Apple 1999 Annual Report Download - page 56

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5--INCOME TAXES (CONTINUED)
As of September 25, 1999 and 1998, the significant components of the Company's deferred tax assets and liabilities were (in millions):
As of September 25, 1999, the Company had operating loss carryforwards for federal tax purposes of approximately $414 million, which
expire principally in 2011 and 2012. This does not include approximately $102 million of remaining operating loss carryforwards acquired
from NeXT, which expire in 2008 - 2012, and the utilization of which is subject to certain limitations imposed by the Internal Revenue Code.
The Company also has various state and foreign tax loss and credit carryforwards, the tax effect of which is approximately $90 million and
which expire between 2001 and 2014. Most of the remaining benefits from tax losses and credits do not expire. As of September 25, 1999, a
valuation allowance of $60 million was recorded against the deferred tax asset for the benefits of tax losses that may not be realized. The
valuation allowance relates to the operating loss carryforwards acquired from NeXT and to tax benefits in certain foreign jurisdictions. The net
change in the total valuation allowance in 1999 was a decrease of $153 million. Management believes it is more likely than not forecasted
income, including income that may be generated as a result of certain tax planning strategies, will be sufficient to fully recover the remaining
net deferred tax assets.
52
1999 1998
-------- --------
Deferred tax assets:
Accounts receivable and inventory reserves................ $ 31 $ 87
Accrued liabilities and other reserves.................... 77 83
Basis of capital assets and investments................... 67 71
Tax losses and credits.................................... 438 447
---- ----
Total deferred tax assets................................. 613 688
Less valuation allowance.................................... 60 213
---- ----
Net deferred tax assets..................................... 553 475
---- ----
Deferred tax liabilities:
Unremitted earnings of subsidiaries....................... 442 390
Available-for-sale securities............................. 84 --
Other..................................................... 12 20
---- ----
Total deferred tax liabilities............................ 538 410
---- ----
Net deferred tax asset...................................... $ 15 $ 65
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