Income Taxes

The sources of income (loss) from continuing operations, before income taxes, classified between domestic entities and those entities domiciled outside of the United States, are as follows:



	Fiscal Years Ended
(in millions)	March 31, 2019		March 31, 2018		March 31, 2017
Domestic entities	$	511	$	454	$	(157	)
Entities outside the United States	1,004		850		(17		)
Total	$	1,515	$	1,304	$	(174	)

On December 22, 2017, the President of the United States signed into law comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Act"). The Act makes significant changes to the Internal Revenue Code of 1986 with varying effective dates. The Act reduces the maximum corporate income tax rate to 21% effective as of January 1, 2018, requires companies to pay a one-time transition tax on certain un-repatriated earnings of foreign subsidiaries, broadens the tax base, generally eliminates U.S. federal income taxes on dividends from foreign subsidiaries, creates a new limitation on the deductibility of interest expense, limits the deductibility of certain executive compensation, and allows for immediate capital expensing of certain qualified property. It also requires companies to pay minimum taxes on foreign earnings and subjects certain payments from U.S. corporations to foreign related parties to additional taxes. As a fiscal year taxpayer, the Company did not become subject to many of the tax law provisions until fiscal year 2019; however, GAAP requires companies to revalue their deferred tax assets and liabilities with resulting tax effects accounted for in the reporting period of enactment, including retroactive effects. Section 15 of the Internal Revenue Code stipulates that for the Company's fiscal years ending March 31, 2019 and March 31, 2018, the Company has weighted corporate U.S. federal income tax rates of 21.0% and 31.5%, respectively. These income tax rates are based on the applicable tax rates before and after the effective date of the Act and the number of days in the Company's federal tax year ending on October 31st.

The SEC staff issued Staff Accounting Bulletin 118 ("SAB 118"), which provides guidance on accounting for the tax effects of the Act in the reporting period that includes the December 22, 2017 enactment date. SAB 118 allowed companies to provide provisional amounts during a measurement period that could not extend beyond one year from the Act's enactment date. In accordance with SAB 118, a company was required to reflect the income tax effects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Act was incomplete but the company was able to determine a reasonable estimate, it was required to record a provisional estimate in the financial statements. If a company could not determine a provisional estimate to be included in the financial statements, it was required to continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Act. The one year SAB 118 measurement period closed for the Company in the third quarter ended on December 31, 2018.

As of December 31, 2018, the Company's assessment of the Act is complete. While the measurement period under SAB 118 is now closed, DXC may, in future periods, need to further refine the Company's U.S. federal and state calculations, related to the Act, as the taxing authorities provide additional guidance and clarification.

The Company recorded the following amounts in accordance with SAB 118:

Capital expensing: During fiscal 2018, the Company recorded a provisional benefit of $87 million, which was based on its intent to fully expense all qualifying expenses for U.S. federal tax purposes. This resulted in a decrease of approximately $87 million to the Company's current income taxes payable and a corresponding increase to its net deferred tax liabilities. During Q3 FY19, the Company finalized its estimate of the impact of the law change for purposes of SAB 118 and determined the incremental benefit of capital expensing was approximately $61 million. This resulted in a decrease of approximately $61 million to the Company's current income taxes payable and a corresponding increase to its net deferred tax liabilities. The Company filed its October 31, 2017 U.S federal tax return and several of its state tax returns in the periods ending September 30, 2018 and December 31, 2018, respectively. In the three months ended December 31, 2018 the Company completed all of the computations necessary, including an analysis of expenditures that qualify for immediate expensing, noting no measurement period adjustments were required.

