8. [Tax effect of permanently reinvested earnings] Silicon Graphics reports, in the tax footnote to its fiscal 1999 Annual Re- port, that We have not provided US federal taxes on approximately $242 million of accumulated undistributed carmings of cer- tain of our foreign subsidiaries, since it is our intention les permanently invest such eamings in foreign operations

a. Explam how Silicon Graphics' treatment of the undis tributed earnings of its foreign subsidiaries has affected its reported: (i) Income tax expense (ii) Income tax paid (iii) Effective tax rate (iv) Earnings per share (v) Book value per share

b. If the subsidiaries remitted the previously undistributed cam- ings to the United States parent company, describe the effect on the following reported amounts in that year: (i) Pretax income (ii) Income tax expense (iii) Income tax paid (iv) ffective tax rate (v) Earnings per share (vi) Book value per share

c. State whether an analyst should adjust Silicon Graphics' re- ported financial data for the tax effect of the undistributed camings Justify your answer

d. In the fourth quarter of fiscal 2000. Silicon Graphics recog- nized a provision for deferred U.S. and foreign tax income taxes on undistributed foreign earnings of approximately $93 million. Suggest why this liability was established given the statement quoted at the beginning of this question.