Microsoft 2004 Annual Report Download - page 48

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PAGE 48
NOTE 10 INCOME TAXES
The components of the provision for income taxes are as follows:
(In millions)
Y
ear Ended June 30 2002 2003 2004
Current taxes:
U.S. and state $3,644 $ 3,861
$3,940
International 575 808 1,056
Current taxes 4,219 4,669 4,996
Deferred taxes (1,699) (1,146) (968)
Provision for income taxes $2,520 $ 3,523 $4,028
U.S. and international components of income before income taxes are as follows:
(In millions)
Y
ear Ended June 30 2002 2003 2004
U.S. $5,282 $ 7,674
$ 8,088
International 2,593 3,380 4,108
Income before income taxes $7,875 $11,054 $12,196
The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for
income taxes are as follows:
(In millions)
Y
ear Ended June 30 2002 2003 2004
Federal statutory rate 35.0% 35.0% 35.0%
Effect of:
Extraterritorial income exclusion tax benefit (3.1) (1.6) (0.9)
Permanent reinvestment of foreign earnings (1.8) (1.3) (1.7)
Other reconciling items 1.9 – 0.6
Total 32.0% 32.1% 33.0%
The 2004 other reconciling items include the $208 million benefit from the resolution of the issue remanded by the 9th
Circuit Court of Appeals and the impact of the non-deductible European Commission fine.