Executive compensation: As a result of changes made by the Act, starting with compensation paid in fiscal 2019, Section 162(m) will limit compensation deductions, including performance-based compensation, in excess of $1 million paid to anyone who, starting in 2018, serves as the Chief Executive Officer or Chief Financial Officer, or who is among the three most highly compensated executive officers for any fiscal year. The only exception to this rule is for compensation that is paid pursuant to a binding contract in effect on November 2, 2017 that would have otherwise been deductible under the prior Section 162(m) rules. Accordingly, any compensation paid in the future pursuant to new compensation arrangements entered into after November 2, 2017, even if performance-based, will count towards the $1 million fiscal year deduction limit if paid to a covered executive. During fiscal 2018, the Company recorded a provisional income tax expense estimate of $2 million for executive compensation relating to the change in covered individuals. The Company completed an analysis of the binding contract requirement on the various compensation plans and determined the impact of the law change was not material. As part of the fiscal 2019 income tax provision, the Company estimated the Section 162(m) adjustment under the new guidance for compensation arrangements entered into after November 2, 2017.

Reduction of U.S. federal corporate income tax rate: As discussed above, the Act reduces the corporate tax rate to 21%, effective January 1, 2018. For certain deferred tax assets and deferred tax liabilities, the Company previously recorded a provisional deferred income tax discrete benefit of $338 million, resulting in a $338 million decrease in net deferred tax liabilities as of March 31, 2018. The Company filed its October 31, 2017 U.S. federal tax return in the period ending September 30, 2018, which impacted the provisional amount recorded. The adjustment was not material. The Company finalized its analysis of the scheduling of the deferred tax assets and liabilities and determined the impact was not material. No additional measurement period adjustments were recorded during the period ended December 31, 2018.

Deemed Repatriation Transition Tax: The deemed repatriation one-time transition tax is a tax on previously untaxed accumulated and current earnings and profits ("E&P") of certain of the Company's non-U.S. subsidiaries. To determine the amount of the transition tax, the Company determined, in addition to other factors, the amount of post-1986 E&P of the relevant non-U.S. subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings and the impact of various guidance including proposed regulations. The Company was able to calculate the transition tax and recorded a provisional transition tax obligation of $361 million in fiscal 2018. Due to the revised E&P and cash computations that were completed during the reporting periods, the Company recognized an additional measurement-period adjustment to the transition tax obligation of $25 million for the three months ended June 30, 2018. During the three month period ending December 31, 2018, the Company recorded a corresponding adjustment of $(69) million. The effect of the total measurement-period adjustments of $(44) million for the nine months ended December 31, 2018 on the fiscal 2019 effective tax rate was (3.9)%. The transition tax, which has now been determined to be complete, resulted in recording a total transition tax obligation of $316 million, of which $324 million was recorded as income tax liability and $(8) million recorded as a reduction in our unrecognized tax benefits.

Indefinite reinvestment assertion: Beginning January 1, 2018, the Act provides a 100% deduction for dividends received from 10-percent owned non-U.S. corporations by U.S. corporate shareholders, subject to a one-year holding period. Although such dividend income is now generally exempt from U.S. federal tax for U.S. corporate shareholders, companies must still account for the tax consequences of outside basis differences and other tax impacts of their investments in non-U.S. subsidiaries. During fiscal 2018, the Company recorded a provisional estimate for those subsidiaries for which DXC was able to make a reasonable estimate of the tax effects of such repatriation for withholding taxes, state taxes, and India dividend distribution tax of $12 million, $7 million and $80 million, respectively. For the three months ended December 31, 2018, the Company recognized an additional measurement-period adjustment of $9 million for state tax purposes recorded to discrete income tax expense. The Company completed its analysis of the non-U.S. tax rules for certain non-U.S. subsidiaries for U.S. federal and state tax purposes for all material provisional amounts during the measurement-period.

Global intangible low taxed income (GILTI): The Company continues to evaluate the impact of the GILTI provisions under the Act, which are complex and subject to continuing regulatory interpretation by the IRS. The Company is required to make an accounting policy election of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”), or (2) factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred method”). The Company determined that it will account for the new GILTI tax rules under the period cost method.

The income tax expense (benefit) on income (loss) from continuing operations is comprised of:



	Fiscal Years Ended
(in millions)	March 31, 2019			March 31, 2018			March 31, 2017
Current:
Federal	$	(50	)	$	392		$	(32	)
State	42			16			14
Foreign	218			247			36
	210			655			18
Deferred:
Federal	95			(899		)	(7		)
State	23			(59		)	(1		)
Foreign	(40		)	61			(84		)
	78			(897		)	(92		)
Total income tax expense (benefit)	$	288		$	(242	)	$	(74	)

The current federal (benefit) and tax expense for fiscal years 2019 and 2018 includes a $(44) million transition tax benefit and $332 million transition tax expense, respectively. The current expense (benefit) for fiscal 2019, 2018 and 2017, includes interest and penalties of $1 million, $2 million and $(9) million, respectively, for uncertain tax positions.

