Whole Foods 2010 Annual Report Download - page 54

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48
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax
liabilities for continuing operations are as follows (in thousands):
2010 2009
Deferred tax assets:
Compensation-related costs $ 88,729 $ 68,675
Insurance-related costs 34,849 29,968
Inventories 2,827 1,975
Lease and other termination accruals 24,396 28,416
Rent differential 91,086 78,120
Deferred taxes associated with unrecognized tax benefit 3,555 4,967
Cash flow hedge instrument 154 7,960
Tax basis of fixed assets in excess of book basis 7,212 7,243
Net domestic and international operating loss carryforwards 16,405 13,395
Tax credit carryforwards 124 124
Gross deferred tax assets 269,337 240,843
Valuation allowance (24,682) (21,707)
244,655 219,136
Deferred tax liabilities:
Financial basis of fixed assets in excess of tax basis (34,862) (37,295)
Capitalized costs expensed for tax purposes (3,885) (2,898)
Other (5,288) (186)
(44,035) (40,379)
Net deferred tax asset $ 200,620 $ 178,757
Deferred taxes for continuing operations have been classified on the Consolidated Balance Sheets as follows (in thousands):
2010 2009
Current assets $ 101,464 $ 87,757
Noncurrent assets 99,156 91,000
Net deferred tax asset $ 200,620 $ 178,757
At September 26, 2010, the Company had international operating loss carryforwards totaling approximately $58.5 million,
all of which have an indefinite life. The Company provided a valuation allowance totaling approximately $24.7 million for
deferred tax assets associated with international operating loss carryforwards, federal credit carryforwards, and deferred tax
assets associated with unrecognized tax benefits, for which management has determined it is more likely than not that the
deferred tax asset will not be realized. Management believes that it is more likely than not that we will fully realize the
remaining domestic deferred tax assets in the form of future tax deductions based on the nature of these deductible temporary
differences and a history of profitable operations.
It is the Company’s intention to utilize earnings in foreign operations for an indefinite period of time, or to repatriate such
earnings only when tax-efficient to do so. If these amounts were distributed to the United States, in the form of dividends or
otherwise, the Company would be subject to additional U.S. income taxes. Determination of the amount of unrecognized
deferred income tax liabilities on these earnings is not practicable because such liability, if any, is dependent on
circumstances existing if and when remittance occurs.