Dell 2003 Annual Report Download - page 46
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Table of Contents
Deferred taxes have not been provided on excess book basis in the amount of approximately $5.1 billion in the shares of certain foreign subsidiaries because
these basis differences are not expected to reverse in the foreseeable future and are essentially permanent in duration. These basis differences arose primarily
through the undistributed book earnings of the subsidiaries. The basis differences could reverse through a sale of the subsidiaries, the receipt of dividends
from the subsidiaries as well as various other events. Net of available foreign tax credits, residual income tax of approximately $1.4 billion would be due upon
a reversal of this excess book basis.
The components of Dell's net deferred tax asset are as follows:
Fiscal Year Ended
January 30, January 31,
2004 2003
(in millions)
Deferred tax assets:
Inventory and warranty provisions $ 260 $ 155
Capital loss carry back 96 —
Deferred revenue 86 186
Leasing 69 17
Investment impairments and unrealized gains 39 118
Provisions for product returns and doubtful accounts 21 44
Other 104 108
675 628
Deferred tax liabilities:
Fixed assets (129) (39)
Other (74) (106)
(203) (145)
Net deferred tax asset $ 472 $ 483
Current portion (included in other current assets) $ 339 $ 292
Non-current portion (included in other non-current assets) 133 191
Net deferred tax asset $ 472 $ 483
A portion of Dell's operations operate at a reduced tax rate or free of tax under various tax holidays which expire in whole or in part during fiscal 2010
through 2013. Many of these holidays may be extended when certain conditions are met.
The effective tax rate differed from statutory U.S. federal income tax rate as follows:
Fiscal Year Ended
January 30, January 31, February 1,
2004 2003 2002
U.S. federal statutory rate 35.0% 35.0% 35.0%
Foreign income taxed at different rates (7.3) (7.9) (6.6)
Other 1.3 2.8 (0.4)
Effective tax rate 29.0% 29.9% 28.0%
NOTE 4 — Capitalization
Preferred Stock
Authorized Shares — Dell has the authority to issue five million shares of preferred stock, par value $.01 per share. At January 30, 2004 and January 31,
2003, no shares of preferred stock were issued or outstanding.
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