Visa 2012 Annual Report Download - page 104

Table of Contents VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2012
utilize the U.S. net operating loss carryforwards was limited in fiscal 2012 , the Company expects to fully utilize the net operating
loss carryforwards in future years.
As of September 30, 2012 , the Company also had federal and state research and development tax credit carryforwards of $4
million and $19 million , respectively. The federal carryforwards will expire in fiscal 2021 through 2029 . The state carryforwards
may be carried forward indefinitely . The Company also has federal alternative minimum tax credits of approximately $1 million ,
which
do not expire . The Company expects to realize the benefit of the credit carryforwards in future years.
The income tax provision differs from the amount of income tax determined by applying the applicable U.S. federal statutory
rate of 35% to pretax income, as a result of the following:
The effective income tax rate in fiscal 2012 was lower than that in fiscal 2011 and 2010 primarily due to:
Income taxes receivable of $179 million and $112 million are included in prepaid and other current assets at September 30,
2012 and 2011 , respectively. See Note 6—Prepaid Expenses and Other Assets . At September 30, 2012 and 2011 , income taxes
payable of $58 million and $63 million , respectively, are included in accrued income taxes as part of accrued liabilities, and
accrued income taxes of $171 million and $468 million , respectively, are included in other long-term liabilities. See Note 9—
Accrued and Other Liabilities
.
Cumulative undistributed earnings of the Company’s international subsidiaries that are intended to be reinvested indefinitely
outside the U.S. amounted to $2.6 billion at September 30, 2012 . The amount of income taxes that would have resulted had such
earnings been repatriated is not practicably determinable.
The Company’s largest operating hub outside the U.S. is located in Singapore. It operates under a tax incentive agreement
which is effective through September 30, 2014, and may be extended through September 30, 2023, if certain additional
requirements are satisfied. The tax incentive agreement is conditional upon certain
101
For the Years Ended September 30
2012
2011 2010
Dollars
Percent Dollars Percent Dollars Percent
(in millions)
U.S. federal income tax at statutory rate
$
772
35
%
$
1,980
35
%
$
1,623
35
%
State income taxes, net of federal benefit
36
2
%
203
4
%
177
4
%
Non-U.S. tax effect, net of federal benefit
(257
)
(12
)%
(150
)
(2
)%
(124
)
(2
)%
Reversal of tax reserves related to the deductibility of
covered litigation expense
(299
)
(14
)%
—
—
%
—
—
%
Remeasurement of deferred taxes due to:
California state apportionment rule changes
(208
)
(9
)%
—
—
%
—
—
%
Other state apportionment changes
11
1
%
(3
)
—
%
15
—
%
Revaluation of Visa Europe put option —
—
%
(
43
)
(1
)%
(28
)
(1
)%
Other, net
10
—
%
23
—
%
11
—
%
Income tax provision
$
65
3
%
$
2,010
36
%
$
1,674
36
%
▪ the fiscal 2012 reversal of previously recorded tax reserves associated with uncertainties related to the
deductibility of covered litigation expense;
▪ a decrease in the overall state tax rate due to changes in the California apportionment rules and the associated
one-time, non-cash remeasurement of existing net deferred tax liabilities in fiscal 2012;
▪ a one-
time benefit recognized upon initial recognition of foreign tax credits in fiscal 2012;
▪ the effect of applying the foregoing adjustments to a pre-tax income that was reduced by a $4.1 billion covered
litigation provision; and
▪
the absence of nontaxable revaluations of the Visa Europe put option in fiscal 2012.