Microsoft 2007 Annual Report Download - page 49

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PAGE 48
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Acquired intangibles are generally amortized on a straight-line basis over weighted average lives. Intangible
assets amortization expense was $236 million for fiscal year 2007, $127 million for fiscal year 2006, and $161
million for fiscal year 2005. The estimated future amortization expense related to intangible assets as of June 30,
2007 is as follows:
(In millions)
Y
ear Ended June 30 Amount
2008 $263
2009 229
2010 184
2011 111
2012 and thereafter 91
Total $878
NOTE 10 INCOME TAXES
The components of the provision for income taxes were as follows:
(In millions)
Y
ear Ended June 30 2007 2006 2005
Current taxes:
U.S. Federal $4,593 $4,471 $3,401
U.S. State and Local 154 101 152
International 957 882 911
Current taxes 5,704 5,454 4,464
Deferred taxes (benefits) 332 209 (90)
Provision for income taxes $6,036 $5,663 $4,374
U.S. and international components of income before income taxes were as follows:
(In millions)
Y
ear Ended June 30 2007 2006 2005
U.S. $12,902 $11,404 $ 9,806
International 7,199 6,858 6,822
Income before income taxes $20,101 $18,262 $16,628
The items accounting for the difference between income taxes computed at the federal statutory rate and the
provision for income taxes were as follows:
Y
ear Ended June 30 2007 2006 2005
Federal statutory rate 35.0% 35.0% 35.0%
Effect of:
Foreign earnings taxed at lower rates (5.1)% (4.6)% (3.1)%
Examination settlements –
(0.6)% (4.7)%
Other reconciling items 0.1% 1.2% (0.9)%
Effective rate 30.0% 31.0% 26.3%