Western Digital 2006 Annual Report Download - page 76

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Income Tax (Benefit) Provision
The components of the (benefit) provision for income taxes were as follows for the three years ended June 30, 2006
(in millions):
2006 2005 2004
(as adjusted) (as adjusted)
Current:
Foreign ......................................... $ 5.8 $2.6 $1.8
Domestic-federal ................................... 3.0 0.8 2.0
Domestic-state .................................... 0.6 0.7 0.2
Deferred .......................................... (22.3) — —
Income tax (benefit) provision ....................... $(12.9) $4.1 $4.0
Remaining net undistributed earnings from foreign subsidiaries at June 30, 2006 on which no U.S. tax has been
provided amounted to approximately $834.7 million. The net undistributed earnings are intended to finance local
operating requirements. Accordingly, an additional U.S. tax provision has not been made on these earnings.
Deferred Taxes
Temporary differences and carryforwards, which give rise to a significant portion of deferred tax assets and liabilities
as of June 30, 2006 and July 1, 2005 were as follows (in millions):
2006 2005
Deferred tax assets:
Reserves and accrued expenses not currently deductible ................... $ 99.0 $ 81.5
Domestic net operating loss (NOL) carryforward ........................ 67.0 127.9
Business credit carryforward ...................................... 60.8 55.3
All other .................................................... 28.3 28.2
255.1 292.9
Valuation allowance . ........................................... (232.8) (292.9)
Total deferred tax assets ....................................... $ 22.3 $ —
2006 2005
Deferred tax assets:
Current portion (included in other current assets) ....................... $ 10.4 $ —
Non-current portion (included in other non-current assets)................. 11.9 —
Total deferred tax assets ....................................... $ 22.3 $ —
Reserves and accrued expenses not currently deductible consisted of the following as June 30, 2006 and July 1, 2005
(in millions):
2006 2005
Sales related reserves and adjustments ................................. $ 68.8 $ 58.6
Accrued compensation and benefits ................................... 21.0 10.2
Other accrued liabilities ........................................... 5.5 10.2
Inventory reserves and adjustments ................................... 3.7 2.5
Total reserves and accrued expenses not currently deductible ............... $ 99.0 $ 81.5
70
WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)