Western Digital 2008 Annual Report Download - page 74

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Income Tax Provision (Benefit)
The components of the provision (benefit) for income taxes were as follows for the three years ended June 27, 2008
(in millions):
2008 2007 2006
Current:
Foreign .................................................. $ 12 $ 8 $ 6
Domestic-federal ........................................... 103 (4) 3
Domestic-state ............................................. 1 — —
Deferred:
Domestic-federal ........................................... (2) (65) (19)
Domestic-state ............................................. — (60) (3)
Income tax provision (benefit) ................................ $114 $(121) $(13)
Remaining net undistributed earnings from foreign subsidiaries at June 27, 2008 on which no U.S. tax has been
provided amounted to approximately $2.2 billion. The net undistributed earnings are intended to finance local operating
requirements. Accordingly, an additional U.S. tax provision has not been made on these earnings. The tax liability for
these earnings would approximate $803 million, if the Company repatriated the $2.2 billion in undistributed earnings
from the foreign subsidiaries.
Deferred Taxes
Temporary differences and carryforwards, which give rise to a significant portion of deferred tax assets and liabilities
as of June 27, 2008 and June 29, 2007 were as follows (in millions):
2008 2007
Deferred tax assets:
Sales related reserves and accrued expenses not currently deductible .............. $ 83 $ 54
Accrued compensation and benefits not currently deductible ................... 37 25
Domestic net operating loss (“NOL”) carryforward .......................... 51 —
Business credit carryforward .......................................... 109 35
Other .......................................................... 45 43
325 157
Deferred tax liabilities ................................................ (15) (10)
Deferred tax assets, net............................................ $310 $147
2008 2007
Deferred tax assets:
Current portion (included in other current assets) ........................... $ 85 $ 69
Non-current portion (included in other non-current assets) .................... 240 88
Deferred tax liabilities ................................................ (15) (10)
Deferred tax assets, net............................................ $310 $147
In addition to the deferred tax assets presented above, the Company had additional NOL and credit benefits related
to stock-based compensation deductions of approximately $43 million and $106 million at June 27, 2008 and June 29,
2007, respectively, including $11 million as of June 27, 2008 related to the Acquisition. The deductions related to stock
based compensation resulted in a $19 million tax benefit and the use of NOL and credit carryforwards related to stock
68
WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)