SanDisk 2009 Annual Report Download - page 147

This is a TAB type table. Insert
conts here. Annual Report
Notes To Consolidated Financial Statements
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax return reporting
purposes. Significant components of the Company’s net deferred tax assets as of January 3, 2010 and
December 28, 2008 were as follows (in thousands):
January 3,
2010
December 28,
2008
Deferred tax assets:
Deferred income on shipments to distributors and retailers and deferred
revenue recognized for tax purposes ................................ $ 25,975 $ 35,908
Accruals and reserves not currently deductible .......................... 125,112 149,582
Depreciation and amortization not currently deductible ................... 56,141 60,406
Deductible share-based compensation ................................. 65,281 50,465
Unrealized loss on investments ...................................... 36,189 52,138
Unrealized foreign exchange loss ..................................... 71,478 58,131
Net operating loss carryforwards ..................................... 26,083 52,553
Tax credit carryforward ............................................ 26,681 149,785
Other ........................................................... 27,359 17,139
Gross deferred tax assets ............................................... 460,299 626,107
Valuation allowance ................................................... (287,498) (430,817)
Deferred tax assets, net of valuation allowance .............................. 172,801 195,290
Deferred tax liabilities:
Acquired intangible assets .......................................... (11,152) (15,816)
Unrealized gain on investments ...................................... (25,852) (72,302)
Unrealized foreign exchange gain .................................... (56,920) (78,031)
U.S. taxes provided on unremitted earnings of foreign subsidiaries .......... (26,338) (17,619)
Total deferred tax liabilities ............................................. (120,262) (183,768)
Net deferred tax assets ................................................. $ 52,539 $ 11,522
The Company continues to be in a cumulative loss position over recent years and based on all available
evidence determined it is more likely than not that net deferred tax assets in the US and certain foreign
jurisdictions will not be realized. The valuation allowance decreased ($143.3) million in fiscal year 2009 from
fiscal year 2008, due primarily to utilization of credits and reversals of temporary differences in the U.S. The
future release of the valuation allowance will continue to benefit the provision for income taxes. The fiscal year
2008 taxable loss in the U.S. was carried back to prior years and a tax refund of $178.8 million has been received
and $64.7 million remains outstanding.
The Emergency Economic Stabilization Act of 2008 enacted October 3, 2008 retroactively extended the
research credit for the fiscal years through 2009. As a result, the current year credit of $1.7 million, if not
utilized, will be carried forward and is subject to a valuation allowance.
The Company has federal, state, and foreign net operating loss carryforwards of approximately $49 million,
$169 million and $22 million, respectively. The net operating losses will begin to expire in fiscal year 2013, if
not utilized. The Company also has federal and California research credit carryforwards of approximately
$4 million and $15 million, respectively. The credit carryforwards will begin to expire in fiscal year 2013, if not
utilized. Some of these carryforwards are subject to annual limitations, including Section 382 and Section 383 of
the Internal Revenue Code of 1986, as amended, for U.S. tax purposes and similar state provisions.
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