LensCrafters 2008 Annual Report Download - page 77

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The 2007 tax benefit of 5.3%, relates to the business reorganization of certain Italian companies which results
in the release of deferred tax liabilities and is partially offset by the increase by 2.1% in the 2007 tax charge
due to the change in the Italian statutory tax rates which results in the reduction of deferred tax assets.
The deferred tax assets and liabilities as of December 31, 2008 and 2007, respectively, were comprised of
(Euro 000):
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS |75 <
Amounts in thousands of Euro 2008 2007
Deferred income tax assets
Inventory 71,660 73,062
Insurance and other reserves 8,580 10,238
Right of return reserve 14,471 13,464
Net operating loss carryforwards 50,565 45,224
Occupancy reserves 19,630 14,681
Employee-related reserves (including pension liability) 72,974 48,977
Trade name 76,525 72,686
Deferred tax on derivatives 21,685 549
Other 54,819 28,349
Fixed assets 29,684 24,472
Total deferred income tax assets 420,593 331,702
Valuation allowance (24,048) (27,088)
Net deferred tax assets 396,545 304,614
Deferred income tax liabilities
Trade name (241,409) (216,997)
Fixed assets (32,919)
Other intangibles (115,031) (117,975)
Dividends (13,316) (11,933)
Other (12,067) (20,342)
Total deferred income tax liabilites (414,742) (367,247)
Net deferred income tax liabilities (18,197) (62,633)
Deferred income tax assets and liabilities have been classified in the consolidated financial statements as
follows:
Deferred income tax assets - current 131,907 117,853
Deferred income tax assets - non current 83,447 67,891
Deferred income tax liabilities - non current (233,551) (248,377)
Net deferred income tax liabilities (18,197) (62,633)
On December 24, 2007, the Italian Government issued the Italian Finance Bill of 2008 (the “2008 Bill”). The
2008 Bill decreases the national tax rate (referred to as “IRES”) from 33% to 27.5%, and the regional tax
rate (referred to as “IRAP”) from 4.25% to 3.9%. The effect of this change created an additional Euro 8
million of deferred tax expense in 2007.
The Company does not provide for an accrual for income taxes on undistributed earnings of its non Italian
operations to the related Italian parent company that are intended to be permanently invested. It is not