Garmin 2005 Annual Report Download - page 93

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63
6. Income Taxes
The Company’s income tax provision (benefit) consists of the following:
Fiscal Year Ended
December 31, December 25, December 27,
2005 2004 2003
Federal:
Current $7,738 $10,323 $17,066
Deferred 11,741 1,362 (2,486)
19,479 11,685 14,580
State:
Current (656) 3,253 849
Deferred 3,219 (5,258) (1,379)
2,563 (2,005) (530)
Foreign:
Current 45,466 43,886 33,599
Deferred (6,127) (4,055) (340)
39,339 39,831 33,259
Total $61,381 $49,511 $47,309
The income tax provision differs from the amount computed by applying the statutory federal income tax
rate to income before taxes. The sources and tax effects of the differences, including the impact of establishing tax
contingency accruals, are as follows:
December 31, December 25, December 27,
2005 2004 2003
Federal income tax expense at
U.S. statutory rate $130,410 $89,324 $79,080
State income tax expense, net of
federal tax effect 1,666 (1,303) 626
Foreign tax rate differential (53,712) (32,516) (21,038)
Taiwan withholding tax, surtax,
tax incentives and credits (17,748) (16,117) (21,161)
Other, net 765 10,123 9,802
Income tax expense $61,381 $49,511 $47,309
Fiscal Year Ended
The Company’s income before income taxes attributable to non-U.S. operations was $307,712, $211,093,
and $202,390, for the years ended December 31, 2005, December 25, 2004, and December 27, 2003, respectively.
The tax incentives and credits received from Taiwan included in the table above reflect $0.65, $0.45, and $0.38 per
weighted-average common share outstanding for the years ended December 31, 2005, December 25, 2004, and
December 27, 2003, respectively. The Company currently expects to benefit from the incentives and credits being
offered by Taiwan through 2010, at which time these tax benefits expire.
As of December 31, 2005, the Company decided to have its wholly owned subsidiary, GC repatriate its
2005 earnings via a dividend to its parent, Garmin B.V. (GBV) during 2006. GBV will pay the Company the entire
amount of dividends it receives from GC in the form of interest expense and principal reduction on its loan to the
Company. As a result of these anticipated 2006 transactions, withholding taxes have been accrued at December 31,
2005. Additionally, a reduction of the current tax payable was recorded at December 31, 2005 recognizing the
amount of surtax that has been levied on undistributed accumulated earnings of GC since 1998 for which a credit
against withholding tax is available.