Staples 2012 Annual Report Download - page 138

C-26
STAPLES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
At the time the Corporate Express tender offer was fully settled on July 23, 2008, Staples had acquired more than 99%
of the outstanding capital stock of Corporate Express. Staples worked diligently to acquire the remaining capital stock of Corporate
Express by means of a compulsory judicial "squeeze out" procedure in accordance with the Dutch Civil Code. This squeeze out
process turned out to be a long and cumbersome process, and in October 2011, Staples withdrew the squeeze out proceedings.
Any additional payments Staples makes to purchase the remaining outstanding capital stock will be recorded in equity pursuant
to ASC Topic 810 Noncontrolling Interest in Consolidated Financial Instruments.
In addition, from time to time, the Company is involved in litigation arising from the operation of its business that is
considered routine and incidental to its business. The Company does not expect the results of any of these actions to have a material
adverse effect on its business, results of operations or financial condition.
Note L — 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, including those related to discontinued operations, are as
follows (in thousands):
February 2, 2013 January 28, 2012
Deferred income tax assets:
Deferred rent $ 39,410 $ 43,140
Foreign tax credit carryforwards 66,422 90,730
Net operating loss carryforwards 335,604 313,732
Capital loss carryforwards 20,388 18,598
Employee benefits 134,959 136,690
Merger related charges 6,750 15,072
Inventory 33,598 42,556
Insurance 38,588 39,375
Deferred revenue 52,025 82,724
Depreciation 29,652 12,205
Financing 31,220 42,954
Accrued expenses 21,475 22,145
Unrealized loss on hedge instruments — 6,028
Other—net 58,997 26,756
Total deferred income tax assets 869,088 892,705
Total valuation allowance (410,128)(307,616)
Net deferred income tax assets $ 458,960 $ 585,089
Deferred income tax liabilities:
Intangibles $ (124,951)$ (148,601)
Other—net (2,043)(4,616)
Total deferred income tax liabilities (126,994)(153,217)
Net deferred income tax assets $ 331,966 $ 431,872
The deferred tax asset from tax loss carryforwards of $335.6 million represents approximately $1.29 billion of net operating
loss carryforwards, $611.5 million of which are subject to expiration beginning in 2013. The remainder has an indefinite
carryforward period. The deferred tax asset from foreign tax credit carryforwards of $66.4 million is subject to expiration beginning
in 2018. The valuation allowance increased by $102.5 million during 2012, primarily due to the establishment of valuation
allowances in certain foreign jurisdictions as a result of the restructuring of a portion of the Company's business operations and
current year operating losses generated in foreign jurisdictions that the Company has determined are not more-likely-than-not
realizable.