Apple 2003 Annual Report Download - page 67

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The foreign provision for income taxes is based on foreign pretax earnings of approximately $250 million, $284 million and $363 million in
2003, 2002, and 2001, respectively. As of September 27, 2003, approximately $2.5 billion of the Company's cash, cash equivalents, and short-
term investments are held by foreign subsidiaries and are 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 $822 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.
As of September 27, 2003 and September 28, 2002, the significant components of the Company's deferred tax assets and liabilities were (in
millions):
As of September 27, 2003, the Company had operating loss carryforwards for federal tax purposes of approximately $189 million, which
expire from 2011 through 2023. A portion of these carryforwards was acquired from NeXT and other acquisitions, the utilization of which is
subject to certain limitations imposed by the Internal Revenue Code. The Company also has Federal credit carryforwards and various state and
foreign tax loss and credit carryforwards, the tax effect of which is approximately $117 million and which expire between 2004 and 2023. The
State:
Current
4
3
—
Deferred
(11
)
6
(10
)
(7
)
9
(10
)
Foreign:
Current
21
29
21
Deferred
(1
)
4
2
20
33
23
Provision for income taxes
$
24
$
22
$
(15
)
2003 2002
Deferred tax assets:
Accounts receivable and inventory reserves $
35
$
32
Accrued liabilities and other reserves
155
126
Basis of capital assets and investments
47
34
Tax losses and credits
204
125
Other
11
11
Total deferred tax assets
452
328
Less valuation allowance
30
30
Net deferred tax assets
422
298
Deferred tax liabilities:
Unremitted earnings of subsidiaries
398
293
Available-for-sale securities
—
1
Total deferred tax liabilities
398
294
Net deferred tax asset
$
24
$
4