Walmart 2004 Annual Report Download - page 47

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45
Earnings before income taxes are as follows (in millions):
Fiscal years ended January 31, 2004 2003 2002
Domestic $ 12,075 $ 10,490 $ 9,168
International 2,118 1,878 1,228
Total earnings before income taxes and minority interest $ 14,193 $ 12,368 $ 10,396
Items that give rise to significant portions of the deferred tax accounts at January 31 are as follows (in millions):
2004 2003
Deferred tax liabilities
Property, plant and equipment $ 1,581 $ 1,357
Inventory 419 527
Capital leases 92 34
International, principally asset basis difference 611 581
Acquired asset basis difference 57 51
Other 146 186
Total deferred tax liabilities $ 2,906 $ 2,736
Deferred tax assets
Amounts accrued for financial reporting purposes
not yet deductible for tax purposes $ 1,280 $ 1,114
International loss carryforwards 638 524
Deferred revenue 140 136
Other 298 367
Total deferred tax assets 2,356 2,141
Valuation allowance (215) (16)
Total deferred tax assets, net of valuation allowance $ 2,141 $ 2,125
Net deferred tax liabilities $ 765 $ 611
Fiscal years ended January 31, 2004 2003
Statutory tax rate 35.00% 35.00%
State income taxes, net of federal income tax benefit 1.53% 1.36%
International (0.20%) (1.29%)
Other (0.27%) 0.16%
36.06% 35.23%
Federal and state income taxes have not been provided on accumulated but undistributed earnings of foreign subsidiaries aggregating
approximately $4.0 billion at January 31, 2004, as such earnings have been permanently reinvested in the business. The determination
of the amount of the unrecognized deferred tax liability related to the undistributed earnings is not practicable.
A valuation allowance has been established to reduce certain foreign subsidiaries’ deferred tax assets relating primarily to net operating
loss carryforwards. During the fourth quarter of fiscal 2004, as the result of new tax legislation in Germany, we re-evaluated the
recoverability of the deferred tax asset related to our German operations. Based on the results of our review, we recorded a valuation
allowance resulting in a charge of $150 million.