, while others have an unlimited carryforward period.
The valuation allowance increased from $16.0 million at December 31, 2008 to $21.8 million at December 31, 2009. The increase was principally
attributable to revaluations of foreign subsidiaries' net operating loss carryforwards arising from fluctuations in foreign currency. The valuation allowance
relates to foreign subsidiaries' net operating loss carryforwards.
Deferred income taxes have not been provided on basis differences related to investments in foreign subsidiaries. These basis differences were
approximately $4.3 billion and $3.7 billion at December 31, 2009 and 2008, respectively, and consisted of undistributed earnings permanently invested in
these entities. The change in the basis difference in 2009 was mainly attributable to income earned in the current year. If these earnings were distributed to the
United States in the form of dividends or otherwise, we would be subject to additional U.S. income taxes. Determination of the amount of unrecognized
deferred income tax liability related to these earnings is not practicable. Income before income taxes from foreign operations for 2009, 2008 and 2007 was
$900 million, $1.1 billion and $1.2 billion, respectively.
We adopted authoritative guidance regarding uncertain tax positions at the beginning of fiscal year 2007. As a result of implementing this authoritative
guidance, we recognized a cumulative effect adjustment of $6.5 million to increase the January 1, 2007 retained earnings balance and decrease our accrued
tax liabilities. Prior to the adoption of this authoritative guidance, our
69