Dell 2005 Annual Report Download - page 53

Download and view the complete annual report

Please find page 53 of the 2005 Dell annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 80

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80

Table of Contents
The components of Dell's net deferred tax asset are as follows:
February 3, January 28,
2006 2005
(in millions)
Deferred tax assets:
Deferred revenue $ 290 $ 241
Inventory and warranty provisions 254 232
Investment impairments and unrealized gains 19 23
Provisions for product returns and doubtful accounts 48 22
Capital loss 8 6
Leasing and financing 119 —
Other 123 99
861 623
Deferred tax liabilities:
Property and equipment (109) (156)
Leasing and financing — (10)
Other (35) (26)
(144) (192)
Net deferred tax asset $ 717 $ 431
Current portion (included in other current assets) $ 441 $ 425
Non-current portion (included in other non-current assets) 276 6
Net deferred tax asset $ 717 $ 431
A portion of Dell's operations operate at a reduced tax rate or free of tax under various tax holidays which expire in whole or in part during fiscal
2009 through 2019. Many of these holidays may be extended when certain conditions are met. The income tax benefits attributable to the tax
status of these subsidiaries were estimated to be approximately $364 million ($0.15 per share) in fiscal 2006, $280 million ($0.11 per share) in
fiscal 2005, and $210 million ($0.08 per share) in fiscal 2004.
The effective tax rate differed from the statutory U.S. federal income tax rate as follows:
Fiscal Year Ended
February 3, January 28, January 30,
2006 2005 2004
U.S. federal statutory rate 35.0% 35.0% 35.0%
Foreign income taxed at different rates (13.8) (11.6) (7.3)
Tax repatriation (benefit) charge (1.9) 6.3 —
Other 2.6 1.8 1.3
Effective tax rate 21.9% 31.5% 29.0%
The reduction in Dell's fiscal 2006 effective tax rate, compared to fiscal 2005 and fiscal 2004, is due to the aforementioned tax repatriation
charge and a higher proportion of operating profits attributable to foreign jurisdictions which are taxed at lower rates.
NOTE 4 — Capitalization
Preferred Stock
Authorized Shares — Dell has the authority to issue five million shares of preferred stock, par value $.01 per share. At February 3, 2006 and
January 28, 2005, no shares of preferred stock were issued or outstanding.
Series A Junior Participating Preferred Stock — In conjunction with the distribution of Preferred Share Purchase Rights (see below), Dell's
Board of Directors designated 200,000 shares of 50