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Income Taxes | 12 Months Ended
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Apr. 28, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | 14. Income Taxes Income before income taxes is as follows (in millions):
|  | Year Ended |
|  | April 28, 2017 |  |  | April 29, 2016 |  |  | April 24, 2015 |
Domestic |  | $ | 206 |  |  | $ | 88 |  |  | $ | 253 |
Foreign |  |  | 459 |  |  |  | 257 |  |  |  | 460 |
Total |  | $ | 665 |  |  | $ | 345 |  |  | $ | 713 |
Domestic income before taxes is lower than foreign income before taxes due to significant domestic expenses related to the amortization of intangibles, stock-based compensation and restructuring expenses. The provision for income taxes consists of the following (in millions):
|  | Year Ended |
|  | April 28, 2017 |  |  | April 29, 2016 |  |  | April 24, 2015 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 22 |  |  | $ | 180 |  |  | $ | 104 |
State |  |  | 3 |  |  |  | 14 |  |  |  | 12 |
Foreign |  |  | 41 |  |  |  | 35 |  |  |  | 40 |
Total current |  |  | 66 |  |  |  | 229 |  |  |  | 156 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 75 |  |  |  | (91 | ) |  |  | 8 |
State |  |  | 18 |  |  |  | (17 | ) |  |  | (3 | )
Foreign |  |  | (3 | ) |  |  | (5 | ) |  |  | (8 | )
Total deferred |  |  | 90 |  |  |  | (113 | ) |  |  | (3 | )
Provision for income taxes |  | $ | 156 |  |  | $ | 116 |  |  | $ | 153 |
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate as follows (in millions):
|  | Year Ended |
|  | April 28, 2017 |  |  | April 29, 2016 |  |  | April 24, 2015 |
Tax computed at federal statutory rate |  | $ | 233 |  |  | $ | 121 |  |  | $ | 250 |
State income taxes, net of federal benefit |  |  | 14 |  |  |  | (3 | ) |  |  | 5 |
Foreign earnings in lower tax jurisdictions |  |  | (100 | ) |  |  | (81 | ) |  |  | (141 | )
Stock-based compensation |  |  | 16 |  |  |  | 13 |  |  |  | 6 |
Research and development credits |  |  | (8 | ) |  |  | (14 | ) |  |  | (14 | )
Resolution of income tax examinations |  |  | — |  |  |  | 20 |  |  |  | 46 |
Domestic production activities deduction |  |  | (4 | ) |  |  | (10 | ) |  |  | (5 | )
Tax charge from integration of intellectual property from the SolidFire acquisition |  |  | — |  |  |  | 64 |  |  |  | — |
Other |  |  | 5 |  |  |  | 6 |  |  |  | 6 |
Provision for income taxes |  | $ | 156 |  |  | $ | 116 |  |  | $ | 153 |
We generated foreign earnings in lower tax jurisdictions primarily related to income from our European operations which are headquartered in the Netherlands. During fiscal 2016, we acquired SolidFire and recorded a tax charge of $64 million related to the integration of SolidFire intellectual property into our worldwide operations. During the first quarter of fiscal 2017, we adopted a new accounting standard that simplifies stock-based compensation income tax accounting and presentation within the financial statements. During fiscal 2017, we recorded a tax charge of $18 million following the post-adoption rules which require that all excess tax benefits and deficiencies from stock-based compensation be recognized as a component of income tax expense. See Note 1 – Description of Business and Significant Accounting Policies for more details regarding the adoption of this accounting standard. The components of our deferred tax assets and liabilities are as follows (in millions):
|  | April 28, 2017 |  |  | April 29, 2016 |
Deferred tax assets: |  |  |  |  |  |  |  |
Reserves and accruals |  | $ | 149 |  |  | $ | 214 |
Net operating loss and credit carryforwards |  |  | 104 |  |  |  | 72 |
Stock-based compensation |  |  | 49 |  |  |  | 66 |
Deferred revenue |  |  | 329 |  |  |  | 336 |
Other |  |  | 32 |  |  |  | 39 |
Gross deferred tax assets |  |  | 663 |  |  |  | 727 |
Valuation allowance |  |  | (94 | ) |  |  | (59 | )
Deferred tax assets, net of valuation allowance |  |  | 569 |  |  |  | 668 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Prepaids and accruals |  |  | 3 |  |  |  | 3 |
Acquired intangibles |  |  | 36 |  |  |  | 27 |
Property and equipment |  |  | 4 |  |  |  | 14 |
Other |  |  | 2 |  |  |  | 3 |
Total deferred tax liabilities |  |  | 45 |  |  |  | 47 |
Deferred tax assets, net of valuation allowance and deferred tax liabilities |  | $ | 524 |  |  | $ | 621 |
The valuation allowance increased by $35 million in fiscal 2017. The increase is mainly attributable to the adoption of the new accounting standard which requires that tax attributes related to excess tax benefits now be recognized as deferred tax assets, offset by corresponding valuation allowances, if applicable. As of April 28, 2017, we have federal net operating loss and tax credit carryforwards of approximately $8 million and $37 million, respectively. In addition, we have gross state net operating loss and tax credit carryforwards of $30 million and $142 million, respectively. The majority of the state credit carryforwards are California research credits which are offset by a valuation allowance as we believe it is more likely than not that these credits will not be utilized. We also have $22 million of foreign tax credit carryforwards generated by our Dutch subsidiary which are fully offset by a valuation allowance. Certain acquired net operating loss and credit carryforwards are subject to an annual limitation under Internal Revenue Code Section 382, but are expected to be realized with the exception of those which have a valuation allowance. The federal and state net operating loss carryforwards and credits will expire in various years from fiscal 2018 through 2037. The California research credit and Dutch foreign tax credit carryforwards do not expire. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):
