NOTE 9. PROVISION (BENEFIT) FOR INCOME TAXES


The provision (benefit) for income taxes consists of the following:

			Year Ended June 30,
				2000		1999		1998
Income (loss) before taxes and extraordinary items:
	Domestic		$	79.9	$	33.0	$	6.0
	Foreign			(0.5)		0.2		—
			$	79.4	$	33.2	$	6.0
Income tax provision (benefit)
	Current:
		Federal	$	20.6	$	0.2	$	0.5
		State and foreign		—		0.3		—
	Total current			20.6		0.5		0.5
	Deferred:
		Federal		(66.6)		—		—
		State and foreign		(7.6)		—		—
	Total deferred			(74.2)		—		—
			$	(53.6)	$	0.5	$	0.5

Significant components of Del Monte’s deferred tax assets and liabilities are as follows:

			Year Ended June 30,
				2000		1999
Deferred tax assets:
	Post employment benefits		$	50.0	$	52.4
	Pension liability			1.7		5.8
	Purchase accounting			6.7		6.9
	Workers’ compensation			2.5		4.1
	Leases and patents			1.8		2.5
	Interest			10.2		5.8
	State income taxes			7.6		8.9
	Other			23.2		23.3
	Net operating loss and tax credit carry forward			16.0		22.7
		Gross deferred tax assets		119.7		132.4
		Valuation allowance		(9.7)		(91.3)
		Net deferred tax assets		110.0		41.1
Deferred tax liabilities:
	Depreciation			24.1		23.6
	Intangible			3.8		3.6
	LIFO reserve			7.6		13.9
	Other			0.3		—
		Gross deferred liabilities		35.8		41.1
		Net deferred tax asset	$	74.2	$	—

The Company released the majority of its valuation allowance in the fourth quarter of fiscal 2000. Management evaluated the available evidence and concluded it is more likely than not that the Company will realize its net deferred assets. In reaching this conclusion, significant weight was given to the Company’s current, as well as cumulative, profitability. A valuation allowance of $9.7 was maintained for NOL carryforwards subject to limitations under Section 382 of the Internal Revenue Code. The net change in the valuation allowance for the years ended June 30, 2000 and 1999 was a decrease of $81.6 and $5.8, respectively.

The differences between the provision (benefit) for income taxes and income taxes computed at the statutory U.S. federal income tax rates are explained as follows:

	Year Ended June 30,
		2000		1999		1998
Income taxes computed at the statutory U.S. federal income tax rates	$	27.8	$	11.6	$	2.1
Taxes on foreign income at rates different than U.S. federal income tax rates		0.2		0.3		—
Reversal of valuation allowance, net of tax adjustments		(67.7)		—		—
Realization of prior years’ net operating losses, tax credits and other adjustments		(12.2)		(11.4)		(1.6)
Other		(1.7)		—		—
Provision (benefit) for income taxes	$	(53.6)	$	0.5	$	0.5

As of June 30, 2000, Del Monte had operating loss carryforwards for U.S. tax purposes totaling $37.5, which will expire in 2012.

Del Monte made income tax payments of $9.0 and $2.6 for the years ended June 30, 2000 and 1999. Del Monte made no income tax payments for the year ended June 30, 1998.