Qualcomm 2002 Annual Report Download - page 74

NOTE 8. INCOME TAXES
The components of income tax provision for the years ended September 30 were
as follows (in thousands):
2002 2001 2000
Current provision:
Federal $ 5,377 $ 274,316 $289,135
State 7,989 69,640 54,423
Foreign 85,903 77,276 62,385
99,269 421,232 405,943
Deferred (benefit) provision:
Federal (22) (279,730) 97,522
State 2,201 (37,001) 23,129
2,179 (316,731) 120,651
$101,448 $ 104,501 $526,594
The following is a reconciliation from the expected statutory federal income tax
provision to the Company’s actual income tax provision for the years ended
September 30 (in thousands):
2002 2001* 2000*
Expected income tax provision at
federal statutory tax rate $ 161,394 $(159,474) $402,059
State income tax (benefit) provision,
net of federal benefit 23,978 (23,693) 59,734
Goodwill amortization and purchased
in-process technology 96,642 95,728 79,811
Other permanent differences 7,649 6,567 8,382
Foreign differential 19,910 11,904 16,125
Valuation allowance (179,324) 192,551 12,016
Tax credits (25,788) (28,549) (43,035)
Alternative Minimum Tax — 4,165 —
Other (3,013) 5,302 (8,498)
Actual income tax provision $ 101,448 $ 104,501 $526,594
* As adjusted (Note 13)
The Company did not provide for United States income taxes and foreign with-
holding taxes on a cumulative total of approximately $455 million of undistributed
earnings for certain non-United States subsidiaries. The Company considers the
operating earnings of non-United States subsidiaries to be indefinitely invested out-
side the United States. Should the Company have to repatriate foreign earnings, the
Company would have to adjust the income tax provision in the period in which the
facts that give rise to the revision become known.
At September 30, 2002 and 2001, the Company had net deferred tax assets as
follows (in thousands):
2002 2001*
Accrued liabilities $ 280,706 $ 451,912
Deferred revenue 170,608 186,094
Unrealized loss on marketable securities 35,600 71,988
Unused net operating losses 458,742 184,725
Tax credits 431,413 324,793
Unrealized loss on investments 247,930 109,070
Total gross assets 1,624,999 1,328,582
Valuation allowance (1,523,044) (1,227,457)
Total net deferred assets 101,955 101,125
Purchased intangible assets (4,022) (7,319)
Deferred contract costs (42,173) (42,524)
Unrealized gain on marketable securities (15,022) (7,817)
Other basis differences (33,889) (36,434)
Total deferred liabilities $ (95,106) $ (94,094)
* As adjusted (Note 13)
The Company has provided a valuation allowance on substantially all of its net
deferred tax assets because of uncertainty regarding their realizability due to the
expectation that deductions from future employee stock option exercises and related
deductions will exceed future taxable income. If and when recognized, the tax benefit
of these deferred assets will be accounted for primarily as a credit to stockholders’
equity rather than as a reduction of the income tax provision.
At September 30, 2002, the Company had unused net operating losses, manufac-
turing, research, foreign tax and alternative minimum tax credits expiring from 2003
through 2022. The unused net operating tax losses were generated by the exercise of
non-qualified employee stock options.
Cash amounts paid for income taxes were $89 million, $75 million and $44 million
for fiscal 2002, 2001 and 2000, respectively.
NOTE 9. CAPITAL STOCK
PREFERRED STOCK
The Company has 8,000,000 shares of preferred stock authorized for issuance in
one or more series, at a par value of $0.0001 per share. In conjunction with the
distribution of Preferred Share Purchase Rights, the Company’s Board of Directors
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued