NVIDIA 2012 Annual Report Download - page 101

Table of Contents NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
carryforwards of $314.2 million that will begin to expire in fiscal year 2018. We have other federal tax credit carryforwards of $1.5 million that will begin to
expire in fiscal year 2014. The research tax credit carryforwards attributable to states is in the amount of $290.7 million, of which $280.8 million is
attributable to the State of California and may be carried over indefinitely, and $9.9 million is attributable to various other states and will expire beginning in
fiscal year 2014 according to the rules of each particular state. We have other state tax credit carryforwards of $2.9 million that will expire in fiscal year 2026
and other foreign tax credit carryforwards of $5.1 million, of which $4.5 million may be refunded in fiscal year 2016 if not utilized and $0.6 million that will
expire in fiscal year 2021. Our tax attributes, net operating loss and tax credit carryforwards, remain subject to audit and may be adjusted for changes or
modification in tax laws, other authoritative interpretations thereof, or other facts and circumstances. Utilization of federal, state, and foreign net operating
losses and tax credit carryforwards may also be subject to limitations due to ownership changes and other limitations provided by the Internal Revenue Code
and similar state and foreign tax provisions. If any such limitations apply, the federal, states, or foreign net operating loss and tax credit carryforwards, as
applicable, may expire or be denied before utilization.
As of January 29, 2012, United States federal and state income taxes have not been provided on approximately $1.29 billion of undistributed earnings of
non-United States subsidiaries as such earnings are considered to be indefinitely reinvested. We have not provided the amount of unrecognized deferred tax
liabilities for temporary differences related to investments in our foreign subsidiaries as the determination of such amount is not practicable.
We had a tax holiday in effect for its business operations in India which terminated in March 2011. This tax holiday provided for a lower rate of taxation
on certain classes of income based on various thresholds of investment and employment in such jurisdiction. For fiscal years 2010 through 2012, the
aggregate tax savings of this holiday was approximately $2.0 million with no material per-share impact in these years.
As of January 29, 2012, we had $138.3 million of unrecognized tax benefits, all of which would affect our effective tax rate if recognized. However,
included in the unrecognized tax benefits that would affect our effective tax rate if recognized of $138.3 million is $31.0 million and $0.2 million related to
state and foreign income tax, respectively, that, if recognized, would be in the form of a carryforward deferred tax asset that would likely attract a full
valuation allowance. The $138.3 million of unrecognized tax benefits as of January 29, 2012 consists of $53.5 million recorded in non-current income taxes
payable and $84.8 million reflected as a reduction to the related deferred tax assets.
A reconciliation of unrecognized tax benefits is as follows:
January 29,
2012 January 30,
2011 January 31,
2010
(In thousands)
Balance at beginning of period $ 121,034 $ 109,765 $ 95,319
Increases in tax positions for prior years 385 — 351
Decreases in tax positions for prior years (293) (3,585) (131)
Increases in tax positions for current year 22,181 18,628 18,342
Settlements — (358) —
Lapse in statute of limitations (5,045) (3,416) (4,116)
Balance at end of period $ 138,262 $ 121,034 $ 109,765
We classify an unrecognized tax benefit as a current liability, or as a reduction of the amount of a net operating loss carryforward or amount refundable,
to the extent that we anticipate payment or receipt of cash for income taxes within one year. Likewise, the amount is classified as a long-term liability if we
anticipate payment or receipt of cash for income taxes during a period beyond a year.
Our policy is to include interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of January 29, 2012,
January 30, 2011, and January 31, 2010, we had accrued $9.5 million , $11.2 million , and $11.2 million , respectively, for the payment of interest and
penalties related to unrecognized tax benefits, which is not included as a component of our unrecognized tax benefits. As of January 29, 2012, non-current
income taxes payable of $63.0 million consists of unrecognized tax benefits of $53.5 million and the related interest and penalties of $9.5 million.
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