Best Buy 2005 Annual Report Download - page 97

$ in millions, except per share amounts
exposures. A number of years may elapse before a Deferred taxes are the result of differences between the
particular matter, for which we have established a bases of assets and liabilities for financial reporting and
reserve, is audited and fully resolved. When the actual income tax purposes. Deferred tax assets and liabilities as
result of a tax settlement differs from our estimated of the dates indicated were comprised of the following:
reserve for a matter, we adjust our tax contingencies Feb. 26, Feb. 28,
reserve and income tax provision in the period in which 2005 2004
the income tax matter is resolved. Accrued property expenses $ 74 $ 39
During fiscal 2005, we reduced our tax contingencies Other accrued expenses 33 60
reserve based on the resolution and clarification of certain Deferred revenue 48 32
federal and state income tax matters, including a Compensation and benefits 51 43
favorable ruling from the IRS and the completion of IRS Inventory 21 31
and certain state tax audits for fiscal 2000 through fiscal Net operating loss carryforwards 38 28
2002. Goodwill 19 21
Other 25 30
Income tax expense was comprised of the following for
the past three fiscal years: Total deferred tax assets 309 284
2005 2004 2003 Property and equipment (158) (156)
Current: Convertible debt (27) (32)
Federal $502 $456 $375 Other (5) (7)
State 36 49 51 Total deferred tax liabilities (190) (195)
Foreign (1) 5 3 Net deferred tax assets $ 119 $ 89
537 510 429
Deferred tax assets and liabilities included in our balance
Deferred:
sheets were as follows:
Federal (4) (9) (22)
State (20) (1) (3) Feb. 26, Feb. 28,
2005 2004
Foreign (4) (4) (12)
Other current assets $ 80 $95
(28) (14) (37)
Other assets 39 —
Income tax expense $509 $496 $392 Long-term liabilities — (6)
The American Jobs Creation Act of 2004 (Act) allows Net deferred tax assets $119 $89
U.S. multinational companies a one-time repatriation of
accumulated income earned outside the U.S. at an Management believes that the realization of the deferred
effective income tax rate of 5.25% rather than the normal tax assets is more likely than not, based on the
U.S. income tax rate of 35%, provided that certain expectation that we will generate the necessary taxable
criteria, including qualified U.S. reinvestment, are met. income in future periods and, accordingly, no valuation
We have reviewed the provisions of the Act and do not reserves have been provided. As of February 26, 2005,
expect to repatriate additional income earned outside the we had net operating loss carryforwards from our
U.S. during fiscal 2006; and therefore, we have not International operations of $107, which expire beginning
recorded any income tax expense as a result of the Act’s in fiscal 2007 through 2012. We expect to fully utilize the
provisions. net operating loss carryforwards; therefore, no valuation
allowances have been recorded.
We have not provided deferred taxes on unremitted
foreign earnings because such earnings are considered to
be indefinitely reinvested outside the U.S. Such amounts
were not significant.
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