Sunbeam 2004 Annual Report Download - page 64

Jarden Corporation
Notes to Consolidated Financial Statements (cont’d)
December 31, 2004
Deferred tax (liabilities) assets are comprised of the following:
As of December 31,
(thousands of dollars) 2004 2003
Property, equipment and intangibles ....................................... $(38,083) $(14,682)
Other ................................................................. (2,693) (2,445)
Gross deferred tax liabilities .......................................... (40,776) (17,127)
Net operating loss ....................................................... 3,426 2,726
Accounts receivable allowances ........................................... 3,340 1,342
Inventory valuation ..................................................... 4,621 3,097
Compensation and benefits .............................................. 5,036 3,961
Other ................................................................. 4,113 3,945
Gross deferred tax assets ............................................. 20,536 15,071
Valuation allowance ..................................................... (1,000) (1,000)
Net deferred tax liability ................................................. $(21,240) $ (3,056)
As of December 31, 2004, approximately $3.4 million of state and Canadian net operating loss
carryforwards remain before the valuation allowance, of which $2.9 million and $0.5 million relate to net
operating losses in the United States and Canada, respectively. Their use is limited to future taxable
income of the Company. The carryforwards expire in the United States in 2021 and in Canada in 2008.
The Company maintained a valuation allowance against a portion of the net tax benefit associated with
all carryforwards and temporary differences at December 31, 2004, as it is more likely than not that these
will not be fully utilized in the available carryforward period.
As a result of the losses arising from the sale of certain assets in 2001, the Company recovered in
January 2002 approximately $15.7 million of federal income taxes paid in 1999 and 2000 by utilizing the
carryback of a tax net operating loss generated in 2001. On March 9, 2002, The Job Creation and
Workers Assistance Act of 2002 was enacted which provided, in part, for the carryback of 2001 net
operating losses for five years instead of the previous two year period. As a result, the Company filed for
an additional refund of $22.8 million, of which $22.2 million was received in March 2002 and the
remainder was received in April 2002.
The difference between the federal statutory income tax rate and the Company’s effective income
tax rate as a percentage of income from continuing operations is reconciled as follows:
Year ended December 31,
2004 2003 2002
Federal statutory tax rate ............................................ 35.0% 35.0% 35.0%
Increase (decrease) in rates resulting from:
State and local taxes, net ........................................ 3.0 3.8 3.3
Foreign ...................................................... 0.3 (0.1) —
Valuation allowance ............................................ ——(8.4)
Other ........................................................ (0.3) 0.5 0.9
Effective income tax rate ............................................ 38.0% 39.2% 30.8%
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