CDW 2006 Annual Report Download - page 55

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45
The tax effect of temporary differences that give rise to the net deferred income tax asset at
December 31, 2006 and 2005 is presented below (in thousands):
2006 2005
Assets:
Payroll and benefits $ 7,606 $ 5,523
Employee stock plans 6,419 2,484
Accounts receivable 4,948 4,769
Other 3,993 5,069
Loss carryforwards 688 291
Gross deferred assets 23,654 18,136
Liabilities:
Software and intangibles 11,530 -
Property and equipment 7,138 4,505
Other - 129
Gross deferred liabilities 18,668 4,634
Deferred tax asset valuation allowance 688 291
Net deferred tax asset $ 4,298 $ 13,211
The portion of the net deferred tax asset relating to employee stock plans results primarily from
the compensatory stock option grants under the CDW stock incentive plans. Compensation
expense related to these plans is deductible for income tax purposes in the year the options are
exercised.
The net operating loss in Canada of $0.8 million was utilized in 2006. The state net operating
loss of $8.4 million, acquired with Berbee, may be carried forward to 2007 – 2022. The capital
loss of $0.9 million, acquired with Berbee, may be carried forward to 2010.
The Company has not recognized deferred income taxes on undistributed earnings of its
international subsidiary. The earnings are considered to be reinvested permanently.
11. Share-Based Compensation
Share-Based Compensation Plan Descriptions
We have established certain share-based compensation plans for the benefit of our coworkers
and directors. The Company’s share-based compensation plans are intended to 1) align the
interest of the Company’s shareholders and the recipients of awards under the plans, 2) attract,
motivate, and retain coworkers and directors, and 3) motivate such persons to act in the long-
term best interests of the Company and its shareholders.
At the 2006 Annual Meeting of Shareholders, the CDW 2006 Stock Incentive Plan (“2006 Plan”)
was approved. The 2006 Plan allows our Compensation and Stock Option Committee to grant
stock options, restricted stock, restricted stock units and other equity-based awards to coworkers,
including executive officers, and consultants. The 2006 Plan replaces the CDW 2000 Incentive
Stock Option Plan (“2000 Plan”) and the equity award provisions of the CDW Senior
Management Incentive Plan (“SMIP Plan”). With the approval of the 2006 Plan, no additional
awards are allowed under the 2000 Plan or the SMIP Plan. Awards previously granted under
these and prior plans remain outstanding in accordance with the terms of the plans under which
they were granted. Upon adoption, there were 4,660,000 shares of common stock available for
grants under the 2006 Plan. Shares not issued due to the expiration, termination, cancellation or