Intel 2005 Annual Report Download - page 70

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 10: Provision for Taxes
Income before taxes and the provision for taxes consisted of the following:
The tax benefit from employee equity incentive plans was $351 million for 2005 ($344 million for 2004 and $216 million for 2003).
The difference between the tax provision at the statutory federal income tax rate and the tax provision attributable to income before income taxes was
as follows:
The American Jobs Creation Act of 2004 (the Jobs Act) created 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 non-U.S. corporations. During 2005, the company’s
Chief Executive Officer and Board of Directors approved a domestic reinvestment plan, under which the company repatriated $6.2 billion in earnings
outside the U.S. pursuant to the Jobs Act. The company recorded additional tax expense in 2005 of approximately $265 million ($0.04 per common
share, assuming dilution) related to this decision to repatriate non-U.S. earnings. This repatriation increased the company’s effective rate for 2005 by
approximately 2.1 percentage points, to 31.3%. The majority of this increase, 1.8%, is reflected as a separate line item in the rate reconciliation table
above, representing the rate effect of the repatriation of prior years’ permanently reinvested earnings. The remainder represents the rate effect of the
repatriation of the current year’s earnings and is included in the rate reconciliation table as part of “Non-U.S income taxed at different rates.”
66
(Dollars in Millions)
2005
2004
2003
Income before taxes:
U.S.
$
10,397
$
7,422
$
5,705
Non
-
U.S.
2,213
2,995
1,737
Total income before taxes
$
12,610
$
10,417
$
7,442
Provision for taxes:
Current:
Federal
$
3,546
$
2,787
$
808
State
289
(69
)
223
Non
-
U.S.
524
390
379
4,359
3,108
1,410
Deferred:
Federal
(360
)
(128
)
420
Other
(53
)
(79
)
(29
)
(413
)
(207
)
391
Total provision for taxes
$
3,946
$
2,901
$
1,801
Effective tax rate
31.3
%
27.8
%
24.2
%
(In Percentages)
2005
2004
2003
Statutory federal income tax rate
35.0
%
35.0
%
35.0
%
Increase (reduction) in rate resulting from:
State taxes, net of federal benefits
1.3
(0.4
)
1.9
Non
-
U.S. income taxed at different rates
(2.0
)
(2.5
)
(2.8
)
Non
-
deductible acquisition
-
related costs and goodwill impairments
—
0.1
3.1
Tax benefit related to divestitures
—
—
(
10.2
)
Export sales benefit
(2.8
)
(4.8
)
(2.5
)
Repatriation of prior years
’
permanently reinvested earnings
1.8
—
—
Other
(2.0
)
0.4
(0.3
)
Income tax rate
31.3
%
27.8
%
24.2
%