Income Taxes

12 Months Ended

Mar. 31, 2012

Income Taxes [Abstract]

Income Taxes

(8) Income Taxes

The income tax provision (benefit) for fiscal 2012, 2011 and 2010 consists of:

	Year Ended March 31,
	2012			2011			2010
				(In millions)
Current:
Federal	$	67.0		$	(14.4	)	$	26.2
State		11.2			7.7			(0.5	)
Foreign		49.1			40.9			44.2
Total current		127.3			34.2			69.9
Deferred:
Federal		4.7			37.7			24.6
State		(0.7	)		3.1			4.3
Foreign		(2.3	)		0.1			(0.7	)
Total deferred		1.7			40.9			28.2
Income tax provision	$	129.0		$	75.1		$	98.1

The foreign income tax provision was based on foreign pre-tax earnings of $235.9 million, $240.1 million and $214.5 million for fiscal 2012, 2011 and 2010, respectively. The federal income tax provision includes the United States tax effects of certain foreign entities that are treated as a branch of a United States entity for tax purposes and therefore their earnings are included in the United States consolidated income tax return.

A reconciliation of income tax computed at the United States federal statutory rate of 35% to reported income tax expense for fiscal 2012, 2011 and 2010 follows (dollars in millions):

	Year Ended March 31,
	2012						2011						2010
	Amount			Percent			Amount			Percent			Amount			Percent
Expense computed at United States statutory rate	$	185.5			35.0	%	$	186.0			35.0	%	$	176.5			35.0	%
Effect of foreign rate differentials		(40.6	)		(7.7	)%		(54.6	)		(10.3	)%		(29.7	)		(5.9	)%
Extraterritorial income and production activities		(25.7	)		(4.8	)%		(24.7	)		(4.6	)%		(21.5	)		(4.3	)%
deductions
State income taxes, net of federal benefit		6.8			1.3	%		8.7			1.6	%		3.1			0.6	%
Settlements with tax authorities		(6.2	)		(1.2	)%		(57.2	)		(10.8	)%		(30.0	)		(5.9	)%
Other, net		9.2			1.7	%		16.9			3.2	%		(0.3	)		0.0	%
	$	129.0			24.3	%	$	75.1			14.1	%	$	98.1			19.5	%

The significant components of deferred tax assets and liabilities at March 31, 2012 and 2011 were:

	March 31,
	2012			2011
	(In millions)
Deferred tax assets:
Deferred revenue	$	66.5		$	53.7
Compensation plans		47.0			46.5
Property and equipment, net		4.0			4.6
Net operating loss carryforwards		52.8			36.0
Tax credit carryforwards		10.0			6.2
Other		65.7			77.1
Total gross deferred tax assets		246.0			224.1
Valuation allowance		(20.5	)		(10.1	)
Total deferred tax assets		225.5			214.0
Deferred tax liabilities:
Software development costs		(88.2	)		(70.7	)
Acquired intangible assets		(95.0	)		(13.5	)
Other		(55.0	)		(59.4	)
Total deferred tax liabilities		(238.2	)		(143.6	)
Net deferred tax assets (liabilities)	$	(12.7	)	$	70.4
As reported:
Current deferred tax assets	$	71.0		$	65.1
Other long-term assets	$	22.7		$	29.3
Accrued liabilities	$	(0.4	)	$	(3.7	)
Other long-term liabilities	$	(106.0	)	$	(20.3	)

In evaluating our ability to realize our deferred tax assets, we consider all available evidence, both positive and negative, including our past operating results, reversals of existing temporary differences, tax planning strategies and forecasts of future taxable income. In considering these sources of taxable income, we must make certain assumptions and judgments that are based on the plans and estimates used to manage our underlying business. Changes in our assumptions, plans and estimates may materially impact income tax expense.

