Ingram Micro 2008 Annual Report Download - page 73

Deferred income taxes reflect the tax effect of temporary differences between the carrying amount of assets
and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant
components of the Company’s net deferred tax assets and liabilities are as follows:
2008 2007
Fiscal Year End
Net deferred tax assets and (liabilities):
Net operating loss carryforwards............................... $111,096 $101,302
Allowance on accounts receivable .............................. 17,687 19,306
Available tax credits ........................................ 33,234 30,453
Inventories ............................................... 12,534 3,383
Depreciation and amortization................................. 52,816 (27,901)
Employee benefits and compensation . . ......................... 36,006 45,437
Reserves and accruals....................................... 57,386 55,338
Other ................................................... 2,466 3,938
323,225 231,256
Valuation allowance ........................................ (116,180) (91,485)
Total ..................................................... $207,045 $139,771
The Company records net deferred tax assets to the extent it believes these assets will more likely than not be
realized. In making such determination, the Company considers all available positive and negative evidence,
including future reversals of existing taxable temporary differences, projected future taxable income, tax planning
strategies and recent financial operations. In the event that the Company determines that it would be able to realize
its deferred income tax assets in the future in excess of its net recorded amount, the Company would make an
adjustment to the valuation allowance which would reduce the provision for income taxes.
Out of the amounts shown above, net current deferred tax assets of $102,624 and $111,767 were included in
other current assets at January 3, 2009 and December 29, 2007, respectively. Net non-current deferred tax assets of
$104,421 and $28,004 were included in other assets as of January 3, 2009 and December 29, 2007, respectively. The
net increase in valuation allowance of $24,695 during 2008 primarily represents additional allowance for net
operating losses, certain tax credits and other temporary items in certain jurisdictions where it is more likely than
not that the Company will not recover all or a portion of these assets.
At January 3, 2009, the Company had net operating loss carryforwards of $406,388 (a valuation allowance has
been provided related to $336,448 of this amount). Approximately 71% of the remaining net operating loss
carryforwards of $69,940 have no expiration date and the remainder expires through the year 2027. The Company
has also recorded deferred tax assets for various tax credit carryforwards of $33,234, to which it has applied a
valuation allowance of $10,844. These include $32,113 of foreign tax credit carryforwards, which have a $10,437
valuation allowance. Of the gross amount recorded, approximately $22,597 are subject to expiry through the year
2018.
In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries
into non-U.S. operations. Such unremitted earnings may become subject to U.S. taxation upon the remittance of
dividends and under certain other circumstances. If the Company were to distribute these earnings, foreign tax
credits may become available under current law to reduce the resulting U.S. income tax liability. Based on the
projected cash flow needs, including consideration of working capital and long-term investment requirements of the
Company’s material foreign subsidiaries and domestic operations, the Company has concluded that all of its
undistributed earnings in foreign subsidiaries as of January 3, 2009, are indefinitely reinvested. As such, the
Company has not made a provision for U.S. or additional foreign withholding taxes on any undistributed earnings of
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INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)