Apple 2001 Annual Report Download - page 45

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The provision for income taxes consisted of the following (in millions):
The foreign provision for income taxes is based on foreign pretax earnings of approximately $363 million, $1,019 million and $612 million in
2001, 2000, and 1999, 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 $755 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.
Deferred tax assets and liabilities reflect the effects of tax losses, credits, and 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.
58
As of September 29, 2001 and September 30, 2000, the significant components of the Company's deferred tax assets and liabilities were (in
millions):
2001
2000
1999
Federal:
Current $
(20
) $
9
$
4
Deferred
(8
)
239
30
(28
)
248
34
State:
Current
—
—
—
Deferred
(10
)
23
11
(10
)
23
11
Foreign:
Current
21
37
33
Deferred
2
(2
)
(3
)
23
35
30
Provision for income taxes
$
(15
)
$
306
$
75
2001
2000
Deferred tax assets:
Accounts receivable and inventory reserves $
26
$
24
Accrued liabilities and other reserves
110
97
Basis of capital assets and investments
54
65
Tax losses and credits
319
280
Total deferred tax assets
509
466
Less valuation allowance
33
33
Net deferred tax assets
476
433
Deferred tax liabilities:
Unremitted earnings of subsidiaries
489
480
Available-for-sale securities
14
174
Other
18
19