EMC 2011 Annual Report Download - page 76

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, 2011 December 31, 2010
Deferred
Tax
Asset
Deferred
Tax
Liability
Deferred
Tax
Asset
Deferred
Tax
Liability
Current:
Accounts and notes receivable $ 86,400 $ — $ 49,636 $ —
Inventory 91,374 — 80,500 —
Accrued expenses 281,071 — 254,775 —
Deferred revenue 274,463 — 224,921 —
Total current 733,308 — 609,832 —
Noncurrent:
Property, plant and equipment, net — (246,377) — (102,962)
Intangible and other assets, net — (609,813) — (633,225)
Equity — (38,616) — (156,802)
Deferred revenue — (10,992) — (22,313)
Other noncurrent liabilities — (55,938) — (47,526)
Credit carryforwards 72,933 — 44,248 —
Net operating losses 156,541 — 157,541 —
Other comprehensive loss 134,157 — 48,385 —
Total noncurrent 363,631 (961,736) 250,174 (962,828)
Gross deferred tax assets and liabilities 1,096,939 (961,736) 860,006 (962,828)
Valuation allowance (5,293) — (4,350) —
Total deferred tax assets and liabilities $ 1,091,646 $ (961,736) $ 855,656 $ (962,828)
We have gross federal and foreign net operating loss carryforwards of $279.0 million and $86.5 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.
We have federal and state credit carryforwards of $22.6 million and $46.1 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 2012, while others have an unlimited carryforward period.
The valuation allowance increased from $4.4 million at December 31, 2010 to $5.3 million at December 31, 2011. The increase was attributable to a
certain subsidiary's foreign tax credit carryforward. The valuation allowance relates to foreign 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 $6.4 billion and $5.1 billion at December 31, 2011 and 2010, respectively, and consisted primarily of undistributed earnings permanently
invested in these entities. The change in the basis difference in 2011 was mainly attributable to income earned in the current year. At December 31, 2011, our
total cash, cash equivalents, and short-term and long-term investments were $10.8 billion. This balance includes approximately $4.5 billion held by VMware,
of which $2.1 billion is held overseas, and $1.5 billion held by EMC in overseas entities. If these overseas funds are needed for our operations in the U.S., we
would be required to accrue and pay U.S. taxes to repatriate these funds. However, our intent is to permanently reinvest these funds outside of the U.S. and
our current plans do not demonstrate a need to repatriate them to fund our U.S. operations. 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 2011, 2010 and 2009 was $1.8 billion, $1.2
billion and $0.9 billion, respectively. Income before income taxes from domestic operations for 2011, 2010 and 2009 was $1.5 billion, $1.4 billion and $0.5
billion, respectively.
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