CONTENTS - Capgemini

Deferred tax liabilities at December 31, 2006 can be analyzed as follows by type:
At December 31 (in millions of euros)
Restatement of tax-deductible goodwill amortization 51
Equity component of “OCEANE 2003 and 2005” bonds 21
Restatement of finance leases 10
Provisions 10
Other 16
Total deferred tax liabilities over one year 108
Revaluation of work-in-progress 9
Other 1
Total deferred tax liabilities within one year 10
TOTAL DEFERRED TAX LIABILITIES 118
II. UNRECOGNIZED DEFERRED TAX ASSETS
Unrecognized deferred tax assets can be analyzed as follows:
At December 31 (in millions of euros) 2004 2005 2006
Tax loss carry-forwards 564 524 437
Acquisition of Ernst & Young’s consulting business (1) 1,067 1,183 1,058
Temporary differences 211 380 188
TOTAL 1,842 2,087 1,683
(1) Unrecognized deferred taxes on the acquisition of Ernst & Young’s consulting business include tax loss carry-forwards generated by tax-deductible
amortization charges recorded against goodwill, as well as future amortization allowances.
Unrecognized deferred tax assets relating to tax loss carry-forwards
amounting to €437 million primarily concern France (€130 million)
and North America (€160 million) at the 2006 year-end.
At December 31, 2006, unrecognized deferred tax assets on temporary
differences mainly relate to:
Changes in provisions for pensions and other post-employment
benefits (€72 million), essentially in the United Kingdom.
Differences in revenue recognition in the individual company
accounts and the consolidated accounts (€25 million).
III. EXPIRY DATES OF TAX LOSS CARRY-FORWARDS
The expiry dates of tax loss carry-forwards are as follows:
2006
Differences in the methods used for capitalizing and amortizing
fixed assets in the individual company accounts and consolidated
accounts (€12 million).
Restructuring costs (€11 million), provisions (€23 million) and
other miscellaneous items (€45 million).
At December 31, 2006, unrecognized deferred tax assets are essentially
attributable to North America for €1,308 million (€1,058 million of
which relates to Ernst & Young’s consulting business, €160 million to
deferred taxes on tax loss carry-forwards and €90 million to deferred
taxes on temporary differences).
2004 2005 2006
At December 31 (in millions of euros)
Amount % Amount % Amount %
y+1 4 - 3 - 62 2
y+2 3 - 69 2 57 1
y+3 52 1 48 1 64 2
y+4 37 1 43 1 8 -
y+5 23 1 9 - 16 -
Over 5 years 4,188 97 4,442 96 4,202 95
TOTAL 4,307 100 4,614 100 4,409 100
Tax loss carry-forwards do not include tax-deductible amortization charges recorded against goodwill arising from the acquisition of Ernst &
Young’s consulting business, amounting to €1,627 million at December 31, 2006.
ANNUAL REPORT 2006 Capgemini
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