Banana Republic 2011 Annual Report Download - page 80
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The provision for income taxes consists of the following:
Fiscal Year
($ in millions) 2011 2010 2009
Current:
Federal ......................................................................... $419 $476 $572
State ........................................................................... 37 75 78
Foreign ......................................................................... 91 134 114
Total current ........................................................................ 547 685 764
Deferred:
Federal ......................................................................... 14 94 (43)
State ........................................................................... (6) (5) (10)
Foreign ......................................................................... (19) 4 3
Totaldeferred ....................................................................... (11) 93 (50)
Totalprovision....................................................................... $536 $778 $714
Except where required by U.S. tax law, no provision has been made for U.S. income taxes on the undistributed
earnings of our foreign subsidiaries when we intend to utilize those earnings in foreign operations for an indefinite
period of time. Such undistributed earnings and profits, as calculated pursuant to provisions in the U.S. Internal
Revenue Code and related Treasury Regulations, of foreign subsidiaries as of January 28, 2012 and January 29, 2011
were approximately $1.5 billion and $1.3 billion, respectively. Cash balances in these foreign subsidiaries are
substantially lower than these earnings and profits. If we had not intended to utilize the undistributed earnings in
our foreign operations for an indefinite period of time, the deferred tax liability as of January 28, 2012 and
January 29, 2011 would have been approximately $225 million and $194 million, respectively. During fiscal 2011, we
assessed the forecasted cash needs and overall financial position of our foreign subsidiaries. As a result, we
determined that approximately $40 million of current year earnings and profits was in excess of the amount we
expect to utilize in our foreign operations for an indefinite period of time, and accordingly, recorded the related tax
expense of $4 million in fiscal 2011.
The difference between the effective income tax rate and the U.S. federal income tax rate is as follows:
Fiscal Year
2011 2010 2009
Federal tax rate ..................................................................... 35.0% 35.0% 35.0%
State income taxes, less federal benefit ............................................... 3.2 3.6 3.7
Taximpactofforeignoperations ..................................................... 2.9 2.0 1.4
Other .............................................................................. (1.9) (1.3) (0.8)
Effective tax rate .................................................................... 39.2% 39.3% 39.3%
66 Gap Inc. Form 10-K