LensCrafters 2005 Annual Report Download - page 126

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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS | 125 <
7. INCOME TAXES
Income before provision for income taxes and the provision for income taxes consisted of the following:
Year ended December 31 - In thousands of Euro 2003 2004 2005
Income before provision for income taxes
Italian companies 146,055 149,479 216,438
U.S. companies 192,732 235,551 262,310
Foreign companies 51,006 72,123 78,821
Total 389,793 457,153 557,569
Provision for income taxes
•Current
Italian companies 17,313 23,194 127,730
U.S. companies 74,113 65,356 127,540
Foreign companies 13,037 27,701 40,855
Total 104,463 116,251 296,125
•Deferred
Italian companies 14,174 9,017 (74,874)
U.S. companies 1,419 39,377 (14,295)
Foreign companies (2,728) (2,980) (934)
Total 12,865 45,414 (90,103)
Total 117,328 161,665 206,022
The Italian statutory tax rate is the result of two components: national (“IRES”) and regional (“IRAP”) tax.
IRAP could have a substantially different base for its computation than IRES.
Reconciliation between the Italian statutory tax rate and the effective tax rate is as follows:
Year ended December 31 - In thousands of Euro 2003 2004 2005
Italian statutory tax rate 38.3% 37.3% 37.3%
Aggregate effect of different rates in foreign jurisdictions (1.9%) 0.5% 1.7%
Aggregate Italian tax benefit - net - - (4.1%)
Permanent differences, principally losses in subsidiary
companies funded through capital contributions,
net of non-deductible goodwill (6.3%) (2.4%) -
Aggregate other effects - - 2.1%
Effective rate 30.1% 35.4% 37.0%
The 2005 aggregate Italian tax benefit is caused by the Company complying with an Italian law that
allows for the step up in tax basis of certain intangible assets.
Beginning with fiscal year 2004, for income tax purposes, the Company and its Italian subsidiaries file
tax returns on a consolidated basis.