Staples 2005 Annual Report Download - page 103

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STAPLES, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)
C-18
NOTE H Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes. The approximate tax effect of
the significant components of Staples’ deferred tax assets and liabilities are as follows (in thousands):
January 28, 2006 January 29, 2005
Deferred tax assets:
Deferredrent ............................................ $ 39,062 $ 34,649
Capitalized vendor money.................................. 26,855 24,164
Foreign tax credit carryforwards ............................ — 7,505
Net operating loss carryforwards ............................ 47,447 15,310
Insurance................................................ 7,274 5,560
Employee benefits ........................................ 24,234 21,229
Merger related charges.................................... 11,008 18,595
Store closurecharge....................................... 10,325 12,197
Capital losses and asset write-downs......................... 17,535 19,874
Inventory................................................ 40,715 15,340
Unrealized loss onhedge instruments ....................... 26,156 17,825
Deferred revenue......................................... 18,291 11,022
Depreciation............................................. 28,152 (11,570)
Other—net............................................... 33,405 28,026
Total deferred tax assets................................... 330,459 219,726
Total valuation allowance.................................... (44,314) (55,454)
Net deferred tax assets....................................... $286,145 $164,272
Deferred tax liabilities:
Intangibles............................................... $ (90,205) $ (77,985)
Other—net............................................... (1,499) (3,104)
Total deferred tax liabilities................................ (91,704) (81,089)
Net deferred tax assets....................................... $194,441 $ 83,183
The gross deferred tax asset from tax loss carryforwards of $47.4 million represents approximately $244.8 million of
net operating loss carryforwards, $7.3 million of which will expire in 2007 and $0.5 million of which will expire in 2009 if
not utilized. The remainder has an indefinite carryforward period. The deferred tax asset from capital losses and asset
write-downs includes approximately $14.0 million, $8.6 million and $11.3 million of capital loss carryforwards that expire
in 2006, 2008 and 2010, respectively. The deferred tax assets for these carryforwards have been partially reserved against
due to the uncertainty of their realization. The valuation allowance decreased by $11.1 million during the year due
primarily to the utilization of foreign tax credits and the expiration of capital loss carryforwards.
For financial reporting purposes, income before income taxes includes the following components (in thousands):
Fiscal Year Ended
January 28, 2006 January 29, 2005 January 31, 2004
Pretax income:
UnitedStates.............................. $ 1,137,499 $ 931,228 $ 648,179
Foreign................................... 177,000 184,344 129,933
$ 1,314,499 $ 1,115,572 $ 778,112