Accounting Policies
Stock Split
Accounting Changes
Unearned Revenue
Cash and Short-Term Investments
Inventories
Property and Equipment
Equity and Other Investments
Goodwill
Intangible Assets
Derivatives
Investment Income/(Loss)
Income Taxes
Stockholders' Equity
Other Comprehensive Income
Employee Stock and Savings Plans
Earnings Per Share
Acquisitions
Commitments and Guarantees
Contingencies
Segment Information
Note 13-Income Taxes
The provision for income taxes consisted of:
(In millions) |
|
|
|
|
|
Year Ended June 30 |
2001 |
|
2002 |
|
2003 |
|
|
|
|
|
|
Current taxes: |
|
|
|
|
|
U.S. and state |
$ 3,243 |
|
$ 3,644 |
|
$ 3,861 |
International |
514 |
|
575 |
|
808 |
Current taxes |
3,757 |
|
4,219 |
|
4,669 |
Deferred taxes |
47 |
|
(535) |
|
64 |
Provision for income taxes |
$ 3,804 |
|
$ 3,684 |
|
$ 4,733 |
U.S. and international
components of income before income taxes were:
(In millions) |
|
|
|
|
|
Year Ended June 30 |
2001 |
|
2002 |
|
2003 |
|
|
|
|
|
|
U.S. |
$ 9,189 |
|
$ 8,920 |
|
$ 11,346 |
International |
2,336 |
|
2,593 |
|
3,380 |
Income before income taxes |
$
11,525 |
|
$ 11,513 |
|
$
14,726 |
In 2001, the effective tax rate
was 33.0% and included the effect of a 3.1% reduction from the U.S. statutory
rate for tax credits and a 1.1% increase for other items. The effective tax rate
in 2002 was 32.0% and included the effect of a 2.4% reduction from the U.S.
statutory rate for the extraterritorial income exclusion tax benefit and a 0.6%
reduction for other items. The effective tax rate in 2003 was 32.1% and included
the effect of a one-time benefit of $126 million from the reversal of previously
accrued taxes related to a favorable tax court ruling and a 2.0% reduction from
the U.S. statutory rate for other items. Excluding this reversal, the effective
tax rate in 2003 would have been 33.0%.
Deferred income taxes were:
(In millions) |
|
|
|
June 30 |
2002 |
|
2003 |
|
|
|
|
|
|
Deferred income tax assets: |
|
|
|
Revenue Items |
$ 2,261 |
|
$
2,556 |
Expense items |
945 |
|
1,048 |
Impaired investments |
2,016 |
|
1,525 |
Deferred income tax assets |
$ 5,222 |
|
$ 5,129 |
Deferred income tax liabilities: |
|
|
|
Unrealized gain on investments |
$
(887) |
|
$ (1,584) |
International earnings |
(1,818) |
|
(1,809) |
Other |
(803) |
|
(961) |
Deferred income tax liabilities |
$
(3,508) |
|
$
(4,354) |
We have not provided for U.S.
deferred income taxes or foreign withholding taxes on $1.64 billion of our
undistributed earnings for certain non-U.S. subsidiaries, all of which relate
to fiscal 2002 and 2003 earnings, because these earnings are intended to be
reinvested indefinitely.
September 15, 2000,
the U.S. Tax Court issued an adverse ruling with respect to our claim that the
Internal Revenue Service (IRS) incorrectly assessed taxes for 1990 and 1991. On
December 3, 2002,
the Ninth Circuit Court of Appeals substantially reversed the U.S. Tax Court
decision. Income taxes, except for one issue remanded to the U.S. Tax Court by
the Ninth Circuit Court of Appeals for additional consideration, have been
settled with the IRS for all years through 1996. The IRS is examining our 1997
through 1999 U.S.
income tax returns. Management believes any adjustments which may be required
will not be material to the financial statements. Income taxes paid were $1.3
billion in 2001, $1.9 billion in 2002, and $2.8 billion in 2003.
|