Intel 1996 Annual Report Download - page 57

The tax benefit associated with dispositions from employee stock plans reduced taxes currently payable for 1996 by $196 million ($116 million
and $61 million for 1995 and 1994, respectively).
The provision for taxes reconciles to the amount computed by applying the statutory federal rate of 35% to income before taxes as follows:
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 $992 million of undistributed earnings for certain non-U.S.
subsidiaries. The Company intends to reinvest these earnings indefinitely in operations outside the United States.
During 1996, Intel reached resolution on all outstanding issues related to income tax returns for the years 1978-1987. Final adjustments were
also received from the Internal Revenue Service (IRS) for the years 1988-1990. Neither event had a material effect on the Company's 1996
financial statements.
The Company's U.S. income tax returns for the years 1991-1993 are presently under examination by the IRS. Final proposed adjustments have
not yet been received for these years. Management believes that adequate amounts of tax and related interest and penalties, if any, have been
provided for any adjustments that may result for the years under examination.
Employee benefit plans
Stock option plans. Intel has a stock option plan (hereafter referred to as the EOP Plan) under which officers, key employees and non-
employee
directors may be granted options to purchase shares of the Company's authorized but unissued Common Stock. The Company also has an
Executive Long-Term Stock Option Plan (ELTSOP) under which certain employees, including officers, may be granted options to purchase
shares of the Company's authorized but unissued Common Stock. In January 1997 the Board of Directors approved the 1997 Stock Option
Plan, which made an additional 65 million shares available for employees other than officers and directors. Under all plans, the option purchase
price is equal to fair market value at the date of grant.
Options currently expire no later than ten years from the grant date and generally vest after five years. Proceeds received by the Company from
exercises are credited to Common Stock and capital in excess of par value. Additional information with respect to the EOP and the ELTSOP
activity was as follows:
(In millions) 1996 1995 1994
- - -----------------------------------------------------------------------
Computed expected tax $2,777 $1,973 $1,261
State taxes, net of federal benefits 186 132 105
Other (186) (33) (51)
------ ------ ------
Provision for taxes $2,777 $2,072 $1,315
====== ====== ======
(In millions) 1996 1995
- - -----------------------------------------------------------------------
Deferred tax assets:
Accrued compensation and benefits $ 71 $ 61
Deferred income 147 127
Inventory valuation and related reserves 187 104
Interest and taxes 54 61
Other, net 111 55
------ ------
570 408
Deferred tax liabilities:
Depreciation (573) (475)
Unremitted earnings of certain subsidiaries (359) (116)
Other, net (65) (29)
------ ------
(997) (620)
------ ------
Net deferred tax (liability) $ (427) $ (212)
====== ======
Outstanding options
----------------------
Weighted
Shares average
available Number exercise
(In millions) for options of shares price