Foot Locker 2005 Annual Report Download - page 60

The income tax provision consists of the following:
2005 2004 2003
(in millions)
Current:
Federal .................................................. $ 72 $ 11 $ 48
State and local .......................................... 11 6 14
International ............................................ 35 52 58
Total current tax provision ............................... 118 69 120
Deferred:
Federal .................................................. 22 43 11
State and local .......................................... 7 8 (6)
International ............................................ (5) (1) (10)
Total deferred tax provision ................................ 24 50 (5)
Total income tax provision ................................. $142 $119 $115
Provision has been made in the accompanying Consolidated Statements of Operations for additional income taxes
applicable to dividends received or expected to be received from international subsidiaries. The amount of unremitted
earnings of international subsidiaries, for which no such tax is provided and which is considered to be permanently
reinvested in the subsidiaries, totaled $388 million and $327 million at January 28, 2006 and January 29, 2005,
respectively.
A reconciliation of the significant differences between the federal statutory income tax rate and the effective income
tax rate on pre-tax income from continuing operations is as follows:
2005 2004 2003
Federal statutory income tax rate .......................... 35.0% 35.0% 35.0%
State and local income taxes, net of federal tax benefit .... 2.8 2.3 2.4
International income taxed at varying rates ................ 0.8 (0.6) 0.5
Foreign tax credit utilization ............................... (3.1) (2.5) (1.0)
Increase (decrease) in valuation allowance ................. (1.5) 0.1 (1.5)
Federal/foreign tax settlements ............................ 0.4 (3.3) —
State and local tax settlements ............................ — — (0.2)
Tax exempt obligations .................................... (0.4) (0.2) (0.2)
Work opportunity tax credit ................................ (0.2) (0.2) (0.1)
Other, net .................................................. 1.2 1.1 0.6
Effective income tax rate ................................... 35.0% 31.7% 35.5%
Items that gave rise to significant portions of the deferred tax accounts are as follows:
2005 2004
(in millions)
Deferred tax assets:
Tax loss/credit carryforwards ........................................... $ 71 $ 89
Employee benefits ...................................................... 75 116
Reserve for discontinued operations .................................... 8 5
Repositioning and restructuring reserves ............................... 3 3
Property and equipment ................................................ 108 89
Allowance for returns and doubtful accounts ........................... 4 7
Straight-line rent ....................................................... 22 19
Other ................................................................... 19 17
Total deferred tax assets .................................................. 310 345
Valuation allowance .................................................... (123) (124)
Total deferred tax assets, net ........................................ $ 187 $ 221
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