The Act implemented a mandatory one-time deemed repatriation tax on previously untaxed accumulated and current earnings and profits of certain of the Company’s non-U.S. subsidiaries, and requires current income inclusions for global intangible low taxed income. As a result of these tax law changes, the HPES Merger, and changes in U.S. cash requirements, the Company changed its permanent reinvestment assertion in fiscal 2018 on the remaining foreign subsidiaries and determined we will no longer consider current and accumulated earnings for all non-U.S. subsidiaries permanently reinvested, except for current year India earnings. We expect a significant portion of the cash held by our foreign subsidiaries will no longer be subject to U.S federal income tax upon repatriation to the U.S.; however, a portion of this cash may still be subject to foreign and U.S. state tax consequences when remitted.

In accordance with the prior fiscal year change in our permanent reinvestment assertion, a deferred tax liability of $554 million previously recorded for U.S. income taxes based on the estimated historical taxable earnings of the HPES foreign subsidiaries was released. The Company had previously recorded an estimated liability of $46 million for the India dividend distribution tax based on estimated historical taxable earnings of the HPES India subsidiary. Due to a change in cash requirements of the U.S. parent and the HPES India subsidiary, the Company changed its reinvestment assertion relating to certain India earnings and reversed this estimated dividend distribution tax liability in the current period. As of March 31, 2019, the Company recorded foreign withholding taxes and state taxes of $17 million and $11 million, respectively, for the tax effects of this future cash repatriation.

In connection with the HPES Merger, the Company entered into a tax matters agreement with HPE. HPE generally will be responsible for pre-HPES Merger tax liabilities including adjustments made by tax authorities to HPES U.S. and non-U.S. income tax returns. Likewise, DXC is liable to HPE for income tax receivables and refunds which it receives related to pre-HPES Merger periods. Pursuant to the tax matters agreement, the Company recorded a net receivable of $20 million due to $49 million of tax indemnification receivable related to uncertain tax positions net of related deferred tax benefits, $133 million of tax indemnification receivable related to other tax payables and $162 million of tax indemnification payable related to other tax receivables.

In connection with the USPS Separation, the Company entered into a tax matters agreement with Perspecta. Pursuant to

the tax matters agreement, the Company generally will be responsible for tax liabilities arising prior to the USPS

Separation. Income tax liabilities transferred to Perspecta primarily relate to pre-HPES Merger periods, for which the

Company is indemnified by HPE pursuant to the tax matters agreement between the Company and HPE. The Company

remains liable to HPE for tax receivables and refunds which it receives from Perspecta related to pre-HPES Merger

periods that were transferred to Perspecta. Pursuant to the tax matters agreement, the Company recorded a net receivable of $24 million due to $94 million of tax indemnification receivable related to government tax refunds owed to Perspecta and $70 million of tax indemnification payable related to government tax payments due from Perspecta.

The major elements contributing to the difference between the U.S. federal statutory tax rate and the effective tax rate ("ETR") for continuing operations is below. Due to the Company's fiscal year, the U.S. federal weighted statutory tax rate for the fiscal years ended March 31, 2019 and March 31, 2018 were of 21.0% and 31.5%, respectively.