|  | Year Ended |
|  | April 28, 2017 |  |  | April 29, 2016 |  |  | April 24, 2015 |
Balance at beginning of period |  | $ | 216 |  |  | $ | 272 |  |  | $ | 236 |
Additions based on tax positions related to the current year |  |  | 7 |  |  |  | 14 |  |  |  | 22 |
Additions for tax positions of prior years |  |  | 7 |  |  |  | 21 |  |  |  | 101 |
Decreases for tax positions of prior years |  |  | — |  |  |  | (39 | ) |  |  | (29 | )
Settlements |  |  | (12 | ) |  |  | (52 | ) |  |  | (58 | )
Balance at end of period |  | $ | 218 |  |  | $ | 216 |  |  | $ | 272 |
As of April 28, 2017, we had $218 million of gross unrecognized tax benefits, of which $156 million has been recorded in other long-term liabilities. Unrecognized tax benefits of $159 million, including penalties, interest and indirect benefits, would affect our provision for income taxes if recognized. We recognize accrued interest and penalties related to unrecognized tax benefits in the income tax provision. During fiscal 2017, 2016 and 2015, we recognized accrued interest and penalties of approximately $5 million, $2 million and $4 million, respectively in the consolidated statements of operations and $16 million and $11 million, respectively, were recorded in the consolidated balance sheets as of April 28, 2017 and April 29, 2016. The tax years that remain subject to examination for our major tax jurisdictions are shown below: Fiscal Years Subject to Examination for Major Tax Jurisdictions at April 28, 2017
2012 — 2017 |  | United States — federal income tax
2008 — 2017 |  | United States — state and local income tax
2013 — 2017 |  | Australia
2014 — 2017 |  | Germany
2007 — 2017 |  | India
2011 — 2017 |  | Japan
2013 — 2017 |  | The Netherlands
2014 — 2017 |  | United Kingdom
2009 — 2017 |  | Canada
In addition, we are effectively subject to federal tax examination adjustments for tax years ended on or after fiscal 2001, in that we have carryforward attributes from these years that could be subject to adjustment in the tax years of utilization. In June 2015, the Internal Revenue Service (IRS) signed a closing agreement on our fiscal 2008 to 2010 transfer pricing arrangements and, in October 2015, completed the examination of our fiscal 2008 to 2010 income tax returns. During fiscal 2016, we recorded discrete charges totaling $23 million attributable to audit settlements and the related re-measurement of uncertain tax positions for tax years subject to future audits. In July 2014, the IRS completed the examination of our fiscal 2005 to 2007 income tax returns upon approval by the Joint Committee of Taxation. During fiscal 2015, we recorded a tax charge of $47 million attributable to the audit settlement and related re-measurements of uncertain tax positions for tax years subject to future audits. We are currently undergoing federal income tax audits in the United States (U.S.) and several foreign tax jurisdictions. Transfer pricing calculations are key issues under audits in various jurisdictions, and are often subject to dispute and appeals. The IRS has concluded the examination of our tax returns for our fiscal years through 2010. The IRS commenced the examination of our federal income tax returns for our fiscal years 2012 and 2013 in August 2016. On September 17, 2010, the Danish Tax Authorities issued a decision concluding that distributions declared in 2005 and 2006 from our Danish subsidiary were subject to Danish at-source dividend withholding tax. We do not believe that our Danish subsidiary is liable for withholding tax and filed an appeal with the Danish Tax Tribunal to that effect. On December 19, 2011, the Danish Tax Tribunal issued a ruling that our Danish subsidiary was not liable for Danish withholding tax. The Danish tax examination agency appealed to the Danish High Court in March 2012. In February 2016, the Danish High Court referred the case to the European Court of Justice. We continue to monitor the progress of ongoing discussions with tax authorities and the impact, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions. We engage in continuous discussion and negotiation with taxing authorities regarding tax matters in multiple jurisdictions. We believe that within the next 12 months, it is reasonably possible that either certain audits will conclude, certain statutes of limitations will lapse, or both. Based on current information, we do not expect significant changes to our existing unrecognized tax benefits as of April 28, 2017. As of April 28, 2017, the amount of accumulated unremitted earnings from our foreign subsidiaries is approximately $4 billion. We have not provided U.S. income taxes and foreign withholding taxes on the undistributed earnings of foreign subsidiaries because we intend to indefinitely reinvest such earnings outside the U.S. If these foreign earnings were to be repatriated in the future, the related U.S. tax liability may be reduced by any foreign income taxes previously paid on these earnings as well as tax attributes. We estimate the unrecognized deferred tax liability related to these earnings to be approximately $1 billion as of April 28, 2017.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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