Western Digital 2010 Annual Report Download - page 77

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requirements and capital investments. Accordingly, an additional U.S. tax provision has not been made on these earnings.
The tax liability for these earnings would approximate $1.4 billion if the Company repatriated the $4.0 billion in
undistributed earnings from the foreign subsidiaries.
Deferred Taxes
Temporary differences and carryforwards, which give rise to a significant portion of deferred tax assets and liabilities
as of July 2, 2010 and July 3, 2009 were as follows (in millions):
2010 2009
Deferred tax assets:
Sales related reserves and accrued expenses not currently deductible .............. $ 50 $ 49
Accrued compensation and benefits not currently deductible ................... 44 43
Domestic net operating loss (“NOL”) carryforward .......................... 52 50
Business credit carryforward .......................................... 137 144
Other .......................................................... 47 52
Total deferred tax assets ............................................. 330 338
Deferred tax liabilities:
Depreciation ..................................................... (58) (30)
Other .......................................................... (11) (20)
Total deferred tax liabilities .......................................... (69) (50)
Deferred tax assets, net............................................ $261 $288
2010 2009
Deferred tax assets:
Current portion (included in other current assets) ........................... $ 81 $ 80
Non-current portion (included in other non-current assets) .................... 249 258
Total deferred tax assets ............................................. 330 338
Deferred tax liabilities:
Current portion (included in other current assets) ........................... (2) (11)
Non-current portion (included in other non-current assets) .................... (67) (39)
Total deferred tax liabilities .......................................... (69) (50)
Deferred tax assets, net............................................ $261 $288
In addition to the deferred tax assets presented above, the Company had additional NOL benefits related to stock-
based compensation deductions of approximately $93 million and $76 million at July 2, 2010 and July 3, 2009,
respectively. The increase in NOL benefits relates to the current year stock based compensation deductions which will
result in a future benefit of $25 million, current year utilization of the stock based NOL of $4 million, and a reduction in
the estimate of the prior year NOL utilization related to stock based compensation of $4 million. This $93 million will
be recorded as a credit to shareholders equity when an incremental benefit is recognized after considering all other tax
attributes available to the Company.
71
WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)