Ingram Micro 2006 Annual Report Download - page 78

Deferred income taxes reflect the tax effect of temporary differences between the carrying amount of assets
and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant
components of the Company’s net deferred tax assets and liabilities are as follows:
2006 2005
Fiscal Year End
Net deferred tax assets and (liabilities):
Net operating loss carryforwards ............................... $ 71,595 $ 50,990
Allowance on accounts receivable .............................. 14,392 14,623
Available tax credits ........................................ 31,056 24,587
Inventories ............................................... (3,140) (2,003)
Realized gains on available-for-sale securities not currently taxable ...... — (2,711)
Depreciation and amortization ................................. (31,725) (40,318)
Employee benefits and compensation ............................ 39,498 32,307
Restructuring charges........................................ 770 2,469
Reserves and accruals ....................................... 46,543 57,285
Other.................................................... 2,292 4,266
171,281 141,495
Valuation allowance ......................................... (49,508) (27,417)
Total ...................................................... $121,773 $114,078
Net current deferred tax assets of $72,097 and $73,948 were included in other current assets at December 30,
2006 and December 31, 2005, respectively. Net non-current deferred tax assets of $49,676 and $40,130 were
included in other assets as of December 30, 2006 and December 31, 2005, respectively. The net increase in valuation
allowance of $22,091 during 2006 primarily represents additional allowance for net operating losses, certain tax
credits and other temporary items in certain jurisdictions, as recovery of a portion of these assets is not considered
likely.
At December 30, 2006, the Company had net operating loss carryforwards of $276,580 (a valuation allowance
has been provided related to $176,721 of this amount). Approximately 85% of the remaining net operating loss
carryforwards of $99,859 have no expiration date and the remainder expires through the year 2025.
The Company does not provide for income taxes on undistributed earnings of foreign subsidiaries as such
earnings are intended to be permanently reinvested in those operations. The amount of the foreign undistributed
earnings is not practicably determinable.
At December 30, 2006 and December 31, 2005, the Company had remaining tax liabilities of $0 and $2,503
($2,711 including estimated interest), respectively, related to the gains realized on the sales of SOFTBANK Corp.
(“Softbank”) common stock in 2002 and 1999. The Softbank common stock was sold in the public market by certain
of our foreign subsidiaries, which are located in a low-tax jurisdiction. At the time of sale, the Company concluded
that U.S. taxes were not currently payable on the gains based on its internal assessment and opinions received from
its outside advisors. However, because of uncertainties in the interpretation of complex tax regulations by various
taxing authorities, the Company provided for tax liabilities on this matter based on the level of opinions received
from its outside advisors and the Company’s internal assessment. In 2005, the Company settled and paid tax
liabilities of $4,243 associated with these gains with certain state tax jurisdictions and favorably resolved and
reversed tax liabilities of $2,385 for such tax jurisdictions. In 2006, the Company accrued additional interest of $46,
as well as settled and paid liabilities of $1,956 to the U.S. Internal Revenue Service (“the IRS”) and favorably
resolved and reversed the remaining tax liability of $801. At December 30, 2006, the Company had no remaining
tax liabilities associated with these gains.
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INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)