Office Depot 2007 Annual Report Download - page 62

60
NOTE E — INCOME TAXES
The income tax provision related to earnings from continuing operations consisted of the following:
(Dollars in thousands) 2007 2006 2005
Current:
Federal ................................................................................................ $ 50,602 $ 179,779 $ 150,303
State .................................................................................................... 728 21,531 12,358
Foreign ................................................................................................ 12,710 18,103 35,008
Deferred:
Federal ................................................................................................ 72,017 (4,261) (68,881)
State .................................................................................................... (38,183) 3,220 (13,734)
Foreign ................................................................................................ (34,856) (14,808) (27,331)
Total provision for income taxes ............................................................ $ 63,018 $ 203,564 $ 87,723
The components of earnings before income taxes consisted of the following:
(Dollars in thousands) 2007 2006 2005
North America ............................................................................................ $ 276,040 $ 537,944 $ 226,413
International................................................................................................ 182,593 169,091 135,102
Total............................................................................................................ $ 458,633 $ 707,035 $ 361,515
The tax-effected components of deferred income tax assets and liabilities consisted of the following:
(Dollars in thousands)
December 29,
2007
December 30,
2006
Self-insurance accruals .......................................................................................... $ 21,188 $ 22,799
Inventory................................................................................................................ 18,791 26,300
Vacation pay and other accrued compensation...................................................... 28,898 35,536
Allowance for bad debts ........................................................................................ 8,223 5,786
Accruals for facility closings ................................................................................. 12,729 19,536
Accrued rebates...................................................................................................... 17,415 22,417
Deferred rent credit................................................................................................ 74,663 71,481
Foreign and state net operating loss carryforwards................................................ 393,609 362,233
State credit carryforwards, net of Federal benefit.................................................. 6,067 10,426
Other items, net...................................................................................................... 20,901 49,332
Gross deferred tax assets.................................................................................... 602,484 625,846
Valuation allowance .............................................................................................. (265,465) (330,057)
Deferred tax assets ............................................................................................. 337,019 295,789
Basis difference in fixed assets .............................................................................. 9,000 19,795
Intangibles.............................................................................................................. 32,417 35,443
Other items, net...................................................................................................... 22,824 12,557
Deferred tax liabilities........................................................................................ 64,241 67,795
Net deferred tax assets ........................................................................................... $ 272,778 $ 227,994
As of December 29, 2007, we had approximately $1.2 billion of foreign and $717.0 million of state net operating
loss carryforwards. Of the foreign carryforwards, $933.9 million can be carried forward indefinitely, $16.0 million
will expire in 2008, and the balance will expire between 2009 and 2027. Of the state carryforwards, $1.9 million will
expire in 2008, and the balance will expire between 2009 and 2027. The valuation allowance has been developed to
reduce our deferred asset to an amount that is more likely than not to be realized, and is based upon the uncertainty
of the realization of certain foreign and state deferred assets related to net operating loss carryforwards.