OfficeMax 2015 Annual Report Download - page 89
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Table of Contents
The components of income (loss) before income taxes consisted of the following:
(In millions) 2014 2013
United States $(264) $(230)
Foreign (76) 357
Total income (loss) before income taxes $(340) $ 127
The income tax expense related to income (loss) from operations consisted of the following:
(In millions) 2014 2013
Current:
Federal $ (2) $ 15
State (1) 5
Foreign 15 125
Deferred :
Federal — (4)
State 3 (1)
Foreign (3) 7
Total income tax expense $12 $147
The following is a reconciliation of income taxes at the U.S. Federal statutory rate to the provision for income taxes:
(In millions) 2014 2013
Federal tax computed at the statutory rate $(119) $ 44
State taxes, net of Federal benefit 4 3
Foreign income taxed at rates other than Federal (10) (28)
Increase (decrease) in valuation allowance 112 8
Non-deductible goodwill impairment — 15
Non-deductible Merger expenses — 13
Non-deductible foreign interest 13 8
Other non-deductible expenses 12 4
Non-taxable income and additional deductible expenses — —
Change in unrecognized tax benefits (2) —
Tax expense from intercompany transactions 2 2
Subpart F and dividend income, net of foreign tax credits 2 75
Change in tax rate — 2
Deferred taxes on undistributed foreign earnings — 5
Other items, net (2) (4)
Income tax expense $ 12 $147
The increase in income tax expense from 2014 to 2015 is primarily related to the transition of the U.S. business from a loss jurisdiction with valuation
allowance to a profitable tax-paying jurisdiction with valuation allowance. The Company also incurred charges related to certain Staples Acquisition
expenses that are not deductible for tax purposes, which increased the effective tax rate for 2015. In addition, the 2015 effective tax rate includes U.S. income
tax expense on a foreign exchange gain associated with the restructuring of certain intercompany financing. In 2014, the Company recognized income tax
expense on a pretax loss due to deferred tax benefits not being recognized on pretax losses in certain tax jurisdictions with valuation allowances, while
income tax expense was
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