Walmart 2010 Annual Report Download - page 44

Deferred Taxes
The significant components of our deferred tax account balances are
as follows:
January 31,
(Amounts in millions) 2010 2009
Deferred tax assets:
Loss and tax credit carryforwards $ 2,713 $ 1,603
Accrued liabilities 3,141 2,548
Equity compensation 267 206
Other 751 437
Total deferred tax assets 6,872 4,794
Valuation allowance (2,167) (1,852)
Deferred tax assets, net of
valuation allowance 4,705 2,942
Deferred tax liabilities:
Property and equipment 4,015 3,257
Inventories 1,120 1,079
Other 609 211
Total deferred tax liabilities 5,744 4,547
Net deferred tax liabilities $ 1,039 $ 1,605
The deferred taxes noted above are classified as follows in the
accompanying Consolidated Balance Sheets:
January 31,
(Amounts in millions) 2010 2009
Balance Sheet Classification:
Assets:
Prepaid expenses and other $1,386 $1,293
Other assets and deferred charges 331 202
Asset subtotals 1,717 1,495
Liabilities:
Accrued liabilities 34 24
Deferred income taxes and other 2,722 3,076
Liability subtotals 2,756 3,100
Net deferred tax liabilities $1,039 $1,605
Effective Tax Rate Reconciliation
A reconciliation of the significant differences between the effective income
tax rate and the federal statutory rate on pretax income is as follows:
Fiscal Years Ended January 31,
2010 2009 2008
U.S. statutory tax rate 35.0% 35.0% 35.0%
U.S. state income taxes, net of
federal income tax benefit 2.0% 1.9% 1.7%
Income taxes outside the U.S. -1.6% -1.7% -1.7%
Net impact of repatriated
foreign earnings -3.4% -1.1% -0.7%
Other, net 0.4% 0.1% -0.1%
Effective income tax rate 32.4% 34.2% 34.2%
Unremitted Earnings
United States income taxes have not been provided on accumulated
but undistributed earnings of its non-U.S. subsidiaries of approxi-
mately $13.7 billion and $12.7 billion as of January 31, 2010 and 2009,
respectively, as the company intends to permanently reinvest these
amounts. However, if any portion were to be distributed, the related
U.S. tax liability may be reduced by foreign income taxes paid on those
earnings. Determination of the unrecognized deferred tax liability
related to these undistributed earnings is not practicable because of the
complexities with its hypothetical calculation.
Net Operating Losses, Tax Credit
Carryforwards and Valuation Allowances
At January 31, 2010, the company had international net operating loss and
capital loss carryforwards totaling approximately $4.6 billion. Of these
carryforwards, approximately $3.0 billion will expire, if not utilized,
in various years through 2020. The remaining carryforwards have no
expiration. At January 31, 2010, the company had foreign tax credit
carryforwards of $1.1 billion, which will expire in various years through
2020 if not utilized.
As of January 31, 2010, the company has provided a valuation allowance
of approximately $2.2 billion on deferred tax assets associated primarily
with net operating loss and capital loss carryforwards from our interna-
tional operations for which management has determined it is more likely
than not that the deferred tax asset will not be realized. The $315 million
net change in the valuation allowance during fiscal 2010 related to releases
arising from the use of net operating loss carryforwards, increases in
foreign net operating losses arising in fiscal 2010 and fluctuations in
currency exchange rates. Management believes that it is more likely
than not that we will fully realize the remaining domestic and inter-
national deferred tax assets.
Notes to Consolidated Financial Statements
42 Walmart 2010 Annual Report