EMC 2010 Annual Report Download - page 73

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The effective income tax rate is based upon the income for the year, the composition of the income in different countries, and adjustments, if any, for
the potential tax consequences, benefits or resolutions of tax audits. A reconciliation of our income tax provision to the statutory federal tax rate is as follows:
2010 2009 2008
Statutory federal tax rate 35.0% 35.0% 35.0%
State taxes, net of federal taxes 1.0 1.0 1.2
Resolution of uncertain tax positions (0.6) (4.5) (2.9)
Tax rate differential for international jurisdictions and other international related tax items (12.2) (17.5) (15.9)
U.S. tax credits (3.3) (3.1) (5.2)
Changes in valuation allowance (0.6) — —
International reorganization of acquired companies 3.2 4.4 —
Permanent items 2.5 4.2 5.3
Other (0.5) (1.1) —
24.5% 18.4% 17.5%
In 2009, we effected a plan to reorganize our international operations by transferring certain assets of our RSA and Data Domain entities and legacy
foreign corporations owned directly by EMC into a single EMC international holding company. As a result of this reorganization, we incurred income taxes
which negatively impacted the rate by 4.4 percentage points.
In 2010, a continuation of the reorganization of international operations was effected which included the transfer of certain assets of Isilon, Archer
Technologies and Bus-Tech into the single EMC international holding company, which negatively impacted the rate by 3.2 percentage points.
The components of the current and noncurrent deferred tax assets and liabilities are as follows (table in thousands):
December 31, 2010 December 31, 2009
Deferred
Tax
Asset
Deferred
Tax
Liability
Deferred
Tax
Asset
Deferred
Tax
Liability
Current:
Accounts and notes receivable $ 49,636 $ — $ 77,052 $ —
Inventory 80,500 — 62,840 —
Accrued expenses 254,775 — 253,803 —
Deferred revenue 224,921 — 170,479 —
Total current 609,832 — 564,174 —
Noncurrent:
Property, plant and equipment, net — (102,962) — (129,381)
Intangible and other assets, net — (633,225) — (504,140)
Equity — (156,802) — (199,490)
Deferred revenue — (22,313) — (29,045)
Other noncurrent liabilities — (47,526) — (56,827)
Credit carryforwards 44,248 — 30,481 —
Net operating losses 157,541 — 139,092 —
Other comprehensive loss 48,385 — 62,747 —
Total noncurrent 250,174 (962,828) 232,320 (918,883)
Gross deferred tax assets and liabilities 860,006 (962,828) 796,494 (918,883)
Valuation allowance (4,350) — (21,815) —
Total deferred tax assets and liabilities $ 855,656 $ (962,828) $ 774,679 $ (918,883)
We have gross federal and foreign net operating loss carryforwards of $288.3 million and $80.3 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 2014, while others have an unlimited carryforward
period.
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