Apple 1994 Annual Report Download - page 39

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Under APB Opinion No. 11, deferred income taxes result from timing differences between years in the recognition of certain revenue and
expense items for financial and tax reporting purposes. The sources of timing differences and the related tax effects for 1993 and 1992 are as
follows:
A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate (35.00% in
1994, 34.75% in 1993, and 34.00% in 1992) to income before income taxes, is as follows:
The Internal Revenue Service has proposed federal income tax deficiencies for the years 1984 through 1988, and the Company has made
prepayments thereon. The Company has contested these alleged deficiencies and is pursuing administrative and judicial remedies. Management
believes that adequate provision has been made for any adjustments that may result from these tax examinations.
Common Stock
Shareholder Rights Plan
In May 1989, the Company adopted a shareholder rights plan and distributed a dividend of one right to purchase one share of common stock (a
Right) for each outstanding share of common stock of the Company. The Rights become exercisable in certain limited circumstances involving
a potential business combination transaction of the Company and are initially exercisable at a price of $200 per share. Following certain other
events after the Rights have become exercisable, each Right entitles its holder to purchase for $200 an amount of common stock of the
Company, or, in certain circumstances, securities of the acquiror, having a then-current market value of two times the exercise price of the
Right. The Rights are redeemable and may be amended at the Company's option before they become exercisable. Until a Right is exercised, the
holder of a Right, as such, has no rights as a shareholder of the Company. The Rights expire on April 19, 1999.
36
(In thousands)
1993 1992
Income of foreign subsidiaries not
taxable in current year $ 53,150 $ 71,429
Warranty, bad debt, and other expenses (80,126) 35,494
Depreciation (3,796) (3,398)
Inventory valuation (16,835) (1,940)
State income taxes 2,607 (10,959)
Other individually immaterial items 41,777 33,852
Total deferred taxes $ (3,223) $ 124,478
FAS 109 Method APB 11 Method
1994 1993 1992
Computed expected tax $ 175,100 $ 48,532 $ 290,850
State taxes, net of federal benefit 16,978 2,465 26,945
Research and development tax credit (1,000) (8,000) (7,000)
Indefinitely invested earnings of
foreign subsidiaries (49,350) (21,083) (31,280)
Valuation allowance 9,016 -- --
Other individually immaterial items 39,364 31,156 45,554
Provision for income taxes $ 190,108 $ 53,070 $ 325,069
Effective tax rate 38% 38% 38%