Estee Lauder 2007 Annual Report Download - page 69

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68 THE EST{E LAUDER COMPANIES INC.
NOTE 6
—
INCOME TAXES
The provision for income taxes is comprised of the following:
YEAR ENDED JUNE 30 2007 2006 2005
(In millions)
Current:
Federal $ 66.6 $164.3 $ 53.8
Foreign 166.7 158.2 129.2
State and local 12.0 11.5 8.0
245.3 334.0 191.0
Deferred:
Federal 11.3 (73.7) 86.5
Foreign (4.8) (0.3) 10.7
State and local 3.4 (0.3) 5.5
9.9 (74.3) 102.7
$255.2 $259.7 $293.7
200
7
$
66.6
1
66.7
1
2.0
2
4
5
.
3
11
.3
(
4.8
)
3
.4
9
.
9
$
255.2
A reconciliation between the provision for income taxes computed by applying the statutory Federal income tax rate to
earnings before income taxes and minority interest and the actual provision for income taxes is as follows:
YEAR ENDED JUNE 30 2007 2006 2005
($ in millions)
Provision for income taxes at statutory rate $248.9 $208.5 $249.8
Increase (decrease) due to:
State and local income taxes, net of Federal tax benefi t 11.2 9.7 11.8
Effect of foreign operations (0.5) 7.0 4.3
IRS tax settlement — 46.0 —
AJCA incremental dividend (5.7) (10.9) 27.5
Preferred stock dividends not deductible for U.S. tax purposes — 0.2 0.3
Other nondeductible expenses 3.4 3.4 2.0
Tax credits (3.0) (2.2) (2.6)
Other, net 0.9 (2.0) 0.6
Provision for income taxes $255.2 $259.7 $293.7
Effective tax rate 35.9% 43.6% 41.2%
200
7
$
248.9
1
1
.
2
(
0.5
)
—
(
5.7
)
—
3
.4
(
3.0
)
0
.
9
$
255.2
3
5.9
%
Signifi cant components of the Company’s deferred income tax assets and liabilities as of June 30, 2007 and 2006 were
as follows:
2007 2006
(In millions)
Deferred tax assets:
Compensation related expenses $ 75.5 $ 69.8
Inventory obsolescence and other inventory related reserves 55.6 54.0
Retirement benefi t obligations 31.6 8.2
Various accruals not currently deductible 78.1 72.4
Net operating loss and credit carryforwards 3.4 7.2
Other differences between tax and fi nancial statement values 16.1 7.6
260.3 219.2
Valuation allowance for deferred tax assets (5.5) (6.5)
Total deferred tax assets 254.8 212.7
Deferred tax liabilities:
Depreciation and amortization (142.6) (111.1)
Other differences between tax and fi nancial statement values (4.8) (5.7)
Total deferred tax liabilities (147.4) (116.8)
Total net deferred tax assets $ 107.4 $ 95.9
2007
$
75.
5
55.
6
31.
6
7
8
.
1
3
.
4
16.
1
2
60
.
3
(
5.5
)
254.
8
(
142.6
)
(
4.8
)
(
147.4
)
$
107.
4