Intel 2003 Annual Report Download - page 74

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Table of Contents
Index to Financial Statements
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
During 2001, the Internal Revenue Service (IRS) commenced an examination of Intel’s tax returns for the years 1999 and 2000. In
August 2003, the IRS proposed certain adjustments to the amounts reflected by Intel on these returns as a tax benefit for its export sales (see
“Note 21: Contingencies”). In January 2004, the IRS commenced an examination of Intel’s tax returns for the years 2001 and 2002. Although
the outcome of tax audits is always uncertain, based on currently available information, management believes that the ultimate outcome will
not have a material adverse effect on the company’s financial position, cash flows or overall trends in results of operations.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the company’s deferred tax assets and liabilities at fiscal year-ends were as follows:
U.S. income taxes were not provided for on a cumulative total of approximately $7.0 billion of undistributed earnings for certain non-
U.S. subsidiaries. The company intends to reinvest these earnings indefinitely in operations outside the U.S.
68
(In Millions)
2003
2002
Deferred tax assets
Accrued compensation and benefits
$
218
$
199
Accrued advertising
107
96
Deferred income
245
199
Inventory valuation
156
184
Impairment losses on equity investments
106
319
Other, net
137
139
969
1,136
Deferred tax liabilities
Depreciation
(1,272
)
(948
)
Acquired intangibles
(68
)
(120
)
Unremitted earnings of certain subsidiaries
(86
)
(112
)
Unrealized gains on investments
(50
)
(45
)
Other, net
(6
)
(7
)
(1,482
)
(1,232
)
Net deferred tax liability
$
(513
)
$
(96
)