Intel 2004 Annual Report Download - page 70

Download and view the complete annual report

Please find page 70 of the 2004 Intel annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 111

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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:
Gross deferred tax assets as of December 25, 2004 were reduced by a valuation allowance of $75 million related to certain state capital
loss carryforwards and state credit carryforwards, as recovery of these assets is not likely. In addition, the company reclassified $445 million
from deferred tax liabilities to common stock and capital stock in excess of par value. The balance sheet reclassification represented the tax
benefit attributable to certain prior-year stock option exercises by non-U.S. employees and had no impact on the accompanying statement of
cash flows.
U.S. income taxes were not provided for on a cumulative total of approximately $7.9 billion of undistributed earnings for certain non-
U.S. subsidiaries. The company currently intends to reinvest these earnings in operations outside the U.S. The American Jobs Creation Act of
2004 (the Jobs Act) creates a temporary incentive for U.S. corporations to repatriate accumulated income earned abroad by providing an 85%
dividends-received deduction for certain dividends from controlled foreign corporations. The deduction is subject to a number of limitations,
and currently the company is uncertain as to how to interpret numerous provisions in the Jobs Act. The company is not yet in a position to
decide whether, and to what extent, foreign earnings that have not yet been remitted to the U.S. might be repatriated. Based on the analysis to
date, however, it is reasonably possible that as much as $6.0 billion might be repatriated, with a respective tax liability of up to $475 million.
The company expects to be in a position to finalize its analysis by October 2005.
63
(In Millions)
2004
2003
Deferred tax assets (liabilities)
Accrued compensation and other benefits
$
265
$
218
Accrued advertising
115
107
Acquired intangibles
(26
)
(68
)
Deferred income
232
245
Depreciation
(894
)
(1,272
)
Impairment losses on equity investments
110
106
Inventory valuation
193
156
Unrealized gains on investments
(82
)
(50
)
Other, net
286
45
199
(513
)
Valuation allowance
(75
)
—
Net deferred tax assets (liabilities)
$
124
$
(513
)
Reported as:
Current deferred tax assets
$
979
$
969
Long
-
term deferred tax liabilities
(855
)
(1,482
)
Net deferred taxes
$
124
$
(513
)