OfficeMax 2015 Annual Report Download - page 90

Table of Contents
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recognized in tax jurisdictions with pretax income. The significant income tax expense in 2013 is primarily attributable to the 2013 sale of the Company’s
investment in Office Depot de Mexico, which is discussed in Note 2. In 2013, the Company paid $117 million of Mexican income tax upon the sale and
recognized additional U.S. income tax expense of $23 million due to dividend income and Subpart F income as a result of the sale, for total income tax
expense of $140 million. The sale of the Company’s interest in Grupo OfficeMax during 2014 did not generate a similar gain or income tax expense. The
2013 effective tax rate also includes charges related to goodwill impairment (refer to Note 15) and certain Merger expenses that are not deductible for tax
purposes.
The Company operates in several foreign jurisdictions with income tax rates that differ from the U.S. Federal statutory rate, which resulted in a benefit for all
years presented in the effective tax rate reconciliation. This benefit in 2015 is primarily attributable to earnings in the Netherlands. Significant foreign tax
jurisdictions for which the Company realized such benefit in 2014 and 2013 also included the UK and France. Additionally, Mexico is included for 2013 due
to the sale of Office Depot de Mexico.
Due to valuation allowances against the Company’s deferred tax assets, no income tax benefit was initially recognized in the 2015, 2014, or 2013
Consolidated Statement of Operations related to stock-based compensation expense. However, due to the profitable tax-paying position in the U.S. in 2015
and 2013, the Company realized an income tax benefit of $3 million and $5 million, respectively, for the utilization of net operating loss carryforwards that
had resulted from excess stock-based compensation deductions for which no benefit was previously recorded. The Company also realized an income tax
benefit of $7 million and $3 million for excess stock-based compensation deductions resulting from the exercise and vesting of equity awards during 2015
and 2013, respectively. These income tax benefits were recorded as increases to additional paid-in capital in 2015 and 2013. The income tax benefits
recorded in 2013 were primarily attributable to the sale of Office Depot de Mexico.
The components of deferred income tax assets and liabilities consisted of the following:
(In millions)


December 27,
2014
U.S. and foreign net operating loss carryforwards   $ 322
Deferred rent credit   80
Pension and other accrued compensation   184
Accruals for facility closings   45
Inventory   23
Self-insurance accruals   33
Deferred revenue   39
U.S. and foreign income tax credit carryforwards   246
Allowance for bad debts   5
Accrued expenses   80
Basis difference in fixed assets   59
Other items, net   8
Gross deferred tax assets   1,124
Valuation allowance   (804)
Deferred tax assets   320
Internal software   8
Installment gain on sale of timberlands   251
Deferred Subpart F income   27
Undistributed foreign earnings   2
Deferred tax liabilities   288
Net deferred tax assets   $ 32
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