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E. I. du Pont de Nemours and Company
Notes to Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
The significant components of deferred tax assets and liabilities at December 31, 2005 and 2004, are as follows:
2005 2004
Deferred Tax Asset Liability Asset Liability
Depreciation $ – $1,337 $ – $1,377
Accrued employee benefits 2,281 1,203 2,412 971
Other accrued expenses 585 18 655 52
Inventories 184 113 172 142
Unrealized exchange gains 120 21 5
Tax loss/tax credit carryforwards/backs 2,420 – 3,187 –
Investment in subsidiaries and affiliates – 318 – 328
Amortization of intangibles 84 670 156 789
Other 332 97 467 249
$ 5,887 $3,776 $ 7,070 $3,913
Valuation allowance (1,363) (1,797)
$ 4,524 $ 5,273
At December 31, 2004, estimated losses on the sale of INVISTA resulted in an increase in the Tax loss/tax credit carryfor-
wards/backs, partly offset by an increase in the Valuation allowance. These impacts were reversed during 2005 primarily due
to realization of the INVISTA tax loss carryforward/back.
Current deferred tax assets of $820 and $1,162 at December 31, 2005 and 2004, respectively, are included in the caption Income
taxes within Current assets of the Consolidated Balance Sheets. In addition, Deferred tax assets of $1,137 and $1,233 are
included in Other assets at December 31, 2005, and 2004, respectively. See Note 17. Deferred tax liabilities of $43 and $69 at
December 31, 2005, and 2004, respectively, are included in the caption Income taxes within Current liabilities of the Consoli-
dated Balance Sheets.
An analysis of the company’s effective income tax rate (EITR) follows:
2005 2004 2003
Statutory U.S. federal income tax rate 35.0% 35.0% 35.0%
Exchange gains/losses19.4 (14.9) (85.5)
The American Jobs Creation Act of 2004 (AJCA)28.2 – –
Lower effective tax rates on international operations–net (7.5) (20.8) (149.3)
Domestic operations (1.4) 1.2 (49.2)
Tax settlements (1.4) (9.5) –
Lower effective tax rate on export sales (1.0) (3.3) (23.8)
Separation charges–Textiles & Interiors – (6.2) 83.8
Tax basis investment losses on foreign subsidiaries3– (9.5) (467.5)
Elastomers antitrust litigation – 5.2 –
State taxes – – 6.2
41.3% (22.8)% (650.3)%
1Principally reflects the benefit of non-taxable exchange gains resulting from remeasurement of foreign currency denominated monetary assets and liabilities. Further
information about the company’s foreign currency hedging program is included in Note 29 under the heading Currency Risk.
2Reflects the tax impact associated with the repatriation of $9.1 billion under AJCA.
3Reflects recording deferred tax assets in two European subsidiaries for tax basis investment losses to be recognized on local tax returns.
F-18