	Fiscal Years Ended
	March 31, 2019		March 31, 2018		March 31, 2017
Statutory rate	21.0	%	31.5	%	(35.0	)%
State income tax, net of federal tax	3.2		2.0		(4.0	)
United States Tax Reform	(3.4	)	(40.6	)	—
Change in Indefinite Reinvestment Assertion	(3.1	)	3.3		—
Loss of attributes due to merger	—		5.1		—
Change in uncertain tax positions	(1.5	)	(0.2	)	(3.4	)
Foreign tax rate differential	(18.4	)	(5.7	)	(40.0	)
Capitalized transaction costs	0.1		1.0		12.1
Change in valuation allowances	16.9		(7.7	)	34.3
Excess tax benefits for stock compensation	(1.1	)	(3.0	)	(11.3	)
Prepaid tax asset amortization	—		0.3		7.1
Income Tax and Foreign Tax Credits	(0.6	)	(7.6	)	(2.0	)
U.S. Tax on Foreign Income	2.4		2.1		(2.6	)
Withholding Taxes	3.5		2.3		(1.1	)
Other items, net	—		(1.4	)	3.4
Effective tax rate	19.0	%	(18.6	)%	(42.5	)%

In fiscal 2019, the ETR was primarily impacted by:


•	Local tax losses on investments in Luxembourg that decreased the foreign tax rate differential and decreased the ETR by $360 million and 23.7%, respectively, with an offsetting increase in the ETR due to an increase in the valuation allowance of the same amount.


•	A change in the net valuation allowance on certain deferred tax assets, primarily in Luxembourg, Germany, Spain, UK, and Switzerland, which increased income tax expense and increased the ETR by $256 million and 16.9%, respectively.


•	A decrease in the transition tax liability and a change in tax accounting method for deferred revenue, which decreased income tax expense and decreased the ETR by $66 million and 4.3%, respectively.

In fiscal 2018, the ETR was primarily impacted by:


•	Due to the Company's change in repatriation policy, the reversal of a deferred tax liability relating to the outside basis difference of foreign subsidiaries which increased the income tax benefit and decreased the ETR by $554 million and 42.5%, respectively.


•	The accrual of the one-time transition tax imposed by the Act on estimated unremitted foreign earnings, which decreased the income tax benefit and increased the ETR by $361 million and 27.7%, respectively.


•	The remeasurement of deferred tax assets and liabilities as a result of the Act, which increased the income tax benefit and decreased the ETR by $338 million and 25.9%, respectively.

In fiscal 2017, the ETR was primarily impacted by:

•

A change in the valuation allowance that primarily consists of an aggregate income tax expense for the increase in the valuation allowances on tax attributes in the United States, Germany and Luxembourg, which decreased the overall income tax benefit and decreased the ETR by $135 million and 78%, respectively. This was partially offset by an income tax benefit from the release of valuation allowances on tax attributes in Denmark, Japan and the United Kingdom, which increased the overall income tax benefit and increased the ETR by $75 million and 43%, respectively.


•	An income tax detriment for transaction costs incurred that are not tax deductible, which resulted in a decrease to the overall tax benefit and decreased the ETR by $21 million and 12.1%, respectively.


•	An income tax benefit from excess tax benefits realized from employee share-based payment awards, which resulted in an increase in the overall income tax benefit and increased the ETR by $20 million and 11.3%, respectively.

The deferred tax assets (liabilities) were as follows:



	As of
(in millions)	March 31, 2019			March 31, 2018
Deferred tax assets
Employee benefits	$	79		$	156
Tax loss/credit carryforwards	1,917			1,665
Accrued interest	16			18
Contract accounting	130			134
Other assets	139			232
Total deferred tax assets	2,281			2,205
Valuation allowance	(1,575		)	(1,440		)
Net deferred tax assets	706			765

Deferred tax liabilities
Depreciation and amortization	(994		)	(888		)
Investment basis differences	(61		)	(62		)
Other liabilities	(63		)	(94		)
Total deferred tax liabilities	(1,118		)	(1,044		)

Total net deferred tax assets (liabilities)	$	(412	)	$	(279	)

Income tax related assets are included in the accompanying balance sheets as follows:



	As of
(in millions)	March 31, 2019		March 31, 2018
Current:
Income tax receivables and prepaid taxes	$	113	$	154
	$	113	$	154
Non-current:
Income taxes receivable and prepaid taxes	$	137	$	30
Deferred tax assets	355		373
	$	492	$	403

Total	$	605	$	557

Income tax related liabilities are included in the accompanying balance sheet as follows:



