Apple 1999 Annual Report Download - page 55

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4--SPECIAL CHARGES (CONTINUED)
pertaining to NeXT subsequent to the date of acquisition have been included in the Company's operating results. The total purchase price was
allocated to purchased in-process research and development ($375 million) and to goodwill and other intangible assets ($52 million). The
purchased in-process research and development was charged to operations upon acquisition, and the goodwill and other intangible assets are
being amortized on a straight-line basis over two to three years.
NOTE 5--INCOME TAXES
The provision for income taxes consisted of the following (in millions):
The foreign provision for income taxes is based on foreign pretax earnings
(loss) of approximately $612 million, $315 million, and $(265) million in 1999, 1998, and 1997, 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 $520 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.
51
1999 1998 1997
-------- --------- ---------
Federal:
Current.................................................. $ 4 $ -- $ --
Deferred................................................. 30 -- --
--- --------- ---------
34 -- --
--- --------- ---------
State:
Current.................................................. -- -- --
Deferred................................................. 11 -- --
--- --------- ---------
11 -- --
--- --------- ---------
Foreign:
Current.................................................. 33 11 --
Deferred................................................. (3) 9 --
--- --------- ---------
30 20 --
--- --------- ---------
Provision for income taxes................................. $75 $ 20 $ --
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