Symantec 2016 Annual Report Download - page 172

carryforwards are subject to an annual limitation under Internal Revenue Code §382, but are expected to be fully
realized. Furthermore, we have U.S. state net operating loss and credit carryforwards attributable to various
acquired companies of approximately $131 million and $20 million, respectively. If not used, our U.S. state net
operating losses will expire between fiscal 2017 and 2033 and the majority of our U.S. state credit carryforwards
can be carried forward indefinitely. In addition, we have foreign net operating loss carryforwards attributable to
various acquired foreign companies of approximately $48 million net of valuation allowances, the majority of
which, under current applicable foreign tax law, can be carried forward indefinitely.
In assessing the ability to realize our deferred tax assets, we considered whether it is more likely than not
that some portion or all the deferred tax assets will not be realized. We considered the following: we have
historical cumulative book income, as measured by the current and prior two years; we have strong, consistent
taxpaying history; we have substantial U.S. federal income tax carryback potential; and we have substantial
amounts of scheduled future reversals of taxable temporary differences from our deferred tax liabilities. We have
concluded that this positive evidence outweighs the negative evidence and, thus, that the deferred tax assets as of
April 1, 2016 are realizable on a “more likely than not” basis.
As of April 1, 2016, no provision has been made for federal or state income taxes on $3.8 billion of
cumulative unremitted earnings of certain of our foreign subsidiaries since we plan to indefinitely reinvest these
earnings. As of April 1, 2016, the unrecognized deferred tax liability for these earnings was approximately $1.1
billion.
The aggregate changes in the balance of gross unrecognized tax benefits were as follows:
Year Ended
April 1,
2016
April 3,
2015
March 28,
2014
(Dollars in millions)
Balance at beginning of year $ 193 $ 282 $ 412
Settlements with tax authorities (25) (150) (122)
Lapse of statute of limitations (15) (13) (11)
Decrease due to divestiture (7) - -
Increase related to prior period tax positions 4 147 27
Decrease related to prior period tax positions (7) (96) (50)
Increase related to current year tax positions 54 23 26
Net increase (decrease) 4 (89) (130)
Balance at end of year $ 197 $ 193 $ 282
There was a change of $4 million in gross unrecognized tax benefits during the fiscal year as disclosed
above. This gross liability does not include offsetting tax benefits associated with the correlative effects of
potential transfer pricing adjustments, interest deductions, and state income taxes.
Of the total unrecognized tax benefits at April 1, 2016, $203 million, if recognized, would favorably affect
the Company’s effective tax rate, while a $5 million offsetting impact would affect the cumulative translation
adjustments. However, one or more of these unrecognized tax benefits could be subject to a valuation allowance
if and when recognized in a future period, which could impact the timing of any related effective tax rate benefit.
At April 1, 2016, before any tax benefits, we had $12 million of accrued interest and penalties on
unrecognized tax benefits. Interest included in our provision for income taxes was a benefit of approximately $8
million, offset by accruals of $3 million for the year ended April 1, 2016. If the accrued interest and penalties do
not ultimately become payable, amounts accrued will be reduced in the period that such determination is made,
and reflected as a reduction of the overall income tax provision.
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