	As of
(in millions)	March 31, 2019			March 31, 2018
Current:
Liability for uncertain tax positions	$	—		$	(15	)
Income taxes payable	(208		)	(112		)
	$	(208	)	$	(127	)
Non-current:
Deferred taxes	(767		)	(652		)
Income taxes payable	(201		)	(278		)
Liability for uncertain tax positions	(216		)	(236		)
	$	(1,184	)	$	(1,166	)

Total	$	(1,392	)	$	(1,293	)

Significant management judgment is required in determining the Company's provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against deferred tax assets. A valuation allowance has been recorded against deferred tax assets of approximately $1.6 billion as of March 31, 2019 due to uncertainties related to the ability to utilize these assets. In assessing whether its deferred tax assets are realizable, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized and adjusts the valuation allowance accordingly. The Company considers all available positive and negative evidence including future reversals of existing taxable temporary differences, taxable income in prior carryback years, projected future taxable income, tax planning strategies and recent financial operations. As of March 31, 2018, DXC's net deferred tax assets in certain DXC German entities were primarily the result of net operating loss carryforwards, pension, restructuring, and other miscellaneous accruals. A full valuation allowance was recorded against these net deferred tax assets as of that reporting date. For the period ended December 31, 2018, management determined that the positive evidence, including the duration of the current profitability due to realization of cost synergies relating to the HPES merger, a legal entity restructuring allowing the future utilization of net operating loss carryforwards and the nonrecurring nature of the factors that primarily drove historical losses outweighs the negative evidence of a three-year cumulative loss. Therefore, as of December 31, 2018, management had a change in judgment and concluded that it is now more likely than not that the net deferred tax assets in these DXC German entities will be fully utilized. As a result, we recorded a valuation allowance release of $113 million. As of March 31, 2019, management had no change in our conclusions regarding the positive and negative evidence and the future realizability of these DXC German entities' deferred tax assets.

The net increase in the valuation allowance of $135 million in fiscal 2019, is primarily due to the increase in Luxembourg tax losses, an adjustment for currency translation of $122 million primarily in Luxembourg, partially offset by a valuation allowance release with respect to certain deferred tax assets of German entities.

The following table provides information on the Company's various tax carryforwards:



	As of March 31, 2019							As of March 31, 2018
(in millions)	Total		With No Expiration		With Expiration		Expiration Dates Through	Total		With No Expiration		With Expiration		Expiration Dates Through
Net operating loss carryforwards
Federal	$	25	$	—	$	25	2037	$	41	$	—	$	41	2037
State	$	845	$	9	$	836	2039	$	873	$	—	$	873	2038
Foreign	$	7,595	$	7,292	$	303	2039	$	6,522	$	6,287	$	235	2038
Tax credit carryforwards
Federal	$	—	$	—	$	—	N/A	$	—	$	—	$	—	N/A
State	$	23	$	7	$	16	2039	$	28	$	7	$	21	2038
Foreign	$	18	$	—	$	18	2020	$	21	$	—	$	21	2020
Capital loss carryforwards
Federal	$	—	$	—	$	—	N/A	$	—	$	—	$	—	N/A
State	$	—	$	—	$	—	N/A	$	—	$	—	$	—	N/A
Foreign	$	236	$	211	$	25	2023	$	240	$	193	$	47	2023

The Company is currently the beneficiary of tax holiday incentives in India, which expire in various fiscal years through 2026, and was a beneficiary of Malaysian tax holiday incentives in fiscal 2018 and 2017. As a result of these tax holiday incentives, the Company recorded an income tax benefit of approximately $2 million, $5 million and $1 million, during fiscal 2019, 2018 and 2017, respectively. The per share effects were $0.01, $0.02 and $0.01, for fiscal 2019, 2018 and 2017, respectively.

The Company accounts for income tax uncertainties in accordance with ASC 740 Income Taxes, which prescribes a recognition threshold and measurement criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more likely than not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more likely than not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. ASC 740 also provides guidance on the accounting for and disclosure of liabilities for uncertain tax positions, interest and penalties.

