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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 5—Income Taxes
The provision for income taxes for the three fiscal years ended September 27, 2008, consisted of the following (in millions):
The foreign provision for income taxes is based on foreign pretax earnings of $3.5 billion, $2.2 billion, and $1.5 billion in 2008, 2007, and 2006,
respectively. As of September 27, 2008 and September 29, 2007, $11.3 billion and $6.5 billion, respectively, of the Company’s cash, cash
equivalents, and short-term investments were held by foreign subsidiaries and are generally based in U.S. dollar-
denominated holdings. Amounts
held by foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S. The Company’s consolidated financial
statements 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 U.S. U.S. income taxes have not been provided on a
cumulative total of $3.8 billion 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.
71
2008
2007
2006
Federal:
Current
$
1,942
$
1,219
$
619
Deferred
(155
)
85
56
1,787
1,304
675
State:
Current
210
112
56
Deferred
(82
)
9
14
128
121
70
Foreign:
Current
277
103
101
Deferred
(131
)
(16
)
(17
)
146
87
84
Provision for income taxes
$
2,061
$
1,512
$
829