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Income Taxes
3 Months Ended
Sep. 30, 2011
Income Taxes [Abstract] 
Income Taxes
Note 10-Income Taxes
 
The Company's effective tax rate was (0.4%) and 2.7% for the second quarter and six months ended September 30, 2011, and 29.8% and 30.4% for the second quarter and six months ended October 1, 2010. There were three major events that had a significant impact on the effective tax rate for the six months ended September 30, 2011, as compared to the effective tax rate for the six months ended October 1, 2010.  During the first quarter of fiscal 2012, the Company elected to change the tax status of one of its foreign subsidiaries. This change in tax status resulted in a deemed liquidation for U.S. tax purposes and triggered various deductions which resulted in an income tax benefit of approximately $121 million and had a favorable impact on the effective tax rate for the six months ended September 30, 2011 of 4.4%.  During the second quarter of fiscal 2012, the Company settled various tax examinations and recognized income tax benefits related to the audit settlements and expiration of statute of limitations of approximately $112 million which had a favorable impact on the effective tax rate for the six months ended September 30, 2011 of 4.1%.  Also during the second quarter of fiscal 2012, the Company recorded a $2.7 billion goodwill impairment charge which was mostly not deductible for tax purposes.  The goodwill impairment charge had a significant impact on the effective tax rate for the second quarter and six months ended September 30, 2011 and was the primary driver of the remaining difference between the effective tax rate and statutory rate of 35%.

During the second quarter of fiscal 2012, the Company settled the IRS examination of its consolidated U.S. tax returns for fiscal 2005 through fiscal 2007.  The nature of the significant items subject to examination included depreciation, amortization, R&D credits, and U.S. related international tax issues.  In addition, the statute of limitations for fiscal 2005 through fiscal 2007 closed in September 2011.  Also, during the second quarter of fiscal 2012, the Company settled an audit for fiscal 2004 through 2005 in Canada.
 
During the six months ended September 30, 2011, the Company's uncertain tax positions decreased by $185 million, net of $75 million of tax attributes and excluding interest and penalties, as compared to the fiscal year end 2011.  The decrease in uncertain tax positions related to the settlement of the IRS examination and lapse of the statute of limitations during the second quarter of fiscal 2012 was $186 million, net of $26 million of tax attributes and excluding interest and penalties.  In addition, there was an increase in uncertain tax positions of $13 million, net of $49 million of tax attributes, related to the acquisitions of iSOFT and AppLabs.  As of September 30, 2011, the Company's liability for uncertain tax positions was $220 million, which was included in non current liabilities on the Company's balance sheet, including interest of $29 million ($18 million net of tax) and penalties of $16 million.

During the six months ended September 30, 2011, the Company recorded an interest benefit of $38 million ($24 million net of tax) and had a net release of penalties of $18 million.  The reduction in interest and penalties was primarily a result of the settlement of the IRS examination and lapse of the statute of limitations.

As of September 30, 2011, the Company's liability for uncertain tax positions included $123 million related to amounts that, if recognized, would affect the effective tax rate, excluding related interest and penalties.
 
The Company may also settle other tax examinations, have lapses in statutes of limitations, or voluntarily settle income tax positions in negotiated settlements for different amounts than the Company has accrued as uncertain tax positions. The Company may need to accrue and ultimately pay additional amounts for tax positions that previously met a more likely than not standard if such positions are not upheld. Conversely, the Company could settle positions with the tax authorities for amounts lower than have been accrued or extinguish a position through payment.  The Company believes the outcomes which are reasonably possible within the next twelve months may result in a reduction in the liability for uncertain tax positions of up to $23 million, excluding interest, penalties, and tax carryforwards.