OfficeMax 2005 Annual Report Download - page 77

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At December 31, 2005, the Company has a deferred tax asset related to net operating loss
carryforwards for Federal income tax purposes of $65.9 million. These net operating loss
carryforwards are available to offset future Federal taxable income, if any, through 2025. In addition,
the Company has alternative minimum tax credit carryforwards of approximately $221.6 million,
which are available to reduce future Federal regular income taxes, if any, over an indefinite period
and foreign tax credit carryforwards of $9.5 million with an expiration date of 2014. The Company
also has deferred tax assets related to various state net operating losses of $23.4 million, net of the
valuation allowance, that expire between 2005 and 2025.
Pretax income (loss) related to continuing operations from domestic and foreign sources is as
follows:
Year Ended December 31
2005 2004 2003
(thousands)
Domestic .......................................... $(65,073) $340,484 $11,580
Foreign ........................................... 27,457 38,958 37,660
Total pretax income .................................. $(37,616) $379,442 $49,240
As of December 31, 2005, the Company had undistributed earnings and profits of foreign
operations of approximately $243 million. The Company has not provided any income tax for
jurisdictions in which it has determined that it has permanently reinvested its earnings. During 2005,
the Company provided for $4.7 million in Federal income taxes related to the anticipated
repatriation of earnings related to its investment in a Mexican joint venture.
The Company has established, and periodically reviews, an estimated contingent tax liability to
provide for the possibility of unfavorable outcomes in tax matters. Contingent tax liabilities totaled
$66.7 million as of December 31, 2005, and are included in other noncurrent liabilities in the
Consolidated Balance Sheet. These liabilities are provided for when considered probable and
estimable, consistent with the requirements of SFAS No. 5, ‘‘Accounting for Contingencies.’’
10. Leases
The Company leases its retail stores as well as other property and equipment under operating
leases. These leases are noncancelable and generally contain multiple renewal options for periods
ranging from three to five years, and require the Company to pay all executory costs such as
maintenance and insurance. Rental payments include minimum rentals plus, in some cases,
contingent rentals based on a percentage of sales above specified minimums. Rental expense for
operating leases included the following components:
Year Ended December 31
2005 2004 2003
(thousands)
Minimum rentals .................................... $365,880 $371,959 $77,038
Contingent rentals .................................. 752 1,036 3,222
Sublease rentals .................................... (2,021) (3,007) (1,415)
$364,611 $369,988 $78,845
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