Dell 2007 Annual Report Download - page 69

Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The components of Dell's net deferred tax asset are as follows:
Fiscal Year Ended
February 1, February 2,
2008 2007
(in millions)
Deferred tax assets:
Deferred revenue $ 597 $ 440
Inventory and warranty provisions 46 128
Investment impairments and unrealized gains 10 -
Provisions for product returns and doubtful accounts 61 51
Capital loss 7 13
Leasing and financing 302 222
Credit carryforwards 3 22
Stock-based and deferred compensation 188 145
Operating accruals 58 34
Other 134 125
Deferred tax assets 1,406 1,180
Deferred tax liabilities:
Property and equipment (105) (96)
Acquired intangibles (199) (16)
Other (21) (39)
Deferred tax liabilities (325) (151)
Valuation allowance - (28)
Net deferred tax asset $ 1,081 $ 1,001
Current portion (included in other current assets) $ 596 $ 445
Non-current portion (included in other non-current assets) 485 556
Net deferred tax asset $ 1,081 $ 1,001
A portion of Dell's foreign operations operate at a reduced tax rate or free of tax under various tax holidays which expire in whole or in
part during Fiscal 2010 through 2021. Many of these holidays may be extended when certain conditions are met. The income tax benefits
attributable to the tax status of these subsidiaries were estimated to be approximately $502 million ($0.23 per share) in Fiscal 2008,
$282 million ($0.13 per share) in Fiscal 2007, and $368 million ($0.15 per share) in Fiscal 2006.
In March 2007, China announced a broad program to reform tax rates and incentives, effective January 1, 2008, including introduction of
phased-in transition rules that could significantly alter the Chinese tax structure for U.S. companies operating in China. Clarification of
the rules, which phase in higher statutory tax rates over a five year period, was issued in late Fiscal 2008. As a result, Dell increased the
relevant deferred tax assets to reflect the enacted statutory rates for the year in which it expects the differences to reverse.
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