Apple 1998 Annual Report Download - page 53

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5--INCOME TAXES
The provision (benefit) for income taxes consisted of the following (in millions):
The foreign provision (benefit) for income taxes is based on foreign pretax earnings (loss) of approximately $315 million, $(265) million, and
$(141) million in 1998, 1997, and 1996, respectively. A substantial portion of the Company's cash, cash equivalents, and short-term
investments is held by foreign subsidiaries and is generally based in U.S. dollar-denominated holdings. Amounts held by foreign subsidiaries
would be subject to U.S. income taxation on repatriation to the United States. The Company's consolidated financial statements fully provide
for any related tax liability on amounts that may be repatriated, aside from undistributed earnings of certain of the Company's foreign
subsidiaries that are intended to be indefinitely reinvested in operations outside the United States. U.S. income taxes have not been provided on
a cumulative total of $437 million of such earnings. It is not practicable to determine the income tax liability that might be incurred if these
earnings were to be distributed. Except for such indefinitely reinvested earnings, the Company provides for federal and state income taxes
currently on undistributed earnings of foreign subsidiaries.
Deferred tax assets and liabilities reflect the future income tax effects of temporary differences between the consolidated financial statement
carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled.
50
1998 1997 1996
--------- --------- ---------
Federal:
Current............................................................. $ -- $ -- $ (125)
Deferred............................................................ -- -- (279)
--------- --------- ---------
-- -- (404)
--------- --------- ---------
State:
Current............................................................. -- -- (2)
Deferred............................................................ -- -- (71)
--------- --------- ---------
-- -- (73)
--------- --------- ---------
Foreign:
Current............................................................. 11 -- (1)
Deferred............................................................ 9 -- (1)
--------- --------- ---------
20 -- (2)
--------- --------- ---------
Provision (benefit) for income taxes.................................. $ 20 $ -- $ (479)
--------- --------- ---------
--------- --------- ---------