Seagate 2010 Annual Report Download - page 96

Table of Contents
SEAGATE TECHNOLOGY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
the Company's management believes that it is more likely than not that these deferred tax assets will be realized. The amount of deferred tax
assets considered realizable, however, may increase or decrease in subsequent periods when the Company reevaluates the underlying basis for its
estimates of future U.S. and certain non-U.S. taxable income.
At July 1, 2011, the Company had U.S. federal, state and non-U.S. tax net operating loss carryforwards of approximately $2.6 billion,
$1.8 billion and $623 million, respectively, which will expire at various dates beginning in fiscal year 2013, if not utilized. At July 1, 2011, the
Company had U.S. federal and state tax credit carryforwards of $278 million and $74 million, respectively, which will expire at various dates
beginning in fiscal year 2012, if not utilized. Of the $2.6 billion of loss carryovers noted above, approximately $754 million will be credited to
Additional paid-in capital upon recognition.
Approximately $364 million and $90 million of the Company's U.S. NOL and tax credit carryforwards, respectively, are subject to an
aggregate annual limitation of $45 million pursuant to U.S. tax law.
The Company became an Irish tax resident in fiscal year 2010. Prior to fiscal year 2010, the Company was headquartered in the Cayman
Islands and not subject to tax in the Cayman Islands. For purposes of the tax reconciliation between the provision for income taxes at the
statutory rate and the effective tax rate, the Irish statutory rate of 25% was used in fiscal years 2011 and 2010. For fiscal year 2009, a notional
35% statutory rate was used.
A substantial portion of the Company's operations in Malaysia, Singapore, Switzerland and Thailand operate under various tax holidays and
tax incentive programs, which expire in whole or in part at various dates through 2020. Certain of the tax holidays may be extended if specific
conditions are met. The net impact of these tax holidays and tax incentive programs was to increase the Company's net income by approximately
$117 million in fiscal year 2011 ($0.25 per share, diluted), to increase the Company's net income by $307 million in fiscal year 2010 ($0.60 per
share, diluted), and to decrease the Company's net loss by approximately $79 million in fiscal year 2009 ( $ 0.16 per share, diluted).
Since establishing Irish tax residency in fiscal year 2010 as a result of the implementation of certain pre-reorganization steps in connection
with the Company's previously announced plan to move its corporate headquarters to Ireland, the Company consists of an Irish tax resident
parent holding company with various U.S. and non-U.S. subsidiaries that operate in multiple non-Irish taxing jurisdictions. The amount of
temporary differences (including undistributed earnings) related to outside basis differences in the stock of non-Irish resident subsidiaries
considered indefinitely reinvested outside of Ireland for which
90
Fiscal Years Ended
(Dollars in millions)
July 1,
2011
July 2,
2010
July 3,
2009
Provision (benefit) at statutory rate
$
145
$
392
$
(985
)
Net U.S. state income tax provision
2
3
6
Permanent differences
—
2
9
Non
-
deductible goodwill
impairments
—
—
813
Valuation allowance
(18
)
(77
)
310
Non
-
U.S. losses with no tax benefits
7
31
263
Non
-U.S. earnings taxed at less than
statutory rate
(102
)
(393
)
(138
)
Tax expense related to intercompany
transactions
26
26
27
Other individually immaterial items
8
(24
)
6
Provision for (benefit from) income
taxes
$
68
$
(40
)
$
311