In accordance with ASC 740, the Company’s liability for uncertain tax positions was as follows:



	Fiscal Years Ended
(in millions)	March 31, 2019			March 31, 2018
Tax	$	165		$	219
Interest	41			40
Penalties	25			25
Net of tax attributes	(15		)	(33		)
Total	$	216		$	251

The following table summarizes the activity related to the Company’s uncertain tax positions (excluding interest and penalties and related tax attributes):



	Fiscal Years Ended
(in millions)	March 31, 2019			March 31, 2018			March 31, 2017
Balance at beginning of fiscal year	$	219		$	192		$	180
Gross increases related to prior year tax positions	4			10			14
Gross decreases related to prior year tax positions	(27		)	(12		)	(12		)
Gross increases related to current year tax positions	—			7			10
Settlements and statute of limitation expirations	(23		)	(19		)	(7		)
Acquisitions	—			39			6
Foreign exchange and others	(8		)	2			1
Balance at end of fiscal year	$	165		$	219		$	192

The Company’s liability for uncertain tax positions at March 31, 2019, March 31, 2018 and March 31, 2017, includes $138 million, $170 million and $149 million, respectively, related to amounts that, if recognized, would affect the effective tax rate (excluding related interest and penalties).

The Company recognizes interest accrued related to uncertain tax positions and penalties as a component of income tax expense. During the year ended March 31, 2019, the Company had a net increase in interest expense of $2 million ($1 million net of tax) and a net decrease in accrued expense for penalties of $1 million and, as of March 31, 2019, recognized a liability for interest of $41 million ($36 million net of tax) and penalties of $25 million. During the year ended March 31, 2018, the Company had a net increase in interest of $2 million ($2 million net of tax) and no net increase in accrued expense for penalties, and as of March 31, 2018, has recognized a liability for interest of $40 million ($36 million net of tax) and penalties of $25 million. The following table presents the change in interest and penalties from the previous reported period, as well as the liability at the end of each period presented:



	As of and for the Fiscal Years Ended
	March 31, 2019			March 31, 2018		March 31, 2017
(in millions)	Increase (Decrease)
Interest	$	2		$	2	$	(8	)
Interest, net of tax	$	1		$	2	$	(9	)
Accrued penalties	$	(1	)	$	—	$	—
Liability for interest	$	41		$	40	$	25
Liability for interest, net of tax	$	36		$	36	$	20
Liability for penalties	$	25		$	25	$	11

The Company is currently under examination in several tax jurisdictions. A summary of the tax years that remain subject to examination in certain of the Company’s major tax jurisdictions are:



Jurisdiction:		Tax Years that Remain Subject to Examination (Fiscal Year Ending):
United States – Federal		2008 and forward
United States – Various States		2008 and forward
Australia		2012 and forward
Canada		2010 and forward
France		2013 and forward
Germany		2010 and forward
India		1998 and forward
United Kingdom		2013 and forward

The IRS is examining CSC's federal income tax returns for fiscal 2008 through 2017. With respect to CSC's fiscal 2008 through 2010 federal tax returns, the Company previously entered into negotiations for a resolution through settlement with the IRS Office of Appeals. The IRS examined several issues for this audit that resulted in various audit adjustments. The Company and the IRS Office of Appeals have an agreement in principle as to some but not all of these adjustments. The Company has agreed to extend the statute of limitations associated with this audit through November 30, 2019. In addition, during the first quarter of fiscal 2018, the Company received a Revenue Agent’s Report with proposed adjustments to CSC's fiscal 2011 through 2013 federal returns. The Company has filed a protest of certain of these adjustments to the IRS Office of Appeals. The IRS is also examining CSC's fiscal 2014 through 2017 federal income tax returns. The Company has not received any proposed adjustments for these tax years. The Company continues to believe that its tax positions are more likely than not sustainable and that the Company will ultimately prevail. The Company now expects to reach a resolution for all years no earlier than fiscal 2021.

In addition, the Company may settle certain 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 those that have been accrued or extinguish a position though payment. The Company believes the outcomes which are reasonably possible within the next twelve months may result in a reduction in liability for uncertain tax positions of $9 million, excluding interest, penalties, and tax carryforwards.