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As of March 31, 2013, we have federal net operating loss ("NOL") carry forwards of approximately $588 million
of which approximately $221 million is attributable to various acquired companies. These acquired net operating
loss carry forwards are subject to an annual limitation under Internal Revenue Code Section 382. The federal
NOL, if not fully realized, will begin to expire in 2029. Furthermore, we have state net loss carry forwards of
approximately $799 million of which approximately $137 million is attributable to various acquired companies.
The state NOL, if not fully realized, will begin to expire in 2016. We also have U.S. federal, California and
Canada tax credit carry forwards of $119 million, $113 million and $26 million, respectively. The U.S. federal
tax credit carry forwards will begin to expire in 2017. The California and Canada tax credit carry forwards can be
carried forward indefinitely.
The total unrecognized tax benefits as of March 31, 2013 and 2012 were $297 million and $274 million,
respectively. Of these amounts, $46 million and $43 million of liabilities would be offset by prior cash deposits
to tax authorities for issues pending resolution as of March 31, 2013 and 2012, respectively. A reconciliation of
the beginning and ending balance of unrecognized tax benefits is summarized as follows (in millions):
Balance as of March 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$273
Increases in unrecognized tax benefits related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . . .
7
Decreases in unrecognized tax benefits related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . .
(4)
Increases in unrecognized tax benefits related to current year tax positions . . . . . . . . . . . . . . . . . . . . . . .
58
Decreases in unrecognized tax benefits related to settlements with taxing authorities . . . . . . . . . . . . . . .
(1)
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations . . . . . . . . . . . . .
(54)
Changes in unrecognized tax benefits due to foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . .
(5)
Balance as of March 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
274
Increases in unrecognized tax benefits related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . . .
2
Decreases in unrecognized tax benefits related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . .
(2)
Increases in unrecognized tax benefits related to current year tax positions . . . . . . . . . . . . . . . . . . . . . . .
30
Decreases in unrecognized tax benefits related to settlements with taxing authorities . . . . . . . . . . . . . . .
--
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations . . . . . . . . . . . . .
(5)
Changes in unrecognized tax benefits due to foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . .
(2)
Balance as of March 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$297
A portion of our unrecognized tax benefits will affect our effective tax rate if they are recognized upon favorable
resolution of the uncertain tax positions. As of March 31, 2013, approximately $106 million of the unrecognized
tax benefits would affect our effective tax rate and approximately $177 million would result in adjustments to
deferred tax valuation allowance. As of March 31, 2012, approximately $98 million of the unrecognized tax
benefits would affect our effective tax rate and approximately $163 million would result in corresponding
adjustments to the deferred tax valuation allowance.
Interest and penalties related to estimated obligations for tax positions taken in our tax returns are recognized in
income tax expense in our Consolidated Statements of Operations. The combined amount of accrued interest and
penalties related to tax positions taken on our tax returns and included in non-current other liabilities was
approximately $23 million as of March 31, 2013, as compared to $21 million as of March 31, 2012. Accrued
interest expense related to estimated obligations for unrecognized tax benefits increased by approximately
$2 million during fiscal year 2013. There is no material change in accrued penalties during fiscal year 2013.
We file income tax returns in the United States, including various state and local jurisdictions. Our subsidiaries
file tax returns in various foreign jurisdictions, including Canada, France, Germany, Switzerland and the United
Kingdom. The IRS has completed its examination of our federal income tax returns through fiscal year 2008. As
of March 31, 2013, the IRS had proposed certain adjustments to our tax returns. The effects of these adjustments
have been considered in estimating our future obligations for unrecognized tax benefits and are not expected to
90