Deferred income taxes reflect the net tax effects of temporary dif- ferences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The company believes that, based upon its lengthy and consistent history of profitable operations, it is probable that the net deferred tax assets of $24.9 million will be realized on future tax returns, primarily from the generation of future taxable income. Significant components of the deferred income tax liabilities and assets are as follows: The company enters into various agreements guaranteeing speci- fied obligations of affiliated parties. In some cases, the company guarantees payment for raw materials that were purchased by a supplier of Hormel Foods. In other cases, the company provides  a standby letter of credit for obligations of an affiliated party that may arise under worker compensation claims. The company’s guarantees either terminate in one year or remain in place until such time as Hormel Foods revokes the agreement. Total guaran- tees provided by the company, as of October 30, 2004, amounted to $3.6 million. These potential obligations are not reflected in the company’s consolidated balance sheet.  In order to ensure a steady supply of hogs and turkeys and to keep the cost of products stable, the company has entered into contracts with producers for the purchase of hogs and turkeys at formula-based prices over periods of up to 15 years. Under these contracts, the company is committed at October 30, 2004, to pur- chase hogs and turkeys, assuming current price levels, as follows: Purchases under these contracts for fiscal 2004, 2003, and  2002 were $749.3 million, $686.8 million, and $682.3 million, respectively. The company has noncancelable operating lease commitments  on facilities and equipment at October 30, 2004, as follows: In fiscal 2004, the company received a $9.0 million cash distribu- tion from a foreign subsidiary under the provisions of the American Job Creation Act. The provisions of the Act provide for a one-time repatriation of foreign earnings of an affiliate at a net 5.25% tax  rate if the earnings are repatriated under a Qualified Domestic Reinvestment Plan. U.S. income taxes have not been provided on remaining undistrib- uted earnings of foreign subsidiaries, which were approximately $24.6 million as of October 30, 2004. The company has rein- vested such earnings overseas in foreign operations indefinitely and expects that future earnings will also be reinvested overseas indefinitely. Total income taxes paid during fiscal 2004, 2003, and 2002 were $138.8 million, $76.4 million, and $101.3 million, respectively. The company expensed $20.0 million, $21.5 million, and $20.0 million for rent in fiscal 2004, 2003, and 2002, respectively. Reconciliation of the statutory federal income tax rate to the  company’s effective tax rate is as follows: Commitments and Contingencies > note H October 30, October 25, (In Thousands) 2004 2003 Deferred tax liabilities: Prepaid pension $ (60,306) $(52,802) Tax over book depreciation (53,985) (48,237) Book/tax basis difference  from acquisition (35,227) (35,889) Other, net (35,766) (27,477) Deferred tax assets: Postretirement benefits 100,064 94,842 Pension accrual 15,889 13,609 Deferred compensation 13,825 11,845 Supplemental pension accrual 9,902 6,624 Insurance accruals 6,062 5,773 Vacation accrual 6,182 5,606 Other, net 58,290 29,876 Net Deferred Tax Assets $ 24,930 $ 3,770 2004 2003 2002  U.S. statutory rate 35.0% 35.0% 35.0% State taxes on income,  net of federal tax benefit 2.0 2.0 2.2 All other, net (0.5) (1.2) (1.6)  Effective Tax Rate 36.5% 35.8% 35.6% 2004 Annual Report 43 (In Thousands) 2005 $ 634,736 2006 465,844 2007 260,945 2008 177,352 2009 142,165 Later years 760,625 Total $2,441,667 (In Thousands) 2005 $ 9,050 2006 7,569 2007 6,166 2008 2,949 2009 1,033 Later years 683 Total $27,450