Income Taxes (Tables)

12 Months Ended

Sep. 24, 2011

Provision for Income Taxes

The provision for income taxes for the three years ended September 24, 2011, consisted of the following (in millions):

	2011			2010			2009
Federal:
Current	$	3,884		$	2,150		$	1,922
Deferred		2,998			1,676			1,077
		6,882			3,826			2,999
State:
Current		762			655			524
Deferred		37			(115	)		(2	)
		799			540			522
Foreign:
Current		769			282			345
Deferred		(167	)		(121	)		(35	)
		602			161			310
Provision for income taxes	$	8,283		$	4,527		$	3,831

Significant Components of Deferred Tax Assets and Liabilities

As of September 24, 2011 and September 25, 2010, the significant components of the Company’s deferred tax assets and liabilities were (in millions):

	2011			2010
Deferred tax assets:
Accrued liabilities and other reserves	$	1,610		$	1,369
Basis of capital assets and investments		390			179
Share-based compensation		355			308
Other		795			707
Total deferred tax assets		3,150			2,563
Less valuation allowance		0			0
Deferred tax assets, net of valuation allowance		3,150			2,563
Deferred tax liabilities:
Unremitted earning of foreign subsidiaries		8,896			4,979
Other		272			150
Total deferred tax liabilities		9,168			5,129
Net deferred tax liabilities	$	(6,018	)	$	(2,566	)

Reconciliation of Provision for Income Taxes

A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate (35% in 2011, 2010 and 2009) to income before provision for income taxes for the three years ended September 24, 2011, is as follows (in millions):

	2011			2010			2009
Computed expected tax	$	11,973		$	6,489		$	4,223
State taxes, net of federal effect		552			351			339
Indefinitely invested earnings of foreign subsidiaries		(3,898	)		(2,125	)		(647	)
Research and development credit, net		(167	)		(23	)		(84	)
Domestic production activities deduction		(168	)		(48	)		(36	)
Other		(9	)		(117	)		36
Provision for income taxes	$	8,283		$	4,527		$	3,831
Effective tax rate		24.2%			24.4%			31.8%

Aggregate Changes in Gross Unrecognized Tax Benefits Excluding Interest and Penalties

The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for the three years ended September 24, 2011, is as follows (in millions):

	2011			2010			2009
Beginning Balance	$	943			971		$	506
Increases related to tax positions taken during a prior year		49			61			341
Decreases related to tax positions taken during a prior year		(39	)		(224	)		(24	)
Increases related to tax positions taken during the current year		425			240			151
Decreases related to settlements with taxing authorities		0			(102	)		0
Decreases related to expiration of statute of limitations		(3	)		(3	)		(3	)
Ending Balance	$	1,375		$	943		$	971