HP 2006 Annual Report Download - page 116

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 13: Taxes on Earnings (Continued)
The significant components of deferred tax assets and deferred tax liabilities were as follows for
the following fiscal years ended October 31:
2006 2005(1)
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
In millions
Loss carryforwards ................................ $ 558 $ — $ 554 $ —
Credit carryforwards .............................. 2,247 — 2,851 —
Unremitted earnings of foreign subsidiaries .............. — 4,111 — 4,015
Inventory valuation ............................... 135 74 179 58
Intercompany transactions—profit in inventory ........... 519 — 749 —
Intercompany transactions—excluding inventory .......... 1,471 — 777 —
Fixed assets ..................................... 362 5 386 13
Warranty ....................................... 670 — 602 —
Employee and retiree benefits ....................... 1,545 553 1,055 472
Accounts receivable allowance ....................... 152 — 166 —
Capitalized research and development .................. 1,880 — 2,235 —
Purchased intangible assets .......................... 58 445 120 619
Restructuring .................................... 182 — 333 —
Equity investments ................................ 54 — 177 —
Deferred revenue ................................ 592 — 443 —
Other ......................................... 896 103 909 41
Gross deferred tax assets and liabilities ................. 11,321 5,291 11,536 5,218
Valuation allowance ............................... (840) — (812) —
Total deferred tax assets and liabilities ................. $10,481 $5,291 $10,724 $5,218
(1) Certain reclassifications have been made to prior year amounts in order to conform to the current
year presentation.
The breakdown between current and long-term deferred tax assets and deferred tax liabilities was
as follows for the following fiscal years ended October 31:
2006 2005
In millions
Current deferred tax assets ........................................... $4,144 $3,612
Current deferred tax liabilities ......................................... (138) (108)
Long-term deferred tax assets ......................................... 1,475 2,263
Long-term deferred tax liabilities ....................................... (291) (261)
Total deferred tax assets net of deferred tax liabilities ........................ $5,190 $5,506
At October 31, 2006, HP had a deferred tax asset of $558 million related to loss carryforwards, of
which $336 million relates to foreign net operating losses. HP has provided a valuation allowance of
$315 million on those foreign net operating loss carryforwards, which HP does not expect to utilize.
The remaining $222 million deferred tax asset relates to various state net operating losses and losses
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