We maintain a valuation allowance against certain tax credits and net operating losses that we do not believe are more likely than not to be utilized in the future. The valuation allowance increased (decreased) by $10.4 million, $1.0 million and $(12.1) million during fiscal 2012, 2011 and 2010, respectively. At March 31, 2012, we have federal net operating loss carryforwards of $111.4 million and foreign net operating loss carryforwards of $13.0 million, which expire between 2017 and 2031. These tax credits and net operating losses have arisen from various acquisitions as well as from net operating losses generated in certain foreign jurisdictions. Certain of the net operating loss carryforward assets are subject to an annual limitation under Internal Revenue Code Section 382, but are expected to be fully realized.

Aggregate unremitted earnings of certain foreign subsidiaries for which United States federal income taxes have not been provided are $615.8 million at March 31, 2012. Deferred income taxes have not been provided on these earnings because we consider them to be indefinitely re-invested. If these earnings were repatriated to the United States or they were no longer determined to be indefinitely re-invested, we would have to record a tax liability for these earnings of approximately $138.3 million, assuming full utilization of the foreign tax credits associated with these earnings.

We carry out our business operations through legal entities in the United States and multiple foreign jurisdictions. These jurisdictions require that we file corporate income tax returns that are subject to United States, state and foreign tax laws. We are subject to routine corporate income tax audits in these multiple jurisdictions.

The total amount of unrecognized tax benefits at March 31, 2012, 2011 and 2010 was $56.8 million, $55.8 million and $106.4 million, respectively, of which $50.3 million, $49.7 million and $95.1 million, respectively, would impact our effective tax rate if recognized.

Activity related to our unrecognized tax benefits (excluding interest and penalties) consists of:

	Year Ended March 31,
	2012			2011			2010
				(In millions)
Beginning of year	$	55.8		$	106.4		$	106.3
Increases related to current year tax positions		3.1			6.6			6.0
Increases related to prior year tax positions		8.8			20.8			21.0
Decreases related to prior year tax positions		(8.1	)		(58.9	)		(22.7	)
Decreases related to lapses of statutes of limitations		(2.6	)		(19.0	)		(3.9	)
Impact of foreign currency exchange rate changes		(0.2	)		(0.1	)		(0.3	)
End of year	$	56.8		$	55.8		$	106.4

We recognize interest and penalties related to uncertain tax positions in income tax expense. To the extent accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period that such determination is made. We recognized $3.9 million, $7.7 million and $2.4 million of interest and penalties during fiscal 2012, 2011 and 2010, respectively. The total amount of accrued interest and penalties related to uncertain tax positions was $33.7 million and $31.0 million at March 31, 2012 and 2011, respectively.

We file a federal income tax return in the United States as well as income tax returns in various local, state and foreign jurisdictions. Our tax years are closed with the United States Internal Revenue Service (IRS) through the tax year ended March 31, 2007, except for one issue related to the year ended March 31, 2006. We received a Notice of Deficiency from the IRS related to this issue and in July 2011 filed a petition for hearing with the U.S. Tax Court. A trial date is scheduled for May 2012. During fiscal 2012, we settled all open issues with the IRS resulting from the audit of our tax year ended March 31, 2008. During fiscal 2011, we settled all open issues but the one mentioned above with the IRS resulting from the audit of our tax years ended March 31, 2006 and 2007. During fiscal 2010 and early fiscal 2011, we settled all open issues with the IRS resulting from the audit of our tax years ended March 31, 2004 and 2005. As a result of these settlements, we recorded net tax benefits of $6.2 million, $57.2 million and $30.0 million in fiscal 2012, 2011 and 2010, respectively. In April 2011, the IRS issued its Revenue Agent Report (RAR) for its examination of our federal income tax return for the tax year ended March 31, 2008, and there are no unagreed issues arising from this RAR. The IRS has initiated an examination of our federal income tax return for the years ended March 31, 2009 and 2010. In addition, certain tax years related to local, state, and foreign jurisdictions remain subject to examination. To provide for potential tax exposures, we maintain a liability for unrecognized tax benefits which we believe is adequate.